What is MoM Growth

MoM Growth Imagine you’re growing a sunflower. You don’t just plant the seed and come back in six months. You check it every few weeks. You measure how much taller it got since last month. Did it grow 2 inches? 5 inches? Did it not grow at all? That regular check-up is exactly what MoM is for a business.

MoM stands for Month-over-Month. It’s one of the simplest and most powerful ways to see if your business is healthy, growing, or needs help. It answers a very basic question: “How did we do this month compared to last month?”

Part 1: MoM Explained – It’s Just a Comparison!

Let’s break it down with a lemonade stand, our favorite business example.

• In June, you made $100 selling lemonade.

• In July, you made $130.

Your brain already wants to compare, right? You made more in July. MoM growth is just putting a number on that feeling.

How to Calculate MoM Growth:
It’s a simple three-step recipe:

1. Find the Change: Subtract Last Month from This Month.

   This Month (July) – Last Month (June) = Change
   $130 – $100 = +$30

2. Divide by Last Month: Take that Change and divide it by Last Month’s number.

   Change / Last Month = Growth Rate (in decimal form)
   $30 / $100 = 0.30

3. Make it a Percentage: Multiply by 100.

   0.30 x 100 = 30%

Your MoM Growth for revenue from June to July is 30%.

It’s that simple. You can do this for almost anything you can count:

• MoM User Growth: 1,000 users last month, 1,200 this month = 20% growth.

• MoM Website Visitor Growth: 5,000 visits last month, 4,500 this month = -10% growth (a decline).

• MoM Cost Growth: Spent $50 on sugar last month, $60 this month = 20% growth (in cost, which you might want to reduce).

The Magic Word is “Over.” Month-over-Month. It’s always looking over its shoulder at the previous period to see the difference.

Part 2: Why is MoM Such a Superstar Metric? (The “Why” Behind the Math)

Knowing your MoM growth isn’t just about math homework. It’s a superpower for any business person, and here’s why:

1. It’s a Fast and Early Warning System.
Think of yearly check-ups (Year-over-Year, or YoY). If you only check your sunflower’s height once a year, you might miss a whole season of bad growth. MoM is like a weekly check. If your customer growth drops from +15% to +2% to -5% over three months, you see the trend immediately. It’s a red flag waving, telling you, “Hey, something’s wrong! Fix it now!” before it becomes a yearly disaster.

2. It Shows What’s Working (and What’s Not).
Let’s say you run a dog-walking app.

• In April, you do nothing special. You get 50 new users.

• In May, you start a “Refer a Friend” program. You get 80 new users.

• Your MoM User Growth for May is (80-50)/50 = 60%!

That huge spike is a direct signal: “The referral program works!” MoM helps you connect actions to results quickly, so you can do more of what works.

3. It’s Easy for Everyone to Understand.
Not everyone is a finance expert. Saying, “Our revenue grew 8% MoM” is much clearer and more immediate than saying, “Our quarterly run-rate has accelerated based on current trajectories.” It gets the team excited and aligned on progress.

4. It’s Essential for Startups and Fast-Moving Businesses.
For a new company, a year is an eternity. They need to learn and adapt every single month. MoM growth rates are the heartbeat of a startup. Investors look for “strong, consistent MoM growth” as a sign that a business is finding its customers and gaining momentum.

Part 3: A Real-World Example: “SnapPic,” A Photo App

Let’s follow a fictional company, SnapPic, for a quarter (3 months).

What can SnapPic learn?

• Trend: They are growing at a healthy, steady rate (~20-25% MoM). This is excellent.

• March Success: Growth actually increased from 20% to 25%. They should ask: “What did we do in February/March? More advertising? A new feature?” Then try to repeat it.

• Goal Setting: They can now set a realistic goal: “Let’s try to maintain at least 15% MoM growth next quarter.”

Now, imagine a bad scenario:

• Feb: 1,200 (+20%)

• Mar: 1,260 (+5%) ← Growth is slowing down sharply.

• Apr: 1,197 (-5%) ← Now we’re losing customers!

This MoM trend is a five-alarm fire. It forces the team to investigate now: Is there a bug? Did a competitor launch something better? Are customers unhappy?

Part 4: MoM’s Wise Older Sibling: YoY (Year-Over-Year)

MoM is fantastic, but it has one quirk: seasonality. Seasonality means regular, predictable ups and downs based on the time of year.

Think about:

• A retail store in December (Christmas sales are huge).

• A tax software company in March/April (everyone is filing taxes).

• A pool cleaning service in July (peak summer).

If the pool company compares July (high season) to June (also high season), MoM is useful. But if it compares December (no one wants their pool cleaned) to November, growth might look terrible, even if the business is perfectly healthy.

This is where you bring in YoY – Year-Over-Year.

• YoY asks: “How did we do this month compared to the same month last year?”

• Example: Retail Sales in December 2024 vs. Retail Sales in December 2023.

This smooths out seasonality. It tells you if you’re truly doing better than last year’s equivalent period. Great businesses track both: MoM for speed and momentum, and YoY for long-term, seasonally-adjusted health.

Part 5: How to Use MoM Growth Like a Pro (Actionable Tips)

1. Track the Right Things: Don’t just track revenue. Track MoM for:

   • Leading Indicators: New sign-ups, website traffic, leads. (These predict future revenue.)

   • Health Metrics: Active users, customer satisfaction score.

   • Costs: Marketing spend, cost per customer.

2. Look for Trends, Not Just One Number. One month of 50% growth might be a lucky fluke. Three months of 10%+ growth is a strong trend. Draw simple line graphs to see the trend.

3. Ask “Why?” for Every Spike and Dip. MoM gives you the “what.” Your job is to find the “why.” Did growth spike because of a holiday sale? Did it dip because your website was down for a day? Always investigate.

4. Set MoM Growth Goals. Instead of a vague “get more users,” set a specific goal: “Achieve 10% MoM user growth for Q3.” This makes the target clear for the whole team.

5. Beware of the “Small Number” Effect. If you start with 10 users and get 10 more, that’s 100% MoM growth! It’s huge, but it’s easier to get when you’re tiny. As you get bigger (1,000 users), adding 100 is only 10% growth. Understand the context of your starting size.

Conclusion: Your Monthly Check-Up

Think of MoM growth as the regular pulse check for your business.

• A strong, steady pulse (consistent positive MoM growth) means a healthy, growing business.

• A racing pulse (very high MoM) might mean a successful launch or viral moment.

• A slowing or weak pulse (low or negative MoM) is a clear signal to stop, diagnose, and fix problems.

It strips away all the complexity and asks the fundamental question: “Are we moving in the right direction, right now?”

By making MoM analysis a monthly habit—just like checking your sunflower’s progress—you take control. You stop guessing and start knowing. You celebrate the wins, learn from the dips, and build a business that grows not by accident, but because you are watching, learning, and improving every single month.