Running a business takes more than just turning a profit. In fact, an increase in sales doesn’t always translate to an increase in profits or revenue. That is why there are certain factors that businesses have to keep an eye on at all times. Learning to spot growths in these certain areas helps businesses flourish. Great businessmen, like CSX Corp Executive Clarence Gooden, have gotten to where they are today because they know the importance of watching growth.
Growth in Profits, Revenue and Sales
As mentioned above, an increase in sales doesn’t always mean an increase in profits or revenue. That is why sales growth is important but not the only area on which you should focus. For example, if your company puts its products on sale, you will see an increase in sales. However, because the units are being sold for cheaper, you may not see an increase in profit. This is why companies have to track sales, revenue and profits to determine profit margins.
Growth in Market Shares
Every company needs to keep track of its share of the marketplace, or its piece of the proverbially pie. This is information that companies might not notice right away if they are only tracking profits, revenues and sales. When a market expands, there is more competition, so it becomes harder for companies to retain their portions of the market. When more businesses enter an industry, each company gets a smaller piece of the market.
Growth in Consumer Base
A company is able to grow its market shares when it gains new customers. This can happen when new consumers enter the market or there is a shift from one service or product to another. To gain new customers and grow a consumer base, companies have to pay attention to growing trends. For example, there has been a growing trend pushing consumers from desktop computers to laptops. Businesses have to cater to this trend so that their consumer base grows.
Growth in Expenses
An increase in expenses means that companies are making lower profits. Once again, think about a company that has an increase in sales. This increase of sales, even if it isn’t because of a special sale, might not translate to profits if the company has growing expenses.
Paying attention to these growths can arm companies with the information they need to be successful. This is why businesses often hire one or more individuals who are tasked only with the job of tracking these individual figures.