FINANCE
unprofitably ), our focus has since the start been to ensure everything we do is viewed in the prism of ROE .
When a marketing campaign isn ’ t immediately profitable – in the sense of generating a direct , observable return through incremental sales and profitable acquisitions – then we have immediately stopped it . This has , at times , meant that we have seen our market share drop significantly – at one stage , we were “ only ” the seventh largest in our sector . But we had longterm goals in mind . We were willing to sacrifice market share and revenue in the short term to build a solid base , ensure profitability and solvency .
Inevitably , rationality prevails – and while the notion that the market can stay rational longer than you can remain solvent has merit – eventually , the strongest businesses will emerge victorious . This has happened time and again in the online space . Almost always , the winner has the best management , the best systems , the lowest cost base and the most competitive structure . Think Amazon , eBay , or Priceline . com .
Most businesses aren ’ t overnight successes – Henry Ford famously
‘ In our opinion , profit a back seat to return
failed several times before hitting on his profitable low-cost model . Spending the early years perfecting systems and developing competitive advantages is critical . At the same time , ensuring that the business is lean is a vital prerequisite to future growth . Once the building blocks are in place , you can take the next step .
16 July 2014