Turnover is vanity, profit is sanity

Whether you’re running a business or running the government, the age-old phrase ‘turnover is vanity, profit is sanity’ is more relevant than ever.

The inflationary impact on costs – materials, services, utilities, payroll – are still running high and this has been accelerated further by the recent budget impact on employers NI. Now, more than ever, is the time to focus on strategic direction, market focus, quality of revenue & margins, operational efficiency, people development and how best to use technology to drive scale and profitability. Too many businesses chase turnover at the expense of profits and cash and then run into cashflow problems through over-trading. The festive period is a great time for reflection and 2025 will definitely be a good time to focus on quality, not just quantity.

Exactly the same applies to the economy. Take Japan as a great example. Between 2010 and 2023, the Japanese population fell by 3% and in the same period their GDP growth was just  9%, less than half the UK’s growth rate and one third that of Australia or Canada. Before you draw the wrong conclusion, take a look at GDP per capita and the story is completely different. In the same period Japan’s GDP per capita rose by 13%, higher than the UK and Canada, similar to high performing Australia and better than any of France, Spain or Italy.  

The key message here is that the focus on productivity and efficiency is more important than a single focus on growth if you want to improve profitability, value for money and living standards. It works for your business, your employees, your shareholders and for the economy at large. 

Here at SWG Advisory, we’re experienced in strategic, market & commercial focus, operational efficiency through technology and building & realising long term shareholder value. If you’re needing support, get in touch today.