Business Growth
How to Use the BCG Matrix (Template, Example, and Steps)
How to use the BCG matrix (the growth-share matrix) for a small business: what stars, cash cows, question marks, and dogs mean, how to measure market growth and relative market share, a step-by-step process, a template, a worked example, the limits of the model, and a Claude workflow for building your own matrix.
Founder, AI Tools and Training Club · November 12, 2026 · 8 min read
The short version
- The BCG matrix, also called the growth-share matrix, sorts your products or services into four boxes using two questions: how fast is the market growing, and how strong is your position in it compared with your biggest competitor?
- The four boxes are stars (high growth, high share), cash cows (low growth, high share), question marks (high growth, low share), and dogs (low growth, low share). Each one points to a different move: invest, harvest, decide, or exit.
- For a small business, the real value is not the chart. It is the decision it forces: which offer gets your next dollar and your next hour, and which one you stop propping up.
How do you use the BCG matrix?
To use the BCG matrix, list every product, service, or offer you sell. For each one, estimate how fast its market is growing and how big your share is compared with the largest competitor in that market. Plot each offer on a two by two grid, with market growth on the vertical axis and relative market share on the horizontal axis. Then read the box each offer lands in: invest in stars, use cash cows to fund growth, make a clear call on each question mark, and fix or exit the dogs.
My strong opinion: most small business owners already know which of their offers are dogs. They keep them because they once worked, because a few loyal customers ask for them, or because cutting them feels like admitting a mistake. The BCG matrix is useful because it makes that conversation impossible to avoid. Put the numbers on one page and the offer that eats your time without growing becomes obvious.
What are the four quadrants of the BCG matrix?
| Quadrant | Market growth | Your relative share | What it usually means | Default move |
|---|---|---|---|---|
| Star | High | High | You lead in a market that is still growing. It earns money but needs reinvestment to keep its lead. | Invest to protect and grow the lead |
| Cash cow | Low | High | You lead in a mature market. It brings in more cash than it needs. | Keep it efficient and use the surplus to fund stars and question marks |
| Question mark | High | Low | The market is growing but you are a small player. It needs cash and may or may not win. | Decide: invest hard to make it a star, or drop it |
| Dog | Low | Low | A weak position in a slow market. It often roughly breaks even and soaks up attention. | Fix it with a clear plan, reposition it, or exit |
The four BCG matrix quadrants and the default move for each
Question marks are sometimes called problem children, and dogs are sometimes called pets. The labels change, the logic does not.
How to use the BCG matrix step by step
- List your offers. Each product line, service package, or revenue stream gets its own row. Keep offers that serve different markets separate, even if they feel related.
- Define the market for each one. Be specific. "Bookkeeping" is too broad. "Monthly bookkeeping for local restaurants" is a market you can actually estimate.
- Estimate market growth. For each market, estimate the yearly growth rate and note the source.
- Estimate relative market share. Name the largest competitor in each market and estimate your share divided by theirs.
- Add revenue and profit. Note each offer's yearly revenue and rough profit margin. On the chart, size each dot by revenue so you can see what actually pays the bills.
- Plot and label. Draw the grid, place each offer, and write the quadrant name next to it.
- Decide one move per offer. Invest, harvest, decide, or exit. Write the move, the owner, and the date you will review it.
BCG matrix template
Copy this structure into a spreadsheet. One row per offer is enough.
| Column | What to write |
|---|---|
| Offer | The product, service, or revenue stream |
| Market | Who buys it and where, described narrowly |
| Market growth per year | Your estimate, plus where it came from |
| Largest competitor | The name of the biggest player in that market |
| Relative market share | Your share divided by theirs |
| Yearly revenue and margin | What it brings in and roughly what it keeps |
| Quadrant | Star, cash cow, question mark, or dog |
| Move | Invest, harvest, decide, or exit, with an owner and a review date |
BCG matrix template (one row per offer)
BCG matrix example for a small business
Here is an illustrative example for a made-up marketing agency with four offers. All numbers are invented to show the method.
| Offer | Market growth | Relative share | Quadrant | Move |
|---|---|---|---|---|
| Local SEO retainers for dentists | 4% a year | 1.5 (the local leader) | Cash cow | Keep delivery lean and use the profit to fund the AI service |
| AI chatbot setup for clinics | 25% a year | 1.2 | Star | Hire a second builder and publish case studies to hold the lead |
| Short-form video editing | 20% a year | 0.2 | Question mark | Run one 90-day test with a clear target, then invest or drop |
| Printed brochure design | Shrinking | 0.3 | Dog | Stop selling it to new clients and refer the work to a partner |
Illustrative BCG matrix for a small marketing agency (invented numbers)
The decision this agency needed was not obvious until the offers were side by side. The SEO retainers felt boring, but they fund everything else. The brochure work felt safe, but it was taking design hours away from the chatbot service that is actually growing.
Limitations of the BCG matrix
- It is a snapshot. It shows one moment in time. Markets move, so redo it at least once a year.
- It uses only two factors. Growth and share leave out profit margin, customer fit, your skills, and how much you enjoy the work. Check each move against those before acting.
- Market definition changes everything. Define a market broadly and you look tiny. Define it narrowly and you look like the leader. Pick the definition your customers would recognize.
- A dog is not always worthless. A low-growth offer can still bring customers in the door who then buy your stars. Check what each offer leads to before you cut it.
- Milking a cash cow too hard can kill it. Starving your most dependable offer of attention invites a competitor to take it.
How the BCG matrix fits with other strategy tools
- To pick where to grow next: once you know which offers deserve investment, use How to Use the Ansoff Matrix (Template, Example, and Steps) to choose the growth move for each one.
- To check the market itself: a question mark in a brutal market may never become a star. Run How to Do a Porter's Five Forces Analysis (Template, Example, and Steps) before you invest.
- To see the whole business: pair the matrix with How to Write a SWOT Analysis for a Small Business (Template and Examples) so the decision reflects your strengths, not just the market.
- To act on the decisions: turn each invest or exit move into a quarterly goal with How to Set OKRs for a Small Business (Template, Examples, and Steps).
How to build a BCG matrix with Claude
Claude is useful here as a structured thinking partner that will not get attached to any of your offers. Open the Claude desktop app and work through it in passes.
- Paste in your list of offers with revenue and margin, and ask Claude to help you write a narrow market definition for each one.
- Ask it what evidence you could gather to estimate market growth and your largest competitor for each market. Collect the evidence yourself, then paste it back in.
- Ask it to place each offer in a quadrant and explain why, showing the share and growth numbers it used.
- Ask it to argue against cutting each dog and against investing in each question mark. Keep a decision only if it survives the argument.
- Ask it to turn your final decisions into a one-page plan with an owner and review date for each move. Check every number yourself before you act on it.
Frequently asked questions
What is the BCG matrix?
The BCG matrix, also called the growth-share matrix, is a two by two grid that sorts a company's products or services by market growth rate and relative market share. The four quadrants are stars, cash cows, question marks, and dogs.
How do you calculate relative market share for the BCG matrix?
Divide your market share by the market share of your largest competitor. A result above 1.0 means you lead the market. A result below 1.0 means a competitor is bigger than you.
What counts as high market growth in the BCG matrix?
A commonly used cut-off is about 10% a year. In markets where growth is generally slow, many businesses set a lower line so the matrix still separates their offers in a useful way.
What should you do with a dog in the BCG matrix?
Usually fix it with a clear plan, reposition it, or exit. Before cutting it, check whether it brings in customers who go on to buy your stronger offers.
Can a small business use the BCG matrix?
Yes. A small business can apply it to its service packages or product lines using honest estimates instead of exact market data. The value is in forcing a clear decision about where to invest time and money.