Growth Rate – Company vs. Market

During a recent conversation with a prospective client, the client was telling me how proud he was that his company grew 10% YoY last year. When I asked him the next logical question (at least in my mind) ‘how much did the market grow?’, I got the “deer in the headlights” look….

So here’s a question for all my readers: is a positive company growth rate a good indicator of a healthy business? It is an indicator in as much as positive growth rate is typically (but not always) a prerequisite for a healthy business – but company growth rate alone is not enough to determine the health of your business. You’ve got to also know the Market growth rate during the same period.

Here’s an example of what I mean. I started my career working in the Semiconductor industry and I was lucky enough to witness the Internet Boom (1999-2001). Things were absolutely crazy during that period – the only price discussions we had were our customers asking us “how much over list do we have to pay to shorten the lead-time?”

During that period of time, if your business was growing 10% YoY, I hate to tell you, but- that was NOT a healthy business. You were likely losing market share even though you were growing (in other words, through the eyes of the market, you were shrinking).

One of the challenges with comparing the two is that your company growth rate can be simply determined by the numbers you already have – there’s no speculation. Market growth is another creature entirely – even if you pay thousands of dollars on a market report, depending on the reliability and availability of numbers, there’s likely still a crystal ball involved. The accuracy of a market report will be directly impacted by two major factors (though there are more for sure): 1) percentage of the overall market covered by private enterprises, 2) percentage of the market covered by large conglomerates (private companies don’t have to make their numbers available and the specific numbers you’re looking for may be hidden in a division of a conglomerate).

You may be asking yourself: this is marketing stuff, what does it have to do with sales? While I agree that this content is touching both areas, from a sales point of view, growth rate is one of the metrics most companies use to measure their success. So if you’re not considering market growth rate, you may be patting yourself on the back for a shrinking business.

The only thing worse than having a problem is having a problem you don’t even realize you have! Chicago Sales Strategies can help you find numerous ‘hidden’ problems you’re likely not aware of (and may not find on your own until it’s too late) – the first step is contacting us for a no-charge discovery session.

Until next time…..

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