4 ms·
I don't really agree. I can grow a business infinitely with ease, just have a model that says "you give me $1 and in return I'll give you $1.10", as long as yo
by raesene9 8y ago
I don't really agree. I can grow a business infinitely with ease, just have a model that says "you give me $1 and in return I'll give you $1.10", as long as you're handing out free money, growth is easy :)
Now this isn't quite as simple as that but growth without profit and without the prospect of profit isn't something any investor should be keen on.
Without profit the company will have to either take out loans (which require repayment with interest) or issue more capital (which dilutes current investors).
This can be fine in the initial growth stages of a business (you have a plan to start making a profit in the future), however for a 10+ year old business who's already floated their stock, it's not great to indefinitely prioritise turnover over profit.