6 Business Model Growth Methods
Sustainable year over year growth is a continuous challenge for all management teams who are seeking to expand their business.
Business expansion is tied to the market model you select both for your current success and future expansion and its correct alignment with one of the four growth cycles your firm currently resides in (start-up stage, growth stage, mature stage, and decline stage).
One method to manage this process of aligning growth with your business cycle is a “Growth Scorecard.” Like other scorecards, the Growth Scorecard links customers, financial metrics, learning and growth, and employees to your business goals.
At Value Forward Group, we have studied sales and marketing models of over 1,000 firms during the last 19 years and have identified 6 primary models for business growth and 14 secondary models that can be deployed to increase corporate revenue. Each of these models have both positive and negative attributes that have to be managed. Additionally, each one of the primary approaches can be applied to more than one product or service within the same company using a best practices approach to benchmark your success.
The selection and implementation of the method you select is a strategic decision that requires an analytical approach to balance both current cash-flow needs and future corporate goals.
The key to growing your firm is aligning the business growth method you select with your firm’s current business life cycle. Often firms do not correctly match their growth method with the right business life cycle and then wonder why they are not maintaining year over year sustainable growth.
Market Growth Options
- Market Duplication. This model focuses on paralleling your product/service pricing, features, and business offerings based on your direct competitor’s business model (e.g., UPS and DHL).
- Market Variation. This model is based on the competition’s model, but adjusts it to visibly offer prospects some improvement in product, feature, price or distribution model (e.g., Oracle, SalesForce.com).
- Market Symbiotic Attachment. This model is used by firms whose revenue stream is connected directly to the success or failure of other vendors (e.g., IBM Partners, Microsoft Partners).
- Market Consolidation. This model uses a growth process where vendors buy-up or roll-up revenue by buying other companies and their market share without using internal organic growth techniques (e.g., funeral business).
- Market Innovation. This growth strategy takes market variation a step further. Instead of a singular market variation, this model creates a new market paradigm (e.g., Amazon.com, Uber).
- Market Entrepreneurial Launch. This model of growth happens when firms use market gap analysis and identify new opportunities where market demand is greater than supply (e.g., GoTo/Overture PPC).
It is common for some IT products and services to have several growth options connected to them, but generally, based on our research, there is usually one dominant business growth attribute that has secondary influences in how the firm deploys its growth model.
Each one of these 6 growth options can be used to increase your firm’s revenue as a whole or a targeted product or service. Understanding the strengths of your current business assets (i.e., human capital, intellectual capital, strategic partnerships, brand perception by targeted prospects, etc.), affects your ability to manage the selected growth strategy correctly.
The key to growth is finding the intersection of your company’s product or service life cycle with your business growth cycle.
When these two business cycles intersect correctly, companies grow. When these two cycles run in opposing positions, company sales become stagnant or decrease.
What business model are you using to grow?
Does it match your current offering life cycle and your company business growth cycle?
If not, you may soon be trying to sell red shoes to blue shoe buyers.