What Is a Realistic Annual Growth Percentage for a Company?

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When starting a new business, determining how fast your company will grow can be a difficult task. It is important to try to come up with an accurate estimate, as you will need to obtain the proper facilities for your business. Growth rates for businesses can vary significantly depending on the situation.

Growth Rates

When trying to determine a growth rate for your business, you may not be able to pinpoint an exact range of what to expect. When a business takes off, it could double or triple in size within the course of a year. At the same time, it might struggle at the beginning and only grow at a rate of 1 or 2 percent for the year. Because of this, any rate could potentially be realistic, and other factors must be evaluated.

Comparisons

When trying to determine what a realistic growth rate looks like, compare your business to other, similar businesses. For example, if you own a small textile manufacturer, look at other textile manufacturers that started out at about the same size. Then compare where those companies are today to where they started out. This should give you an idea of the growth rate that you could realistically expect. You could potentially do better or worse than that company.

Industry

When trying to make projections, you also have to look at the industry in which your business is. If you are in a fast-growing industry such as technology or communications, you might expect rapid growth. If you are trying to start a niche business in a stable industry or one that is slowly declining, you may expect a very small or nonexistent growth rate for your new business. The industry can play a big role in how quickly your business grows.

Considerations

To come up with a realistic growth rate, look at your sales projections for the upcoming year. Determine what type of business growth it would take to reach those projections. For some companies, this might mean a 5 to 10 percent growth rate from one year to the next. Other companies might be on the cutting edge of an industry, and grow 25 to 50 percent in a single year. The assets that you come into the business with can also impact growth rates. If you have more to invest in infrastructure and advertising, it could pay big dividends for your business.

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