Companies that bet on the long term earn +47%

I recently wrote an article reflecting on the eternal dilemma about managing a company’s short and long term , or what is the same as deciding to focus efforts on generating short-term sales and the strategy that leads us to refocus the company and achieve greater benefits . I just found a 2017 study carried out between Mckinsey and FCLT Global in which they analyzed the results of American companies between 2001 and 2014, in which the main result observed is that companies that focus on the long term outperform its competitors in almost all important financial metrics (revenue, profits, economic profit, market value, etc.). Companies focused on the long term obtain 47% more income than the rest

Why do companies bet on the short term if it makes them earn less?

But the reality is different. We see day after day how companies prioritize short-term results (focus on sales) and leave aside medium and long-term projects, due to lack of time, budget, etc. But, as we see from the results of the study, the paradox is that: Those who bet on the short term are achieving exactly the opposite effect to what they are category email list looking for. That is, they are betting on short sales so as not to sacrifice the company’s turnover and profit, and what they are doing is sacrificing +47% and +36% respectively. And we can see this with data from another study by FCLT Global , it shows us that 71% of company executives and directors would cut non-essential expenses (in our case: advertising, marketing, etc.), so as not to compromise annual profits. , and 55% would delay projects .

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Companies focused on the long term obtain 47% more income than the rest

If we look at the graph with the main results of the study , we see Phone Database how in the period studied (2001-2014), including the 2007-2009 crisis, the differences in the main financial indicators are spectacular: +47% in income. +36% in profits. +81% in economic benefit (EBITDA). +58% in market capitalization. But we also see that they generated 12,000 more jobs . If we applied these ratios to the US economy, its GDP would have totaled 1 trillion dollars (1 trillion in European numbers), and 5 million additional jobs would have been generated. Obviously we are talking about estimates, but the results are, at least, something to stop and think about, right?

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