Mathematically, there are four ways a company can increase sales –
- volume
- price
- new products
- acquisition
Volume
- who is buying from the company? classify into groups that have common behavior.
- can each of the individual groups afford to buy at all? must they buy from co. or its peers to survive at all?
- if they will indeed buy (for whatever reason), why will they buy from the co. as opposed to peers?
Price
- cyclical?
- is the industry in oversupply/under-supply?
- are the industry prices inflationary or deflationary?
- how differentiated is the product?
- how concentrated is the buyer base?
- are there tariff or other constraints?
Does the business get even more sales as it scales?
- network effect
- brand effect
- owns assets that the company has a lock on, which comps can’t replicate (Waste Management)
Is the company’s product near a critical mass beyond which it will accelerate?
Is the company’s product itself driving the sales (substituting another product that already has significant sales), or does it need to wait for something else to kick in? (e.g. equipment supplier waiting for the demand of the end product)
Prasad Capital 