May 28, 2022


Accounting + Finance Blog

Three Barometers that indicate Growth in a Startup


When a mother gives birth to a child, the next thing she expect from that child is growth. Within three months time the baby starts sitting with little support. In six to nine months the baby will start using his/her kneel to crawl and at one year six month the baby should have starts walking on his/her own legs with little or no support. By the time the baby is two years you will expect the baby to start walking all by himself/herself and also starts eating solid foods.

All this personal development from the child is the barometer that the child is growing up. In like manner, businesses has barometer or indicators to reveal that a business is growing up.

Knowing that your business is growing up is a motivation. It increases the entrepreneur hormone, to continue working hard, and setting new strategy to achieve further growth. But how will you know your business is growing up? Below are the three barometrics to help you notice it, but first you will need a good accounting and book keeping system.

Three indicators that show that your business is growing up

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Value of Assets.
The value of your non-current assets are signs telling you your business is growing. Assuming you started your business in a room with just a single computer, but now you have bought a building and have hundreds of computers, software infrastructure and other equipments, then you know your business is growing up.

The federal ministry of industries in Nigeria has set out monetary value of assets to show if a business is an MSMEs or a large business.

A business whose asset base is less than N400,000 is regarded as a micro business. If your business asset base is within N400,000 and N5 million, it will be regarded as a small business. For medium scale businesses, the assets base should be valued at N5 million to N10 million and any business whose assets value is more than 10 million is a large scale business.

So, with good accounting system in place, you should know your business position.

Number of Employees.
The number of employees a business is also a factor that reveals if the business is growing up. Business morgues, like Alinko Dangote has huge entreprenuers to always starts small. Probably, starting it all by yourself, then bootstrap in a few months or years, when you know the business needs more hands then you start employing more persons to assist you grow up the business.

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The Federal ministry of industries also states the number of employees to help you know were your business falls under. It states that if the number of employees is within 1 and 10 then it is a micro business. A business that has a number of employees with 11 and 100 is a small business. Also, a business with an employee base of 101 to 300 is a medium scale business while that with 301 employees and above is referred to as large business. Where do your business falls?

Sales value.
The value of sales is the third barometer I will be discussion on. The value of sales is the total value of goods sold within a period of time. For service enterprise, the sales value is the total business incomes including interest earned by the business within a period of time. A period of time is at most one year.

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The sales value tells you the extent to which your business has captured the market. That means it tells you if your business has a large market base when compared with other businesses in the same market. To know this, you will need to know the average number of sales in the industry.

As stated earlier, business growth is a  motivation to the business owner. While any observation that your business is not growing is a de-motivation. You van grow your business by bootstrapping or by having co-founders, angel investors, or by venture capitalists providing seed funds.

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