A growth case is where the next dollar of revenue comes from — and whether that dollar is good revenue. The split is price, volume, mix, then existing customers vs new, then existing products vs new. It is not “more marketing,” and it is not a profitability case (there, profit fell and you isolate a driver). Here the CEO wants +$X revenue (or a growth rate) and you must not destroy contribution to get it.
Do not name a growth framework. Say the split and which branch you will test first.
A growth tree that does not leak
| Branch | Meaning | Ugly version of this branch |
|---|---|---|
| Price | $/unit on a constant basket | Discounting that buys volume |
| Volume | More of the same basket | Filling the channel, then returns |
| Mix | Shift to higher- or lower-price SKUs / customers | “Growth” that is just more cheap SKUs |
| New | New logos, new SKUs, new geos | New that is really a launch or Ansoff bet |
Existing vs new customers is the other cut: net revenue retention vs new logo. If NRR is 92%, pouring gasoline on acquisition is a leaky bucket.
If the prompt is a portfolio of businesses, you may be in growth-share (allocate capital). This page is one commercial P&L.
Worked example: PE portco distributor
Prompt. Harbor also owns Midland Supply, a MRO distributor (bearings, hose, safety). Revenue $240m, growth 1.2%, PE wants 6%. EBITDA margin 8.4% and must not fall. Three ideas on the whiteboard: 4% list increase, hire 12 hunters, add a private-label glove line.
Start with the identity. Last year $237m → $240m. +$3m. Where?
| Component | $m | Comment |
|---|---|---|
| Price (realized) | +$6.1 | List +2.5%, but net after rebates +1.8% |
| Volume (same SKU set) | −$4.4 | Lost 2 large plants |
| Mix | +$0.8 | Slightly more safety SKUs |
| New SKUs | +$0.5 | Negligible |
| Net | +$3.0 |
So “we grew 1.2%” is price covering volume loss. Hunters without a retention story repeat the −$4.4m.
Idea 1 — 4% list. Elasticity on MRO is not grocery. Large plants bid. Last +2.5% list became +1.8% realized. A 4% list might realize ~2.5% if rebates widen. +2.5% × $240m = +$6.0m. Volume risk: if the two plants that left were price-sensitive, another 4% list without a service story loses more. Contribution margin on this book ~22% variable (the rest is branch cost). +$6m revenue × 22% = +$1.3m EBITDA if volume holds. If volume −2% from the hike: revenue −$4.8m + $6.0m = +$1.2m, EBITDA ~flat. List is not a 6% growth plan. It is a maybe-margin plan.
Idea 2 — 12 hunters. Fully loaded $110k. $1.3m opex. New logo productivity in this industry: $0.9m revenue / hunter / year at maturity, year-1 half. Year-1 revenue +$5.4m. At 22% variable minus $1.3m opex: −$0.1m EBITDA in year 1, +$1.1m at maturity if the $4.4m leak stops. NRR is 94% (the volume hole). Hunters at 6% growth target while 6% of the book walks is a treadmill. Fix on-site vending and fill-rate (why the two plants left) before 12 hunters.
Idea 3 — private-label gloves. Glove category $18m, 7.5% of sales, 19% contribution vs 28% on bearings. Private label could add 4 points of margin on gloves or steal $ from better SKUs. If 30% of glove $ switches and you gain 4 points: 0.3 × 18m × 4% = $0.22m EBITDA. Revenue might even fall if price is lower. Does not get you to 6% revenue. Wrong KPI.
Where 6% could come from. $240m × 6% = $14.4m. Retention: if you stop the $4.4m leak, you are +$4.4m vs the trajectory (that is volume on existing). Price realize +1.5% more without extra rebate leakage: +$3.6m. Share of wallet at the 40 branches’ top 20 accounts (not 12 random hunters): +$6m is a documented MRO pattern when fill-rate goes 92% → 97%. That path hits ~$14m and protects margin (fill-rate is a cost of inventory, not 12 salaries in year 1 — capex/working capital, which PE must fund).
Recommendation. Do not hire 12 hunters as the growth strategy. Do not expect private-label gloves to print 6%. Put the 6% on stop the leak + fill-rate wallet share + modest realized price. Hunters in year 2 if NRR ≥ 98%. Risk: inventory for fill-rate blows cash conversion — model working capital for the PE IC. That is a growth case with good revenue.
When a growth tree is the wrong tool
Profit fell. Isolate on the profitability page. Growth ideas are how candidates avoid the driver.
The growth is a new country. Entry.
The growth is four boxes of newness. Ansoff.
The mistake unique to growth cases
Buying revenue with contribution. 12 hunters can print year-1 sales and flat EBITDA, which is a fail if the constraint was margin. The unique fail is revenue vanity. Always attach variable margin and extra opex.
Second: new logos while NRR is 94%. That is not a growth strategy. It is a hole.
How to open
“I will split last year’s +$3m into price, volume, mix, and new SKUs — it looks like price covering lost volume — then I will only keep growth ideas that close the leak and protect 22% contribution.”
Then kill gloves and year-1 hunters. Then fill-rate.
Grow the good dollars
Structure a growth prompt by killing vanity revenue. Keep contribution on the page.