Wednesday, November 06, 2013 3:32:18 PM
I think they're in the kind of growth phase where opportunities to grow abound, limited only by available cash and the time and energy of employees.
With VivaVuva being launched soon, all energy and extra cash is going into that right now. If they have a profit, it just means they didn't need all that extra cash to get VivaVuva going, and they were limited more by their own time.
But once VivaVuva is running smoothly, they should put excess cash into one of many opportunities they have to drive growth:
* More adwords and online advertising.
* More sophisticated Search Engine Optimization
* More people working on promotional events, social media. etc.
* More TV and radio ads, professionally done with expert help.
* More brick-and-mortar World of Leggings stores
* The creation of brick-and-mortar VivaVuva stores.
Most of these things will give a big return on investment early, then eventually give a diminishing return. I think profits should go into a little bit of each, with measurements to see what's giving the best returns, with follow-on profits going more into those things, until they reach diminishing returns.
But the point is, right now there are so many growth opportunities, that they shouldn't be aiming to have much profit. Keep the profit minimal by pouring cash into growth drivers, until incremental spending on growth no longer pays off well, in which case, let profits grow. We're probably many years from reaching that point.
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