Growth Strategies

Squint if You Have To

To maintain current profitability, companies must find new growth opportunities.
Matt SurkaFebruary 1, 2012

What does an embattled, post-downturn company do when it looks up and sees distressingly few growth prospects? It puts on its rosiest-tinted glasses and looks again.

A recent study of 184 senior finance executives conducted by CFO Research Services in conjunction with IBM suggests that companies face a grow-or-die imperative. As markets continue to flounder, identifying new growth opportunities will be key to maintaining profitability over the next two years, say survey respondents.

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After cutting to the bone during the downturn, many companies have all but exhausted cost-control as a means of protecting the bottom line. Fully half of senior finance executives agree strongly that cost reduction will not be sufficient to maintain profitability over the next two years, and an additional 30% agree to at least some extent.

At the same time, an overwhelming majority (83%) say that it will be more difficult to maintain profitability now than it was the last time the economy began to rebound. Companies have little choice but to pursue growth — even if it means taking on unprecedented levels of operating and financial risk.

Fortunately, senior finance executives appear to be optimistic about growth opportunities. But to what extent that optimism reflects an actual easing of pressures, versus being fabricated out of necessity, is an open question.