Why are growth numbers so important?

I just heard a segment on CNN news, running in the background on my TV while I write. They were talking about a business that is down because of the economy but will still expect to show double-digit growth.

Who cares how fast it grows? All businesses eventually saturate their market and show limited growth. The only measure of business health is profit. It is possible to have a stable, profitable business and not get much bigger.

True, you do have to look ahead since the market does change, your product or service may have to change, delivery methods may change, cost structures may change and you have to keep on top of all that while turning a profit.

The idea of constant growing sales comes from lazy financial monitors, mainly stock price followers, looking for a single simple measure of performance where the truth is much more complex. Those lazy people have infected the rest of the business community with their shorthand performance measure and that in turn has twisted management’s view and investor’s expectations to unrealistic levels.

I remember Apple’s stock price dropping because their profit was slightly smaller than some Wall Street analyst’s projections at the same time they returned over a billion with a B in profit. That was even up slightly over the year before, just not as much as the analyst expected (wanted?)

Unfortunately far to may companies are focused on what the stock market does and not on what their customers want and are willing to pay for. The customer buying products ultimately funds companies not stock sales.