The Importance of the "Sometimes Underestimated" Bottom Line

As business leaders and with our day to day operation, we have to keep eyes on the prize: growth, market share, new products, etc. But sometimes we put other initiatives over our most important health metric, the "bottom line". Although this term is not the correct financial term, it transmits the right message: Are we profitable as we are?. We are after all, a business.

I was speaking with a client earlier this week. He was telling me that the past year, there was no innovation, no new products, in other words, he had explicitly plateaued. Nevertheless, he mentioned what I believe is, the most important thing: He decided to focus on his bottom line. He decided to stop creating new products, growing more on diverse channels, in order to focus in house and what his profit margin was.

We have to understand that our margin, our profit, is our foundation and our future engine for growth.

We have to understand that our margin, our profit, is our foundation and our future engine for growth.

Not all business are apt for fundraising from PE or VC. And most businessmen won't want to. Why dilute when you can grow organically and maybe issue some debt without losing any equity or control of your company.

Focusing on a good margin is paramount for any future product development, new channel, etc. Being profitable should always be the first focus of any business. And as straightforward this might sound, it's not always remembered.