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Profitable growth: Is your business growing strongly?
Last week, I presented this reality to a group of CEOs during a session on profitable growth.
We reviewed a real business trend that looked very impressive on the surface.
Sales had grown nearly 7 times over a few years.
Naturally, the leadership team felt confident about the growth journey.
But when we examined profitability, the conversation took a different turn.
Net profit margin had declined from 23 per cent to 7 per cent.
In simple terms, earlier, every ₹1 crore of sales generated about ₹23 lakh of profit. Today, the same ₹1 crore generates only around ₹7 lakh.
Growth was clearly visible. Margin dilution had happened quietly.
From my experience working with many small & emerging businesses, this pattern is more common than most founders rarely realise.
Over time, continuous margin dilution usually brings:
*Higher dependence on volume
*Rising working capital intensity
*Increased operational complexity
*Reduced resilience during cost or demand shocks
This is where the leadership lens becomes critical.
Revenue growth creates excitement.
Profitable growth requires conscious design and discipline.
In the CEO forum, we reflected on a few areas where founders and leadership teams may need to re-examine periodically:
*Customer and order mix quality
*Cost and pricing discipline
*Product and SKU rationalisation
*Working capital rigour
*Operational effectiveness and delivery discipline
*Leadership review rhythm and focus
Profitable growth rarely happens by accident. Daily leadership decisions shape it.
A reflection for many founders & CEOs.
Is your business only growing in size or becoming stronger?
🙂