Give Due Respect to Timing while Setting Growth Targets

Managers like us have done it umpteen number of times — that number crunching , those excel sheets in which Year 2 sales & profits are always projected higher Year 1 numbers plus 15% or an aspirational figure , and so on. These projections are rarely accurate, because they prompts us to think along with linear models — while in reality the growth story is nonlinear, sometimes even exponential. Instead of assuming that growth will happen right away, and at a steady pace, think about the likely times at which revenues will be realized. What’s the realistic lag time between initiating your growth efforts and reaping the rewards from it? Focus on three inputs: the revenue goal for the investment at steady state; the assumed first-year revenue; and the inflection point, which is the time required to reach 50% of the revenue goal. Unrealistic revenue projections can lead to career-ending misses. So take plenty of time to do some smart thinking beforehand.