Measure the Growth Rate of Your Market
Spend some time determining what the growth rate of your market is and evaluate other markets to find one that’s growing. With this information, you can make sure you’re focused on growth opportunities.
At any point in time, a minority of markets are growing rapidly. However, most markets are growing at a slow pace, and some markets are shrinking. Knowing how quickly or slowly your market is growing is vital because it’s a key driver of your sales growth and profits.
Take a moment to evaluate the current growth rate and future growth potential of your market. If it’s not fast enough, then find a new and faster market to target.
Your market ought to be experiencing at least 5 percent overall annual growth (although my preference is for a 10 percent or better growth rate). Anything slower than 5 percent makes it hard to grow your own business.
To assess your market’s growth potential, think of one or several simple indicators of your market’s overall growth rate and use them to gauge market growth. These indicators include the year-to-year trend in industry-wide sales, the trend in number of customers, and the trend in type and size of purchases per customer. If you find that the market is shrinking or static, then you need to look for a growth opportunity.
Sometimes, finding a direct measure of your market’s size and growth rate is difficult. For example, if you sell office equipment and furniture in the greater Chicago area, your market is the dollar value of all office furniture purchased in that area.
Can you find out what that figure is? Not very easily, if at all, so you need to find indirect indicators of your market’s growth rate that you can use instead. Statistics on business employment in Chicago are useful because as business employment grows, so does the need for furniture.
If corporate headquarters are leaving the downtown area or laying off workers, then you can assume that the overall market for office furniture is shrinking.