Move guide
Prove the market and your growth
Your report suggested a move on at least one of these two questions:
- whether your segments are growing, provably, and by how much;
- whether you outgrow your market, organically and like for like.
This move guide builds the market's growth from its drivers, from sources a buyer can check. Then it splits your own growth four ways and sets it against the market.
1. When it applies
Use this move guide if your report placed either question at "Red flag" or "Doubtful".
| Question | Where it may sit today | Where this move guide aims |
|---|---|---|
| Are the segments we play in growing, provably, and by how much? | Red flag: "Our segments are flat or shrinking, and we know it." Doubtful: "We quote whole-market growth; our actual segments grow below GDP." |
Supported: "We can show our segments growing above GDP on driver-based evidence a bidder's advisers would accept (2–3 points more in good years if we are cyclical)." |
| Do we outgrow our market (organically and on a like-for-like basis)? | Red flag: "Our like-for-like share is drifting to competitors, and we reach customers only through channels that can delist or disintermediate us." Doubtful: "We grow with the market, can't separate organic from acquired growth, and our route to new customers is whatever it has always been." |
Supported: "Organic, like-for-like share gains evidenced over several years, through a route to market that reaches the right customers." |
If both already sit at "Supported" or higher, skip this move guide.
"Are the segments we play in growing" is a warning question on the seller check. A low answer on it moves the report's verdict toward "Slow down".
2. What to do
Five steps. They take six to eight weeks.
- Build a driver-based model of each segment you sell into, from sources a buyer can check. Compare its growth with GDP. Table A below records it.
- Stop quoting the trade association's number. Put your model beside it and explain the gap.
- Split three years of your growth into organic, acquired, price and volume.
- Show like-for-like share against each segment's growth. Positive growth can still be lost share.
- Map how you reach new customers, and who controls the channel.
3. What to produce
One table.
Table A. The segment market model
| Segment | Its drivers | Source for each driver | Growth a year (%) | Against GDP | Our growth like for like (%) |
|---|---|---|---|---|---|
A segment with no source in the third column is an opinion.
4. A worked example
Illustrative. Written for this move guide. It describes no client.
A commercial laundry business serves hospitals, aged-care homes and hotels.
The market.
- The owners had quoted an industry report's growth figure. The model built it instead from beds, rooms, occupancy and the share sent out to a laundry.
- Hospital and aged-care demand grew faster than GDP. Hotel demand grew more slowly.
The growth.
- Three years of growth split into a small acquisition, price rises and organic volume.
- Organic volume in aged care grew faster than its segment. In hotels it grew more slowly, so share fell there.
Eight weeks on.
- 3 segments modelled from their drivers
- 4 parts of growth: organic, acquired, price, volume
- 1 segment where share was falling, now named
On a retake, both questions could be answered at "Supported".
What it looked like in our work
From our own work. Figures changed.
For a business software vendor preparing a sale, our due diligence built its market's growth from three drivers. Each driver had its own sources, and the market's growth is the three multiplied.
| Driver | What moves it |
|---|---|
| Turnover of the businesses it can serve | The economy in the regions served, and the share of turnover from businesses of the right size and kind |
| Share of their sales made online | Online ordering replacing phone and email orders |
| Software spend as a share of online sales | More features bought, and regular price rises |
A buyer can check each driver against its own source, instead of trusting one market figure.
5. Effort and dependencies
- Chief financial officerBuilds the market model and the growth split, with an analyst.
- Sales or marketing leadSupplies the segment and channel views.
- Chief executiveSigns off which segments matter.
What you need
- The buyer map from knowing who buys and why.
- Revenue by segment, customer and price for the last three years.
How long
- Six to eight weeks.
What gets in the way. We have seen these in our own work:
- A bigger, slower market. For a branded food maker, the independent market model came out bigger and slower than the vendor's. The vendor's claimed outperformance shrank by a third.
- Growth that was lost share. A contact-centre business grew every year for five years, and lost share every year, because its market grew faster.
6. How will you know it worked?
The test is whether a buyer's adviser could rebuild your market figure from your sources. Retake the check when the model and the growth split are written. Each of these should be true when you answer:
| Question | You can answer Supported when | A document alone does not count if |
|---|---|---|
| Whether your segments are growing | Your segments grow above GDP on driver-based evidence a buyer's advisers would accept. | The figure comes from one industry report. |
| Whether you outgrow your market | Organic, like-for-like share gains are shown over several years, through a route to market that reaches the right customers. | Growth is shown in total, with acquisitions and price mixed in. |
The worked example is illustrative.
Think we've used your work without proper credit? Tell us and we'll fix it.