Business can feel very complex, but here’s a big concept that’s amazingly simple:
Every business on the planet can only find growth from one of four places.
That’s right, and here they are:
- HOLD – more repeat business from existing clients, for example increasing their purchase frequency or the amount they spend each time.
- DEEPEN – new business from existing clients ie upselling and cross-selling
- DISPLACE – winning new clients within your space ie beating (or buying) the competition
- PENETRATION – opening up new markets ie new territories or launching new products and services for a different target market
Given that every business must derive growth from these four areas and knowing you don’t have the resources to focus on all equally at the same time, it’s a very good idea to decide how to allocate your efforts for the next 12 months against each of the four.
This is as easy (or hard!) as allocating a percentage to each.
This can be done in two steps.
First, starting with the total revenue you are forecasting for the next 12 months, estimate the share of revenue coming from each source.
Then allocate a share of effort you and your team will apply to each source. This will probably differ from the share of revenue you allocated because, for example, your revenue from Holding (current clients) will probably require less effort than Deepening your relationship with clients, even if similar revenue growth is forecast for both initiatives. Similarly you would need to allocate significant effort to Penetrate a new market even if the revenue forecast from it is initially modest.
Let’s give it a try.
Over the next 12 months, where will your revenue come from? (allocate percentage):
Over the next 12 months, where will you direct your organisational efforts? (allocate percentage):
Please download your chart and compare it with those of your team-members. note If you haven’t looked at your business this way, you’ll find each other’s answer interesting no doubt.
If there’s no consensus, don’t worry, we’ll discuss it in your coming workshop!