Profitable Growth: Why It Matters

Profitable Growth: Why It Matters

Even if you are ventured-backed, delivering profitable growth is the right long-term objective for every company and leader with P&L management responsibility. Profitable growth means both profitability and growth are jointly achieved. To achieve profitable growth, organizations must do two things. First, they must create products and services that customers want and value (and will pay for). Second, they must do it more productively than the competition. Thus, profitable growth requires leaders to manage both revenue and expenses to margin targets.

Why does profitable growth matter? Free cash flow gives companies options to improve their balance sheet, invest in new products and services, etc. Rapid growth – a good thing in early stage companies – often hides mediocrity and operational weakness because performance is perceived strong. Over the long-term, implementing and reinforcing control, discipline and process into your business practices ensures the right deals, decisions and investments are made. In the end, if you are not growing profitably, what are you doing? You are going out of business.

All contents copyright © 2013, Josh Lowry. All rights reserved.

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