The Real Reasons Short-Termism Is Profitable

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Listen to any entrepreneur and they will tell you that long-term profits trump everything else. Short-term money is good, but what’s the point if it isn’t going to around for you to grow your business and take it to the next level? Expand slowly and steadily and with the future in mind, and you’ll reap the rewards further down the line.

While this is true, the theory that short-term profits aren’t healthy is wrong. Short-termism has it’s advantages and can be a genuine money-maker if an entrepreneur uses the technique correctly.

Here are the reasons why.

Money For Marketing

Think of your marketing program as the machine that turns and brings money into the company. So, the cash that you put into it is the fuel, and, the more you stack it with, the hotter it will burn. Sure, you can devise a plan that isn’t as short-sighted and has long-term gains in the future. However, in the beginning, you need to bump your bottom line to prevent the business from filing for bankruptcy. Money from marketing is the answer, but only if you have enough of a cash injection to keep the fires burning for a year to eighteen months.

Morale And Rewards

Employees want to know that they are a ship that isn’t about to sink. Considering eight out of ten businesses fail within the first year, they are right to be nervous. One drawback of their nervousness, however, is the fact that it impacts morale in the workplace. As soon as it drops, productivity levels will fail and the company will lose more money. Short-termism is a perfect excuse for you to be transparent. “Look, people – the business is expanding!” is a sign that their worries are unfounded. When you use the cash to give them bonuses, they will forget all about their perceived problems.

Morality Consumerism

Consumers want to shop with brands that value their morals. Morality is pushing consumerism today, and you can use short-termism to enhance your reputation as HH Properties did. In conjunction with Peter Hall, the two transformed a property in Middlesbrough that the residents hated because it was an eyesore. Not only did they do the locals a favour, but they invested in the area too and raised awareness of their brands in the long-term. The art of flipping houses doesn’t have to be your thing – sponsoring an event for the community is as effective. As long as you add value, they’ll give you their loyalty.

Credit History

Your company’s credit history is as critical as any other area of the business. Without the ability to take out a loan, you won’t have the cash you need to fund your projects. And, short-term profits won’t cut it because you need a steady stream of money, usually from a bank. However, short-termism should ensure you continue to pay the bills on time and avoid building negative credit. Firms that only focus on long-term profits often suffer from harmful missed payments and late fees.

Have you been narrow-minded about short-termism? Do you see the potential benefits of it now?