October 23, 2017

Hillstrom's Optimizer: Heavy Five Year Investment

Here's our base case.

Then we invested heavily in radio/television for a year, and the trajectory of the business changed.

What happens if we invest heavily for five consecutive years?

Look at the top line, look at total sales ... this business is growing ... it's going somewhere!

The business isn't terribly profitable ... we give up twelve million dollars of profit over five years, but we get growth in exchange for what we give up.

Business is all about choices. Businesses that grow tend to have one of three things working in their favor.
  1. They have increasing merchandise productivity, and that funds growth.
  2. They have a low-cost / no-cost customer acquisition program that fuels growth.
  3. They reinvest profit, and that funds growth.
If we want to get out of a tepid growth pattern, we'll have to pick a different path. We could reinvest profit, but then that means somebody doesn't get paid.

P.S.:  Low-Cost / No-Cost customer acquisition programs appeal to you? Create sheep with personalities!! (click here).

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