According to Rochwarger, businesses today often have lower revenue and higher earnings. Though this combination is often met with investor enthusiasm, it is hardly sustainable and eventually collapses.
Rochwarger says: “While cutting any unnecessary cost is good for a business, long term, sustainable value creation depends on constantly renewing and demonstrating a business’s value to existing and potential customers.”
“Managers must evolve their business plans to meet customers’ changing needs,” he continues. “Every business, if it wants to grow, needs to identify how customers’ behaviors change and how this creates new markets- large and niche- that are as yet untapped. This goes for companies large and small.”
A business must identify ways to leverage the customers’ needs to produce new flows of revenue. This can be done by offering more services, adjusting existing services, or fine-tuning pricing tiers in a way that benefits the customers while boosting the company’s earnings potential.
Geoff Rochwarger concludes: “The new economic environment has made margins thinner, competition stronger, and profitability more difficult- but by leveraging your existing intellectual capital, you can identify new opportunities, create value, and bring new products to new niche markets faster and more successfully.”