Business Sales Growth
What it is, how it’s calculated and why it’s important to small business owners.
Calculation
Sales Growth = ((Current Annual Total Sales – Previous Annual Total Sales) ÷ Previous Annual Total Sales) × 100
Definition
Sales Growth, also known as Revenue Growth, is the percentage by which the average sales volume of a company’s products or services has grown in the last year. Sales Growth is first calculated by subtracting the total sales for the previous calendar year from the total sales for the current calendar year. The resulting number is then divided by the total sales from the previous calendar year and then multiplied by 100 to form a percentage.
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How it’s Used
Similar to other growth metrics, Sales Growth is a key indicator of a company’s performance and financial health. A positive Sales Growth indicates that overall sales are increasing for a company, while a negative Sales Growth indicates that overall sales are decreasing.
Ways to Improve Sales Growth
A great way to improve Sales Growth is through marketing campaigns. Once a company determines the best platform to reach potential consumers (social media, email, television, etc.), they should try to release engaging content on a weekly or monthly basis. Another useful marketing technique could be to establish a referral reward program. Companies can offer promotions to customers who successfully refer them new business.
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