Forecasting growth for a recurring revenue service business (property management) - what we've learned over the last seven years and how we're doing it differently for 2021.

For property management, the number of "units under management" is a highly visible and important metric. For years my business partner and I would arbitrarily pick an aggressive unit growth target each year (eg - we manage 200 units now, let's manage 400 by year's end).

This did not work (surprise). Here's what we do now.

You need to know a few important numbers from your business: Churn (if you start the year with 100 clients, how many leave on average over the course of the year), Organic Growth (existing clients who buy more property), and Closing Ratio (what % of valid leads turn into clients)

So if you enter your starting units, add in organic growth and subtract churned units - that's how many you would end the year with if nothing else happened (our real predicted numbers for 2021 below):

Now, pop in a growth target and you can see how many units you need to add from SALES:

And from there if you know your closing ratio (eg 20%), you can figure out how many LEADS per month you need to be generating in order to hit your growth goal for the year. Consider - is it realistic? How could you generate more leads?

It's not a panacea, this does give you a data-backed starting position from which to consider various marketing strategies for the year. Eg - you could talk to your website company and ask "If we increased ad spend by 500/mo, could we generate 5 more leads per month?"

This is so much more effective than just picking a big number and "working hard" all year, in hopes that you'll hit the target.