Sustainable Growth Requires More than Just Cost Cutting

Under the pressure of a challenging economic climate, businesses are constantly looking for ways to improve profit margins. One tempting method often practiced is the institution of cost cutting policies. This strategy can have excellent short-term results, satisfying investors, but according to Geoffrey Rochwarger, chairman and CEO of IDT Energy, over the long haul this method of improving earnings cannot be sustained.

“For any business owner, the opportunity to cut costs is a constant obsession, and the slow economic recovery we’ve been dealing with just makes cost-cutting an increasingly urgent concern. 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,” explains Rochwarger.

In order to bring true value to a company with sustainable growth, businesses “need 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,” explains IDT Energy’s CEO.

Today’s marketplace is certainly challenging. Meeting that challenge with more than short-term solutions such as cost-cutting is essential for businesses intending to compete over the long-term. As Rochwarger puts it:

“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.”

About Jonathon Bowes

Jonathan Bowes started his career in banking. After a few years, he took courses in business and finance and worked his way up the corporate ladder. Today, while writing part-time for Business District, Bowes assists talented people to find jobs in the field of economics. Contact Bowes at Jonathon[at]businessdistrict.com