Undoubtedly, finding growth points is crucial for business success. Many people talk about it, write articles, but few explain how to actually find these growth points. So let’s define what we consider to be a growth point for a business, and how to determine whether something qualifies as one.

Business growth is related to achieving target values of a key metric, which is usually profit but can also be revenue. Either way, we’re talking about money. 

Since our goal is money, growth points are those aspects of the business where applying effort leads to an increase in profits or, in other words, achieving the target value of the key metric. 

The simplest way to explain this is through unit economics, as it shows how business processes are connected to the money a company makes. The two basic formulas of unit economics — for contribution margin and gross profit — look like this: 

CM = UA × (CLTV × C1 — LTC)

CLTV = (AOV – COGS) × APC — 1sCOGS

Listing all the parameters in these formulas provides us with metrics that relate to specific business processes. These metrics, in turn, help calculate contribution margin, which is a key business metric. 

Growth Points 

A growth point is a business process where a small improvement leads to the greatest increase in the target metric, while the cost of improvement remains minimal. 

Sounds complicated? Let’s look at an example using ueCalc to calculate unit economics. Consider a business with the following metrics: UA = 15,000, C₁ = 1.57%, AOV = 1,400, COGS = 900, APC = 2, LTC = 13. 

We input these metrics into the Basic Unit Economics template and get a line of results. 

Next, we’ll find a growth point. Let’s say that improving the business process results in a multiple increase in the target metric, in this case, contribution margin. For example, we improve the purchase process, increasing conversion by three times. After adjusting the conversion rate to 4.71%, the contribution margin increases more than 12-fold. 

Given that the improvement costs are minimal, we have found a growth point for this business. 

How to Find Growth Points

Now that we understand what a growth point is, how do we find them in our business model? The process is simple: 

1. Open a unit economics template. 

2. Fill it in with your business metrics.

3. Use the "Bottleneck search" tool in ueCalc. 

4. Enter your target contribution margin and see which business processes contribute the most. 

By using unit economics, it's easy to identify growth points based on metric analysis.