For many small businesses, setting revenue growth goals often starts with a single, seemingly straightforward decision: choosing a round number. However, this top-down, arbitrary approach can set your team up for frustration rather than success. A recent survey from SCORE found that 65% of small businesses don’t achieve their revenue goals, with unrealistic targets being a primary cause. Setting unattainable goals not only strains your resources but also demoralizes your team, leaving them questioning the feasibility of leadership’s vision.

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There’s a better way. A bottom-up approach to setting revenue goals ensures that your targets are rooted in reality, empowering your team to work towards a shared vision that feels both achievable and motivating. This method involves analyzing customer accounts, assessing churn risks, and using past performance data to inform a detailed and actionable plan. Here’s how you can approach revenue growth goal-setting in a way that inspires confidence and drives results.

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Why a Bottom-Up Approach is More Effective

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The top-down approach might seem simple—“Let’s grow revenue by 20% next year”—but it often overlooks critical details. It can lead to over-promising and under-delivering, eroding trust within your organization. By contrast, a bottom-up approach builds your revenue target piece by piece, starting with your current reality and factoring in every variable that contributes to growth. This method doesn’t just provide a clearer picture of what’s possible; it also creates a roadmap for achieving it.

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How to Build Revenue Goals from the Ground Up

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1. Evaluate the Growth Potential of Existing Customers

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Start with your current customer base. Analyze each account’s potential for growth by considering:

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• Historical Trends: How much have they grown with you year over year?
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• Upsell Opportunities: Are there additional products or services they could adopt?
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• Market Conditions: Are your customers positioned for growth in their industries?
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By creating a customer-by-customer growth forecast, you’ll have a clear baseline for what your existing accounts can realistically contribute to your 2025 revenue.

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2. Account for Churn Risks

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Next, assess potential revenue loss due to customer churn. Use historical data to estimate:

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• Churn Rate: How many customers do you typically lose each year?
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• At-Risk Accounts: Identify customers who may not renew or continue purchasing based on recent feedback or behavior.
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Understanding churn ensures you account for potential setbacks while leaving room for proactive retention strategies that can minimize revenue loss.

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3. Analyze Marketing and Sales Performance

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Your ability to acquire new customers plays a critical role in hitting revenue targets. Look at:
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• Lead Generation Metrics: How many leads did your marketing efforts produce in the previous year?
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• Conversion Rates: What percentage of leads converted into customers?
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• Customer Acquisition Costs (CAC): How much did you spend to gain each customer?
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Based on this data, calculate how many new customers you can realistically expect to acquire and determine what additional resources (e.g., ad spend, headcount) are needed to improve these metrics.

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4. Set Realistic Growth Goals by Segment
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Once you’ve analyzed your current accounts, churn risks, and new customer acquisition potential, roll these numbers up into segment-specific revenue goals. For example:

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• Current Customers: $2M growth.
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• New Customers: $1.5M growth.
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• Reduced Churn Impact: $500K saved.

This segmented approach ensures every part of your business has a clear role in achieving the overall goal.

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5. Plan for Incremental Investments

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Achieving growth often requires spending money to make money. Based on your analysis, outline the investments needed to hit your targets. This could include:

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• Expanding your sales team.
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• Allocating more budget to digital marketing.
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• Investing in sales enablement tools or AI-driven marketing platforms.
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By tying investments directly to expected results, you’ll gain buy-in from your team and stakeholders while ensuring every dollar is spent with purpose.

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Actionable Next Steps

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To set your business up for success in 2025, work through the following steps with your team:

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1. Host a Growth Planning Workshop: Bring together leaders from sales, marketing, and customer success to evaluate current accounts, churn risks, and growth opportunities.
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2. Build a Collaborative Revenue Plan: Ensure all teams have input and buy-in on the final numbers to foster accountability.
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3. Align Goals Across Departments: Make sure marketing, sales, and operations are aligned on what’s required to meet revenue targets.
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4. Commit to Regular Check-Ins: Schedule quarterly reviews to track progress and adjust strategies as needed.
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By taking a bottom-up approach to revenue goal-setting, you’ll create a growth plan that motivates your team and sets your business on a clear path to achieving sustainable, realistic success. So, as you prepare for the New Year, ask yourself: Are your 2025 goals empowering your team—or stressing them out?