How is Growth Measured in Business?

As a business owner or manager, you are used to taking measurements. Without measuring how you are doing, it’s nearly impossible to make good decisions, respond to problems, and drive your organization forward.

On the subject of growth, it’s important to continue that pattern of consistent measurement. Unfortunately, measuring growth can be tricky. In fact, I think that the measurement of growth might be just as hard – if not harder – than actually achieving the growth. You should consider it a worthwhile endeavor to spend whatever time is necessary to determine how to measure your growth on as many fronts as possible. 

No One Right Answer

The first thing to know about measuring growth is that there isn’t a single metric you can look at to quantify how much your organization has grown over a period of time. Sure, you could use a figure like revenue over the previous quarter or year as a benchmark, but that would miss many different types of growth.

When I work with businesses on growth objectives, one of my main areas of focus is to develop KPIs that will help them identify where their initiatives are succeeding and where they could be improved. In this way, measuring growth is a custom process, tailored to the situation that each business is facing. If you try to simply copy and paste the growth metrics used by other companies, you may find that they don’t quite fit with your needs or goals. 

Pairing Growth Measurements to Business Timelines

The way you measure growth in your business will likely depend – at least in part – on the age of your business. In the early days, profitability may be out of reach, so how much you make in a year won’t be a great indicator of growth. Instead, something like how many new product ideas were developed, or how many hours were spent on specific projects, may be a sign of growth that will pay off later. 

On the other end of the spectrum, an established, proven business will be focused more closely on the bottom line. This is a company that has a good handle on its collection of products and services and won’t be making any big changes in that area anytime soon. So, growth for this business could mean reaching a bigger market segment and closing more deals – meaning revenues would be a good metric to track. 

It's Forever Changing

If there is one thing I want you to take away from this article, it’s this last point – the way you measure growth should always be changing. If you sit down in the near future to settle on some KPIs you can use to track growth, don’t expect those to be relevant five or ten years down the road. You’ll need to be agile on this point, perpetually changing how you measure growth to line up accurately with the growth that you are hoping to achieve. Make it a policy to review growth metrics on a periodic basis – such as annually – so you are always up-to-date and relevant on this critical point.