Saturday, March 15, 2008

Business Volume is not all bad

Business volume and market share are important and valuable. Extra volume also helps us to spread the fixed costs. Volume also helps us in making a good sales pitch and creates confidence to approach big customers.

Business volume changes the way the world perceives your business. There is more acceptance and feel good environment. More people are hired to handle the extra volume. And the moral of the existing employees is high to see the company in the growing gear. You become a part of the preferred employer list for a lot of good talent, who earlier wouldn't even consider you worth sending their profile.

Its a feel-good environment everywhere, till the balance sheet is presented.

The bottom line still doesn't change why does high volume fail to translate in to high profits.

Why do businesses have to pay the price of shrinking margins when targeting more business volume or market share.

What can be the cause of increasing costs? More business should be more profits and the cost to profit ratio should remain the same, ideally. Converse is true though.

Real problem is not more volume but extra complexity.

1 comment:

Ariza said...

People should read this.