Startup Growth Calculator
growth.tlb.org
growth.tlb.org
From my limited personal experience, every startup I've chatted about this with has some sort of forecast though the degree of seriousness with which is was constructed and is used varies.
"A good growth rate during YC is 5-7% a week. If you can hit 10% a week you're doing exceptionally well. If you can only manage 1%, it's a sign you haven't yet figured out what you're doing." - http://www.paulgraham.com/growth.html
This little app can help put those into perspective.
It becomes hard to see that text with low weekly expenses($2500), close weekly revenue ($1000), and good growth rate (5%)
You don't have to grow along a fixed axis, whether that be # of users, # of widgets, etc. You just have to average the growth in income.
I had a similar initial reaction to the chart because I stick to R&D-driven startups that will run at $0/week for as long as it takes. However, pushing the stop-energy out of my head and running with it is a good gut check for viability on breaking even given assumptions about expenses vs income over time.
The output isn't "we will grow at an annualized 360% forever, yielding foo," it's "we only need to kick in $x to have a good shot at getting to B/E."
I wish the tool had an additional degree of freedom, which is "time until first revenue". That would let you model how much time-to-market is costing you until breakeven, and trade off a business idea that generates revenue immediately vs. another business idea that takes a long time to incubate but may have a higher growth rate. I guess you can figure it out with some quick mental math (just multiply monthly expenses by time-to-market and add that on to capital required, and add the time-to-market on to the breakeven time), but if it were in the tool it'd be easier to visually see the effects of different choices there.
After the first year of doing business (or faster?), you should revisit your model with these kinds of metrics and hone the model, but you usually won't have it going into year 1.
Hope someone makes a version that applies to SaaS companies where expenses usually increase almost linearly with growth at least initially(until the recurring revenue begins to come in).
At my start-up, a typical new sales rep makes back his monthly salary from month two on-wards costing us marginal amount initially. In year two is when we make the real money(off renewals; with no commission to pay). If you are wondering why we can't scale infinitely, scaling ad reps is a different beast the adwords - though at time, it certainly feels like a machine similar to adwords :)
But I love the graphical interactivity, very nice.
Its practical for a very rough +- order of magnitude calculation if you are pretty sure about your growth and market size. Then again, as a startup in your first years, you have little idea about the last two.
A growth model has to balance how you go up and how you go down (both in business/user loss) and no business i can think of handles revenue exponentially and costs fix.