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Five Rates To Guide Your Business Growth

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Five Rates To Guide Your Business Growth

For any business centered on growth, failure to track key business rates would be like walking blindly. If you say that you want to reach a certain level in a given period of time, you need to keep tracking your progress. The only way to do that is by analyzing business data and calculating the necessary rates.

Rates unlock valuable insights by pointing out your weak areas that need improvements. In addition, they guide you on how to align your resources, talents, and process with your goals and objectives.

If you haven’t been paying much attention to your rates, you have been doing your business progress and injustice. Here are five rates that you can start with.

 1.  Sales Growth Rate

Ideally, you are in business to sell your product or service. The revenue that you bring in is a clear indicator of whether your product or service is accepted in the market. The sales growth rate shows how your sales are increasing or decreasing over a period of time. It is calculated by subtracting sales for the previous period from sales for the current period, divided by sales for the previous period, multiplied by 100 to get the percentage.

A positive percentage shows that your sales are increasing. If it is below your projection, then you need to take measures to increase your sales. You can start by adding more vigor to your marketing campaigns or lowering prices, giving discounts. You can also seek to increase your customer base by expanding to international markets. You can hire global expansion services providers, such as Global PEO, to get advice on how to go about venturing to other parts of the globe.

 2.  Customer Retention Rate

When you have loyal customers, you are almost guaranteed to make sales. In addition, loyal customers are the one that spread the word about your business, bringing in referrals that translate to additional sales. If you are able to retain just 5% of your customers, your profits can grow by up to 95% according to research. That is because retaining customers is cheaper as compared to attaining a new customer. By calculating the customer retention rate, you can be able to tell if you are putting in the right efforts to retain your customers.

 3. Lead-To-Conversion Rate

The ability to convert leads to happy customers is one way to grow your revenue. You will receive leads in your business, but it is up to your sales team to reach out to them and convert them to paying customers. The Lead-to-Conversion rate tells you how your sales team is performing. If it is poor, you might need to think of training. Moreover, a low rate might mean that your product is a poor fit for the market, or your landing pages aren’t effective among other insights.

4. Gross Profit Margin

If you aren’t making any profits, moving your business to the next level can be a challenge. That is because the money you retain after deducting the costs of goods sold from your sales revenue is what you can use to finance other business operations. If your gross profit margin is low, you will have a challenge funding your operating costs.

Your ability to make a profit is highly dependent on the efficiency in sales and production processes. This rate tells you where you need to be innovative to lower the cost of production, as well as the efforts needed to increase sales.

 5. Inventory Turnover Rate

For a business to continue in the growth path, it must be able to convert inventory into sales in the shortest time possible. This rate helps you unlock insights on how fast inventory is being sold by taking into consideration the cost of goods sold and average inventory. If the rate is low, it shows possible overstocking, or inability to push your products to the market. If you are in an industry like fashion or electronics, it could mean that you are dealing with obsolete items. On the other hand, a high turnover could mean you are understocking hence missing out on sales opportunities.


If you want to go far, it is important to pose and take stock of how you are doing. Otherwise, you could be stagnating in one position or going down without your knowledge. Besides, you feel inspired to continue moving forward when you see the rates growing steadily.

About The Author
Andy Latkovskis is an HR Officer specialized in employee training and development. He is truly passionate about nurturing talent and ideas that evoke transformative change in individuals, teams, and organizations. When he is not working, you can find him socializing physically.
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