Growth initiatives are often chosen with the heart, gut or intuition. But if that method no longer holds, here is a method that allows you to assess your growth opportunities in relation to their potential to hinder earnings and which at the same time gives you a realistic risk assessment.
I am starting from the fact that you in the company have already identified a number of potential growth-creating measures. In this first part of the model, you must assess the different growth opportunities in relation to market, revenue and their potential for a profit.
Evaluate each growth opportunity against the following six elements:
The results of this study are entered in the table below and assessed on a scale from 1-10. Where 1 is the lowest potential, 10 the highest:
| Growth opportunity | Current market demand | Potential for market growth | Degree of market differentiation | Profit potential | Market leader potential | Passion | Total Potential |
| (A) Geographical expansion in neighboring region |
4 | 5 | 4 | 4 | 3 | 7 | 27 |
| (B) Geographical expansion in neighboring town |
8 | 6 | 3 | 4 | 2 | 5 | 26 |
| (C) Develop a new product line |
9 | 8 | 6 | 8 | 9 | 10 | 50 |
| (D) Adapt current product to parent: Sub-segmentation |
9 | 9 | 8 | 9 | 9 | 8 | 52 |
| (E) New distribution system |
6 | 8 | 8 | 1 | 8 | 2 | 33 |
To examine the risk of each option, you assess the following elements:
Enter the results in the following table. 1 is high risk, 10 low:
| Growth opportunity | Served customers | Strategic and differentiated capabilities in the market | Product | Supplier and distribution chain | Geographic markets | Competitors | Total risk |
| (A) Geographical expansion in neighboring region |
6 | 7 | 7 | 6 | 3 | 7 | 36 |
| (B) Geographical expansion in neighboring town |
2 | 4 | 5 | 2 | 1 | 1 | 15 |
| (C) Develop a new product line |
9 | 2 | 4 | 8 | 8 | 5 | 31 |
| (D) Adapt current product to parent: Sub-segmentation |
5 | 7 | 4 | 4 | 8 | 3 | 31 |
| (E) New distribution system |
3 | 5 | 5 | 2 | 5 | 6 | 26 |
All results are now collected in the following table, which gives an overview of both market and profit potential as well as how high the risk of the various options is.
| Growth opportunity | Market and profit potential | Risk assessment | Total |
| (A) Geographical expansion in neighboring region |
27 | 36 | 63 |
| (B) Geographical expansion in neighboring town |
26 | 15 | 41 |
| (C) Develop a new product line |
50 | 40 | 90 |
| (D) Adapt current product to parent: Sub-segmentation |
52 | 31 | 83 |
| (E) New distribution system |
33 | 26 | 59 |
For a better overview, you can put the results into a matrix like this:
The creators of this method, Bill Liabotis and Donald Baer, emphasize the flexibility of the model. You can add and remove elements according to the needs of your business.
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