Want to know how your business is growing? We replicate the formula in our simple to use calculator for you to obtain immediate results.
How do you measure the growth rate of your business over a period of time, say a year? We have the formula covered for you so you can calculate your growth rate. Measuring the growth of your company is essential for any manager in order to know how your business is doing and control what additional investment you may need in the future. Our Business Calculator will help you with this task.
Note that growth is different to net income. Growth is calculated over a period of time as a rate of increase, and is a relative not absolute value. It is also no indication of the value or size of your business unless you have the previous figure. We have a business value calculator for your needs in this respect.
How to calculate the growth rate of your company?
Your growth rate is dependent on how your revenue is evolving. If your revenue is growing usually your growth rate is too. But calculating the exact percentage of growth is an important part of management and business in order to compare with other companies that may not have similar economies of scale. For example, a major car company will have higher revenue in raw numbers than a small shop, but the shop may have a higher growth rate over the past month.
The growth of a company is calculated through a formula that measures your growth rate by revenue. You subtract the present day’s revenue by last month’s revenue and dive this by last month’s revenue. You should then get a ratio that you can convert into a percentage by multiplying the figure by 100.
What is the formula for calculating business growth :
Basic Growth Rate = [(Present Value – Initial Value) / Initial Value] * 100
How to use the growth calculator?
- Plug in the initial value of your enterprise
- Plug in the ending value after your preferred period.
- Add the churn rate if applicable : the churn rate refers to the number of clients you have potentially lost impacting the
- Hit the “calculate” button and you will receive a percentage.
What is a good growth rate for a business?
Industry and business is said to grow at the same pace as the economy (in non-crisis periods around 2-3%). However, your business or startup might have its own growth objectives, based on what the bank or financier is requesting. You might have set targets to pay back certain loans on time. You can find out what you pay monthly on a loan threw a Business Amortization Calculator.
Not enough growth and your business will stagnate. Too much growth in too short a period and your business might struggle with its supply chain management .
How do you calculate growth over 5 years?
To calculate the average rate over a period of five years you must divide the present value from the one five years ago then divide again followed by an exponent of ¼, and finally minus 1. The exponent determines how many years you want to calculate the growth of (amount of years – 1). It is otherwise essentially the same formula as the standard growth above. You can be assured about putting your past value 5 years before in our calculator will deliver similar results.
Formula for growth average over several years :
[(Present Value / Initial Value)1/n-1] * 100
Where n is the number of years of growth you wish to analyse.