4 Reasons to Pay Attention to Business Growth
When businesses make announcements about their quarterly or annual performance, one of the first things that people in business circles do is look at their business growth. That is, they compare their numbers with the previous quarter’s or year’s figures. Those with more analytical minds use data going back even further. That way they can gauge how quickly a business is growing.
Paying attention to business growth is a must, whether it is on your own company, a rival or a company you want to invest in. For reasons such as future profitability and keeping an eye on the growth of wider economies, not looking at business growth could be a great mistake. Here are 4 reasons why you should.
1. Identifying Room for Improvement
If the most recent set of financial results yielded a loss or a dip in your company’s profits, try to work out why it happened. Look at which products and services performed below expectations of investors and directors. From there, identify where you can improve.
Should this part of the business prove impossible to make a profit from, consider closing it. At the very least, scale it down. That way, your business will be able to focus on its more successful products or services. You will remove a drag on its profitability.
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2. Monitoring New Investments
Looking at major infrastructure investments is a must. Many businesses’ individual fortunes depend on their success. Using the Belt and Road Initiative—which connects China, Singapore, Malaysia and Thailand—as an example, let’s look at the industries and companies that have the most to gain from the initiative.
In the case of Belt and Road, engineering and construction companies are among those best placed to profit. The construction of new roads and bridges will be needed, which will eventually equate to growth in profits, job opportunities and investments.
3. Moving into Foreign Markets
You can often accelerate your company’s business growth by making sensible investments in foreign markets. When you’re moving into a foreign market, however, you must pay attention to a number of different statistics. And the main thing you must pay attention to is the local currency.
A currency’s performance is usually a wider indicator of how the economy as a whole is doing. Looking at the foreign exchange markets can help you to determine how much money your business can expect to make from exporting goods.
The export markets in particular see their fortunes wane or thrive with the local currency. For example, a strengthening currency, that is, one that is increasing in value against others, could make exports more difficult to sell. On the other hand, a weakening currency, or one that is going in the opposite direction, could make exporting a little easier.
4. Checking out the Competition
For business owners, looking at a rival’s growth is really useful. Try to emulate whatever it is that your rival is doing well, so that you won’t be left lagging. Watching your competition can also alert you to changes in consumer behavior or demand, allowing you to more quickly adapt.
By using competitive analysis, you can have a better idea of how your rivals are doing. You will know what areas they are leading in and where, if at all, they are leaving any gaps. If one or more competitors are returning healthy profits, it also indicates that your industry as a whole is performing well.