New Venture Lab: Equipping Christian Entrepreneurs

Question

I am planning on launching a services company, but not sure what I can realistically plan on for annual growth.  What advice would you give me for planning purposes?

Answer

The answer depends upon the scalability of your service.

If your service is highly automated and requires very little actual labor input, then the business is what I would call highly "scalable" and your growth would only be limited by your sales pipeline (how many and how fast you can attract customers to your service).  Think of Google.  It is very easy for them to serve an additional 10 million customers without breaking into a sweat and one of the reasons they have grown so fast, is the "scalability" of their business model.

If, on the other hand, your services business model requires significant labor content to deliver the service -- such as a maid service or a lawn mowing service -- then your growth will be limited not only by your speed of customer acquisition (your sales and marketing process), but it will also be limited by your hiring pipeline -- that is your ability to attract, hire, train and deploy the labor necessary to service more customers.  The more difficult the service delivery and the more training required, the more of a bottleneck your hiring pipeline will be on your ability to grow.  Most services company that depend primarily on labor to deliver the service have a difficult time growing faster than 30% per year.