The Founder’s Guide to Compound Growth: The 10% Rule
Whether you choose to bootstrap or raise money, aim for 10% month over month growth in revenue.
That’s really all you need because compounding growth is the most powerful thing you’ve never really understood.
For easy math, let’s pretend that you’re making $100/month through your business today and you grow that revenue at 10% each month. Here’s what that looks like:
- Month 1: $100
- Month 2: $110
- Month 3: $121
- Month 4: $133.10
- Month 5: $146.41
- Month 6: $161.05
- Month 7: $177.16
- Month 8: $194.87
- Month 9: $214.36
- Month 10: $235.79
- Month 11: $259.37
- Month 12: $285.31
- Month 13: $313.84
- Month 14: $345.23
- Month 15: $379.74
- Month 16: $417.72
- Month 17: $459.50
- Month 18: $505.45
You see what’s happening, don’t you? The business is doubling just about every 8 months… and it just gets faster and faster. (And just imagine how much bigger the numbers get when you’re at $1,000/month or more.)
Now, before you crucify me for not discussing churn or anything else — you’re missing the point.
In the early days, investing in a startup is an emotional decision for an investor. If you can show that you’re focused on building and growing a business, you’ve already set yourself up to look like a better investment than anything else that the investor has probably seen lately.
If, on top of that, you can show a 10% month over month growth rate, you’re basically killing it.
When someone asks you how much traction you’ve got, you should always have a line ready. Maybe it’s something like “we’re making money and we’re growing at X% month over month at this point.”
Stay focused on sales and growth — not the idea.
Originally published at Results Junkies.