Sales growth rate

An increase in sales is good news for a business. The sales growth rate gives the pace of this, expressed as a percentage, for a given period.

The success of a business is many with index number can be measured. One of the most commonly used indicators is the sales growth rate. The startups this is one of the most important metrics when characterizing its development. But it is also one of the most critical monitored indicators for companies listed on the stock exchange, in addition to profit. 

The sales growth provides information on whether the company - with some simplification - has succeeded in expanding its markets. If the sales grow, it may mean that it is.

However, absolute numbers are more difficult to measure and compare. If a company is wondering how it performed in this area compared to other market players and competitors, then it is worth examining the growth rate.  

During the calculation of the sales growth rate, the sales revenue achieved in a given period is contrasted with that of a previous period. Most often one business year sales revenue is compared with the previous year, or a business quarter with the previous quarter, possibly with the same quarter of the previous year. The period compared to which the sales revenue of the given year is examined is called the base period. When calculating the sales growth rate, the difference between the sales achieved in the two periods is divided by the sales revenue achieved in the base period and multiplied by one hundred - the result indicates the growth rate of sales revenue in percentage.  

This percentage value can already be compared to that of competitors, possibly the market to benchmark. By comparing the sales growth rates, we can thus form an image of how our company performed in the given business environment compared to other market participants.

At the same time, the sales growth goals must fit the company's business and into financial plans. In the different life cycles of the company, different speeds can be considered outstanding and good.

At the time of attracting an investor, or other aspects of the company's growth financing and when examining its possibilities, it must also be clearly presented to the financier (i.e business angel, to a venture capital corporation or for example the credit to the issuing bank), that the achieved growth is sustainable, the development of the company scalable.