Tom O’Connor: “I’m a student, heading to a career as an ad copywriter. I try to increase my MBA-type knowledge of how business works, and I don’t understand the grow-or-die concept as it applies to companies. Sure, it makes sense for publicly traded ones that have to satisfy analysts’ desire for earnings growth, but beyond that, why? If I’m turning a profit, why does it matter whether or not I’m growing?”
If you’re not growing when the population is, I guess you’re sort of shrinking.
And if you’re not growing, then you’re:
- taking all the profits out of the business instead of reinvesting them (in which case you’re probably not keeping up with the competition in terms of new equipment and/or better ways of doing things); or else . . .
- reinvesting your profits at zero return (which doesn’t bode terribly well, either).
And if you’re not growing, it’s not too interesting or exciting for the sales team and management, so you’re not likely to attract or keep the young, bright go-getters – but your competition will. And those hungry go-getters will work hard and smart to win your customers over to the competition.
All that said, I’m sure there’s a place for the charming little guest house that has its fiercely loyal repeat clientele; that never expands; that never raises its rates, except perhaps to match inflation; and that provides a lovely living for the people who run it. But, with exceptions, there’s certainly something to the maxim.
Quote of the Day
It turns out that advancing equal opportunity and economic empowerment is both morally right and good economics, because discrimination, poverty and ignorance restrict growth, while investments in education, infrastructure and scientific and technological research increase it, creating more good jobs and new wealth for all of us.~Bill Clinton
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