3 Reasons why you should focus on Business Growth rather than Profitability
Profitability and Business Growth are different aspects yet very inter-related terms. Many investors aim for profitability in the long run and think about business growth later. The typical mindset of an investor makes them carry out the solitary profitability route unlike a prudent decision maker. There seems to be no potential threat in following the narrow way but the organization will have to certainly go through a rough sledding eventually.
The ideal relationship between profitability and business growth can be established only when a foreman understand that profitability is necessary but not quintessential for the sustainability of a business.
Therefore, managers are advised to stop aiming exclusively for profitability and mull over the overall business development. The following points will make the stance comprehendible.
Dynamic Environment: The time has changed ever since. In this day and age, managers need to think ahead of their time. The competition is neck and neck. If a business continues to adopt a retrograde approach and maintains the supremacy and importance of profitability above everything else, the firms are certain to get routed. The companies that are stick to their core products are most unlikely to understand market changes and new opportunities. Kodak can be exemplified. Only one of the 30 original firms that constituted the Dow Jones Industrial Average is still alive and kicking.
Customer- Centric Environment: The markets are changing very swiftly. The managers should think about the customer friendly products even if it tends to increase the cost of making. The business could possibly grow manifold times if taken a customer developing approach. It will eventually pay off the firm in form of good returns.
They need to work seamlessly towards customer satisfaction.
Social responsibility: Working towards fulfilling the social responsibility helps in reconciling. Unfair, fraudulent practices to increase short term profits will lead the firm nowhere. So, it should be an obligation to follow the customary.
Developing a Holistic approach is the key to business growth and profitability eventually. Managers need to have multidisciplinary perspectives. They should listen to the market, absorb and improve ideas to keep learning.
Business growth is altogether a broader term and encompasses the factor that necessitates healthy profit developing schemes. With business growth, value and strength of a firm is increased. In a nutshell, firms should go for business development and growth as it will help in protecting the rootstocks. Profitability at length will follow.