It happens to smaller businesses, too. A competent, well-connected credit manager formed a company. From the moment, the doors opened, it was a runaway success. For four years, there was continual growth. More employees were added and the office space doubled. Then things slowed and some months later there was an actual plateau. Finally, volume began to slide. "I couldn't figure out what was going on," said the president. "Everything was so good for so long. Every month set a new record. Then it all began to change."

At first, the owner thought it was a "minor glitch" on the screen. "We had been doing so well, I thought we were just slowing down a bit." When the downward slide continued, he called in a marketing consultant.

The analysis revealed that the success of the business was due mainly to his excellent networking over many years as a credit and collections manager for a large company. They fueled his success. Then the fabric began to unravel as some of these helpful associates took new jobs and their replacements had their own vendors. Others retired and a number of businesses merged, while several excellent accounts closed their doors.

What happened was clear: the collection company ran out of what can be called "goodwill capital." It used up its long-time relationships. Once they were gone, the company was "bankrupt" and didn't know it.
The marketing consultant also discovered that with the immediate influx of business at the beginning and the quick growth, the company had never marketed itself. "Frankly, we didn't even think about it," said the president. "Besides, we didn't need it. We had more business than we could handle for a long time"

The scenario with an insurance group is a little different, but the results were the same. The company formed to supply products and services to its members. Within a short time, it recruited a substantial number of agencies around the country and became profitable. Then, the new member supply line dried up. Even though what the group offered its member was considered outstanding by everyone who heard about it, recruiting new participants slowed to a halt. As hard as management tried, few signed on.

The experience of the networking firm was quite different. It took nearly 20 years for sales to hit the wall. After enjoying years of growth, sales slowed and then almost stopped over a 12-month period. In spite of glowing customer satisfaction reports, new customers were few and far between. "I've tried to stand back and assess what happened," reported the CEO. "I can't figure it out" While the insurance group and the networking firm are different situations, they both followed the collection firm's scenario. The insurance agency buying group was made of members of the same trade association who were not part of other buying groups. Once the unaffiliated members were tapped out, sales stopped.

The networking company enjoyed a long run, nearly two decades, before the sales lagged. First they slowed, then leveled off and, finally, began declining. Like the collection company, neither the insurance agency group nor the networking company felt a need to market themselves in terms of differentiating themselves from the competition and building a brand image. All three firmly believed they were good at what they did. As the chairman of the insurance agency group said, "No one comes close to what we can offer our members." Each of these companies was experiencing a predictable phenomenon: The Killer Curve.

In most cases it appears to be a Bell Curve. There''s a period of growth (a) sometimes slow but many times quite rapid that is generally driven by "goodwill capital." This is followed by slower growth [b] that is often "explained" by changes in the market, the entrance of new competitors, or both. "We had done so well so fast," reported the collection company CEO, "we just thought it was a temporary situation" So did the owner of the networking company.
The next phase is sales stagnation, a time when business plateaus [c]. This leveling off is often viewed with some concern but is generally seen as a "temporary" situation.

Finally, the curve turns downward [d] in terms of sales or profitability. Once decline sets in, it is often difficult for companies to take the steps necessary to solve the problems, mainly because they have difficulty identifying them. There are a number of relevant implications that can be learned from The Killer Curve scenario. Here are several possibilities:

In itself, entrepreneurial drive isn't enough to sustain a business. It has only been recently that corporate America seems to have discovered the value of entrepreneur ship, and is now encouraging it. But in the cases cited above, the drive, talent, and experience required to start an enterprise was not enough to keep it going. While this is often pointed out, entrepreneurs may believe themselves to be the exception to the rule.

"There's a tendency to be seduced by the "growth." Without an understanding of what is fueling sales, there's a tendency to believe that the "magic formula" has been discovered. Even the AOLs of the world realize that free Internet access is here. Preoccupation with growth can serve to mask what lies ahead. There seems to be a failure to recognize what drives initial growth, whether it's "goodwill capital" earned by company founders, a relationship with a particular manufacturer, or partnering with an organization that feeds sales. Short-term thinking becomes long-term strategy. An organization armed with more than $300 million in cash to acquire certain regional companies across the U.S. was so focused on making sales that it failed to develop a strategy for integrating the various units. The short term was so appealing and exciting that management neglected "the next phase."

There's no marketing strategy. In each of the case histories, there was no marketing plan. More precisely, there was a lack of understanding of the role of marketing. It seemed that the entrepreneurial attitude dominated the organizations to the point that their total emphasis was on "making sales." There was no recognition of a need to create a brand identity that differentiates the company and establishes in the customer's mind the benefits of doing business with one particular firm. This appears to be the "blind spot."

A failure to factor in change. In the early 1980s, a typewriter service company was the largest in the Northeast with service contracts on 25,000 machines. Rather than seeing themselves in the service business, the company had built its identity on typewriters. Attempts to transition into other office machines failed because the customers picture of the company was indelible. Amazon.com avoided becoming equated in the customer's mind with "books." It is the companies ability to deliver extraordinary service that gives it its brand identity. It can sell music, electronic equipment and just about anything else. It has built change into its identity.

Do some businesses beat The Killer Curve? Undoubtedly. But why take unnecessary chances? The Killer Curve is a dramatic portrayal of both success and failure. There are many times when a rising growth curve is the right time to sell. Snapple is a good example. As soon as the company was sold to corporate America, sales slumped.

It isn't just start-ups that fall victim to The Killer Curve. Companies that have been in business for decades can experience its effects:
Companies that have "more business than we can handle." They assume the sales curve will go up forever.
Companies that rely on acquisitions, either of salespeople with a book of business or competitors. The infusion of "new business" often masks a lack of "real" sales growth.

Is there an inevitably to The Killer Curve? Only if marketing is missing from the entrepreneurial plan. Leave marketing out and chances are the killer will strike.