Growth and sustained profitability

Why sustained profitability is important:

A wise man once said: "Long term profitability is a series of short term profits". Likewise, long term sustainable profitability is a series of short term, sustainable profits.

The warning signs of sustained profitability, include:

• Dependency on a core product, market or customer
• Management who are overly confident in their product or service and its ability to sustain margins and market leadership
• Culture of punishing and dealing with failure harshly, which will reduce innovation and risk taking in the organisation
• Onerous governance, measures and red tape, making innovation and change frustrating 
• No product development or research strategy, investment or activity

The impact of this:

• Future profitability will come under pressure as more competitors enter the market, eventually slow and decline
• Staff retention will become more difficult as staff are poached by competitors and leave for better opportunities
• No development, or loss of any entrepreneurial culture

How can you sustain, sustainable profitability?

Keep a focus on the market and emerging trends as well as a culture focused on innovation and sustainable profitability. Monitor customer numbers, behavior and feedback. Understand why new and departing customers are basing their decisions on. Focus a team on the products, services or customers that make you money and make sure you understand every change, request, requirement and defend this core from competitors and market shifts.

Encourage and reward innovation. Innovation can happen at many levels, from small tweaks to an existing process or product, through to large green fields projects for revolutionary new products. Foster innovation at all levels of the organisation.

Manage new ideas and projects through a process. Make sure account-abilities are allocated and followed up. Ensure there is a business case for each new idea and a return on investment. Allocate funds as if it were your own money.

Build a culture around sustainable profitability in all things the organization does.

Return and continue to read more on growth and the growth challenges faced by growing businesses.