How Much Can You Grow in a Year?

As we come to the end of 2016 it’s time to pat ourselves on the back for how far we’ve come—and to plan for growth in 2017. Here’s how:

1. Congratulate yourself on where you are right now!
2. How can you grow 10 times as big in twelve months?
3. Set your OKRs for next year
4. Go!
5. Repeat

Congratulate yourself on where you are right now!

I was talking to a founder yesterday who was complaining about his monthly recurring revenue. I reminded him that he’s grown it 400% since I first met him in February. We all wish we could do as well!

But we lose perspective because we’re always looking forward.

You’ve put a lot of work into getting where you are right at this moment, so now’s the time to congratulate yourself. Think back over the past year and how hard you’ve worked. Think about your big wins. Think about how far you’ve come since last January.

Sometimes I reward myself with a gift or a nice meal to really savor the moment.

How can you grow 10 times as big next year?

Now it’s time to get back to work ;)

Big, established companies are happy when they achieve 5 to 7 percent growth—and 10 percent growth is a huge win. The US economy has been growing at 2 percent, and China’s economy has been growing over 6 percent annually.

But as entrepreneurs with smaller companies we have the ability to grow much faster. We’ve talked about the exponential growth curve, which requires 10x jumps to get that steep curve.

Grant Cardon (The 10x Rule), Ash Maurya (Scaling Lean), and the GoogleX team all use this aggressive approach because it forces you to break out of your comfort zone. And we can only achieve big jumps in growth by making ourselves uncomfortable.

Even if you fail you’ll probably do way better than if you simply shoot for a five or ten percent improvement!

But when you aim for a 10x gain, you lean instead on bravery and creativity — the kind that, literally and metaphorically, can put a man on the moon. We chose to go to the moon, John F. Kennedy said, not because it was easy…but because it was hard.

Kennedy understood that the size of the challenge actually motivates people: that bigger challenges create passion. And that, counter-intuitively, makes the hardest things much easier to accomplish than you might think. —Wired Magazine

What does it take for you to grow 10 times in a year?

You have to change pretty much everything! You need:

• A larger team, either salaried or on demand
• More distribution channels
• More customers if you’re going for volume
• Higher prices or more upselling opportunities if you’re going for revenue
• Higher production throughput for your product (if it’s software you’ll probably need to release more frequent updates)

Start from a blank slate and brainstorm what this looks like.

Set your OKRs for next year

Goals are powerful. I set my OKRs three months ago, tracked them religiously, and beat them.

But I didn’t crush them.

I didn’t do ten times my goals.

I didn’t even do two times my goals.

So I probably set my goals too low.

I spoke with a CEO about setting her team’s OKRs for 2017. Her company does about $6 million in revenue, and it’s realistic for them to get to $6.6 million next year. But Google recommends setting OKRs so you achieve about 70%—which means setting her revenue target at $8.5 million.

She’s concerned that this will scare her team! But the benefit is that it will motivate them way beyond the lower number, especially if the compensation is structured to reward them.

And ten times their revenue would be $60 million next year. Talk about scaring her team!

But it’s also important to be aware of the incentives you’re creating. The gross margin number is crucial for her business, and it needs to be at least 60%. Setting a gross margin goal of 85% for next year would incent her team to cut every corner imaginable in order to lower costs—which would lead to a terrible experience for her customers.

Google X has also run into the dark side of 10x planning.

Go!

Now you have a plan to hit the ground running in January, and a set of measurable OKRs to track your progress.

The nice thing about OKRs is they tell you if you’re on course early in the process so you can adjust. Remember that you’ll need to set quarterly OKRs in order to hit your annual ones.

Repeat

If you do this exercise at the end of every year and then stretch for growth in the following twelve months, you will be amazed at the results.

Mike Lingle is obsessed with helping founders grow their businesses. I’m a serial entrepreneur, mentor, and executive in residence at Babson College. Check out my Rocket Pro Forma if you want to quickly create your financial projections.