Minimum Business Growth Rate | Startup | Sarthak Ahuja [Video]

If your business is not growing at over 24% p.a., there is a problem…

Let’s look at this from a few lenses.

👉🏼 The country’s GDP is growing at 6% p.a. and if you’ve selected a good industry to operate in, which I’m assuming is at least tech enabled if not tech in its core…

The industry growth rate is double of the country’s GDP i.e. at 10-12% p.a.

Being a small player in a huge market even if you’re at a Rs 100 crore top line, the least you should aim to grow at is double your industry’s growth rate

Because even if you put in average effort like everyone else in your industry, the wave of growth should grow you by 12%

The real merit of one’s differentiated leverage or moat lies in at least 2X the industry growth rate esp when you have a small base.

So 24% p.a. is expected even if you’re in the 10th year of your operation or more.

For sub 5 year old operations, the growth has to be even double of that at say 50% p.a. at the very least.

👉🏼 Now, let’s look at this from the lens of stock market returns.

If the stock market has been giving 18% p.a. over the past 5 years, the least you can do as a small privately held company is a growth 33% higher… i.e. 24%

I understand that stock market valuations during bull runs are not absolutely correlated to revenue growth, and multiples may be higher…

But even if you were to take a long term growth rate of 14% p.a. on the index… a 10% extra on that is the bare minimum for a company with lack of liquidity and a +100x lower base to calculate growth on.

Are you fitting the bill, or do you have a separate metric?

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A Chartered Accountant with about 10 years of experience in areas of Tax Advisory, Startup Consulting, Fundraising, Audits, Deal Advisory, Business Modelling and contract CFO services.

Winner of the ISB Young Leader Award 2017 and the Best All Rounder, PGP Class of ’17, Sarthak has also been published about in the leading financial newspapers such as The Financial Express as possibly the youngest Indian to have completed the courses of CA, CS and CMA along with a graduate degree in Financial & Investment Analysis from University of Delhi, all by the age of 23 years.