Upfront, I don't usually ask founders "how fast are you growing?". I start with "what's your revenue made up of?"
After building my own business, running through plenty of acquisitions, and now advising founders, I can tell you that this is the question that actually tells you something. Revenue is the easiest number in the business to misread.
Same number, different business
Let me explain why. Below is two companies I worked with. Both turned over ~$15 million last financial year. On paper, identical.
Business A
- $11m managed services, three-year contracts
- $2m recurring software licensing
- $2m projects
- 80%+ of next year's revenue already contracted
- EBITDA ~$2.8m (19% margin)
- Founder isn't directly involved in most sales
Business B
- $8m hardware and software resale, 12% gross margin
- $4m project delivery, supporting product deals
- $3m consulting engagements
- Around 15% of next year's revenue already committed
- EBITDA ~$750k (5% margin)
- Founder personally closes most new work
Same $15 million. Business A knows what next year looks like before it starts. Business B is carrying a much bigger cost base to move the same dollar, thin margin on the hardware, project and consulting work stitched in to make the numbers work, and five cents of every dollar makes it to the bottom line. It's starting from close to zero again every July, and it's working a lot harder to get there.
Not all revenue is equal
Revenue shows up as one line on the P&L, but if that's all you focus on, it's hard to progress.
A dollar of managed services under a signed three-year contract isn't the same as a dollar of hardware resale. A client on a monthly retainer who keeps expanding their footprint isn't the same as a project that ends with a final invoice and a handshake. A project that rolls into ongoing support isn't the same as a project that just... ends.
All of it counts as revenue. None of it counts the same when you're trying to run the place with any certainty, or figure out why one business clears 19% and the other is scraping together 5% on exactly the same top line.
What happens next year?
Forget growth rate for a second. The question that actually matters is: how much of next year's revenue already exists?
The businesses that know the answer can tell you:
- percentage recurring
- percentage under contract
- average contract length
- renewal rates
- customer concentration
- gross margin by revenue type
- growth from existing customers versus new logos
The businesses that don't know tend to find out the hard way, usually mid-year, usually under pressure.
Growth can still feel like standing still
I've watched businesses grow 30% a year and still feel like they're running on a treadmill. Targets reset every month. A project finishes, a consultant rolls off, a hardware deal needs replacing, and the founder's still the one carrying the number. It is incredibly hard to forecast what is coming next.
I've also watched businesses grow slower with most of next year already contracted before the financial year starts. Those businesses aren't panicking in March. Their leadership teams plan past the next quarter. Hiring, investment, culture, all of it gets easier when you're not starting from zero every twelve months.
This isn't an argument for becoming an MSP
Consulting businesses can be great businesses. Product businesses can be great businesses. Project businesses can be great businesses. This isn't about which model you run. It's about deliberately upgrading the revenue you already have.
This is about:
- Can this customer move onto a managed service?
- Can this project become an annual agreement?
- Can this consulting engagement become retained advisory?
- Can this one-off become repeatable?
- Can I continue to add value to this client?
The strongest technology businesses aren't just growing revenue. They're growing the proportion of it that's predictable, contracted, repeatable and profitable.
It is not a finance exercise. It is the key to sustainable growth and a better business.