How to Configure Metric Growth in a Business Plan

Today I want to once again demonstrate what metric growth configuration in a business plan looks like.

I often see that people do not understand how to reflect the dynamics of business development over time — specifically, how to incorporate growth rates and allocate time for development, research, and custdev. Of course, in today's world, talking about building time buffers into a business plan is quite debatable. We are now in the age of agents, and creating any prototype can realistically be done on the fly in 1–2 days, spending no more than $100. Nevertheless, planning is not going anywhere, and getting money right away will not be easy.

That is why reflecting the correct growth in a plan is critically important. But when doing modeling in Excel, the first thing people do is linear growth — simply adding a delta to the previous cell.

More advanced users might apply percentage growth, which generally produces something resembling an exponential curve. But it is even better to use a sigmoid, which consists of 3 parts: the first stage — time for hypothesis testing; the second — time for growth; the third — saturation, applying accumulated experience.

To make it clearer how this works, I prepared an interactive demo for you. You can enter a start value and a finish value for the metric, and by clicking Calculate get three charts: linear growth from start to finish, exponential growth, and a sigmoid.

You can configure the sigmoid: the parameter $x_0$ controls the position of the inflection point — essentially the middle of the second stage (growth) — and the parameter $k$ controls the rate of growth at the inflection point, that is, how fast you will be growing at that moment in time.

Using a sigmoid in business planning is good practice toward partners and investors. It allows you to remain honest, allocate time for hypothesis testing, and still reach the target metric level.

How to use the sigmoid in practice is probably the main question. For that, I will share my formula, which works well in Google Sheets:

=IFS(OR(current_date="", current_date<start_date), "", AND(current_date>start_date, current_date<end_date), start_value+(end_value-start_value)/(1+EXP(-k*((x-1) - middle_point*(duration - 1)))), current_date = start_date, start_value, current_date = end_date, end_value)

This formula works with named cells for creating custom functions. So now you can use the sigmoid in your own work.