A revenue target is the number every other part of the annual plan bends around: hiring, spend, quotas, cash. When that number is picked rather than built, the whole plan inherits the error. On Call to the Bullpen, Clint Overton and Ted Stann explained how to replace the default growth guess with a target your business can defend.
Quick answer
How do you set a realistic revenue growth target for next year?
A realistic revenue growth target is built from evidence, not added to last year’s total. Test any proposed number, whether 10% or 50%, against four inputs: your historical pipeline conversion, retention and pricing of existing customers, market headwinds and tailwinds, and input from every leader who has to deliver it. A target none of those support is a hope.
Ted Stann, co-founder of Boardroom Bullpen, is a career CFO who founded two fractional CFO firms, has raised more than $300 million in capital, and has taught finance at Washington University in St. Louis. His test for any growth number is blunt: “You definitely don’t want to go into a year hoping that your revenue is going to support your growth goals if you don’t have empirical facts that are going to support that.”
That standard applies to every percentage. Ted lists the questions behind it: “What do we know? What are the unknowns? What are the assumptions we’re making behind those unknowns? Why do we believe that those assumptions are ultimately going to lead to long term success?” If your leadership team cannot answer those for the number on the slide, the number is not finished.
This is also one reason growth companies plateau despite a sound strategy. The strategy may be right, but the revenue target is disconnected from the engine that produces revenue, so the plan built on top of it drifts out of reach by midyear.
Watch the episode
Call to the Bullpen: The Value of Annual Planning: Turning Strategy Into Results, with Clint Overton and Ted Stann
Why does a “plus 10%” revenue target fail?
A “plus 10%” revenue target fails because nobody can explain where the extra revenue comes from. It feels conservative, but a number with no reasoning behind it is just as likely to be too low as too high, and the team has no way to tell which.
Clint Overton, co-founder of Boardroom Bullpen and a former corporate executive now doing fractional COO work, sees it constantly. “If you just go into next year’s exercise and go, well, we’re just going to grow by 10%, we’re going to grow by 50%, which I see so many companies doing. Like, how did you come up with that number? Why is it 10 or 15?”
His diagnosis is that the default number is a shortcut. Companies reach for it “because in some cases, I’m not sure that they want to put in the work and they just don’t know how to get started.” The cost shows up later, when the sales team is chasing a goal nobody believes in. Clint names this as one of the core planning mistakes: a budget without a strategy behind it.
Does your sales pipeline support your revenue goal?
Your sales pipeline supports a revenue goal only if your historical conversion rates, applied to the pipeline you expect to build, produce that number. If the math falls short, the goal needs a new pipeline source, a better conversion rate, or a lower target.
Ted starts with lagging indicators. “Understanding those lagging indicators, like what historically has been our days to close. What does it look like from opportunity to close? Great lagging indicator. It actually helps us with our annual planning when we’re looking forward.” The question he wants answered: “Does the pipeline even support what your sales goals are?”
He also notes that the sales pipeline is only half the picture. Marketing feeds the pipeline, so marketing’s historical lead volume and quality belong in the same analysis. Every function has its own version of this check.
A simple version of the math:
| Input | Where it comes from |
|---|---|
| Average deal size | Last 12 months of closed deals |
| Opportunity-to-close rate | Historical CRM data |
| Average days to close | Historical CRM data |
| Opportunities needed | Revenue goal divided by (deal size times close rate) |
| Pipeline timing | Opportunities must open early enough to close inside the year |
If the opportunities needed exceed anything your team has generated before, the target depends on a change, and that change needs to be named in the plan.
What headwinds and tailwinds should shape a revenue target?
Headwinds and tailwinds are the outside forces that push your revenue up or down regardless of execution, and each one should move the target. Clint listed the ones he sees most often:
Market demand. “Things changing in the market that’s going to impact the demand of your product or service.”
Competition. “Are there new players out there that you’re having to go head to head with that maybe you weren’t having to go head to head with before?”
Pricing pressure and supply chain, including tariffs for manufacturers.
Talent. Whether you can get “the right butts in seats” at every level to do the work.
Regulation and industry factors, which “might impede our progress or might create tailwinds.”
Ted adds a look-back on revenue misses: “Historically, have we missed revenue? Why have we missed revenue? Have we fixed that problem?” A target that ignores a known, unfixed cause of last year’s miss is built to miss again.
How do existing customers and pricing affect next year’s revenue?
Existing customers usually make up the largest and most predictable share of next year’s revenue, so retention and pricing should be settled before any new-business target is set. Ted puts the question directly: “Are we actually looking at our historical customers? Are we going to keep those, retain those customers that we have from a standpoint of what does it look like from pricing?”
Pricing cuts both ways. Cost increases, including tariffs, may force price changes that test customer loyalty. Ted adds that every CEO and leadership team should be watching tariff exposure. Then comes the expansion question: “What else do we have to offer the market?” New offerings to existing customers are often the cheapest growth available.
A financial lead who models retention, churn, and price sensitivity by customer segment makes this step much more reliable. That is a core part of what a fractional CFO does in planning season.
Is there a path to 25% growth?
Asking whether there is a path to a higher number is how you find out what would have to change. Clint frames it as a set of questions, not a demand: “Are there changes that you need to make in order to accomplish it? Is there a reason why you can only do 10 or 15%? Is there a path to 25%? What are the actions associated with that?”
The answer may be yes, with a new sales hire, a pricing change, or a new market. It may be no, and that is useful too, because you now know the limit is real. Either way, the target that comes out of the conversation has a plan attached. Ignoring the constraints that hold growth back is one of the common mistakes leaders make as their business grows.
How to set a revenue goal your team will defend
Pull the lagging indicators. Days to close, opportunity-to-close rate, and average deal size for the last 12 months.
Model the existing base. Project retention, churn, and pricing changes for current customers before adding any new business.
Run the pipeline math. Calculate how many opportunities the target requires and compare it with what marketing and sales have actually generated.
Score the headwinds and tailwinds. Adjust for demand, competition, pricing, talent, and regulation, and write down the assumption behind each.
Revisit last year’s misses. Confirm the causes are fixed or build the fix into the plan.
Test a stretch case. Ask what it would take to reach a higher number, such as 25%, and decide whether to fund those actions.
Get input from every leader. Ted warns that a CEO who decides “we’re going to hit number X without having input” is setting the team up to “fail right out of the gate.”
If your finance function cannot yet produce the data in step one, finance as a service can build that foundation.
Frequently asked questions
What is the difference between a revenue goal and a revenue forecast?
A revenue goal is the number your company commits to achieving, while a revenue forecast is the best current estimate of what will actually happen. A well-built goal starts from the forecast and adds only the growth that specific, funded initiatives can explain. When the goal sits far above the forecast with no initiatives behind it, the gap is the risk.
How do you break an annual sales goal into smaller targets?
Break an annual sales goal into smaller targets by working backward from pipeline math: the opportunities required, when they must open given your average days to close, and how many each rep or channel must generate. Spread the result by month, adjusted for seasonality, so your sales leader can see early whether the year is on pace.
Should salespeople help set their own sales goals?
Salespeople and sales leaders should give input on sales goals, but the final number belongs to the full leadership team. Front-line input surfaces pipeline realities a spreadsheet misses. Ted Stann of Boardroom Bullpen warns that a goal dictated by one person without input is “one way that you’re going to fail right out of the gate.”
Why do growth companies plateau even with a good strategy?
Growth companies often plateau because the revenue target is disconnected from the engine that produces revenue. The strategy may be sound, but if pipeline volume, conversion rates, customer retention, and talent cannot support the target, the plan falls behind early. Recurring misses with unfixed causes, and leaders who have not grown with the company, compound the stall.
Listen to the full episode
Clint and Ted also discuss how to pick the three to five priorities that make a plan executable and how to keep the plan current as the year unfolds.
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