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Is your company trendy? The answer could affect your financial growth

by , 19 September 2014
Do you consider your industry trendy? For example, health food stores have become a big trend as the movement towards a healthier life continues.

This is great for initial growth as the trend factor can bring in a lot of business. But there's also a down side as it could mean your company only has a short life span.

Either way, it'll have a massive affect on your company's financial growth.

Read on to discover how, so you can account for it in your financial planning...

 

Here's how the trend factor could negatively impact your financial growth

 
Trends tend to pick up a lot of speed in the beginning. For example, in South Africa there's this new found craze around Craft Beer. Even though this industry existed a year ago, it didn't have the same kind of popularity it does now. 
 
The problem comes in where trendy industries, such as this one, start to lose their popularity. When this happens financial growth slows right down or even stops.
 
And that's why, if your business is trendy, you must consider how sustainable your current financial growth actually is. 
 
Here are some things you can look at to determine if your business is in a trendy industry.
 
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Consider these five things to determine if your business is trendy

 
1. Did you experience a sudden financial growth spurt?
2. Are there suddenly other businesses like yours springing up?
3. Is your product suddenly very popular?
4. Was it as popular the same time a year ago?
5. Is there sudden interest from outside investors?
 
Your answers to these questions will help you identify the trend factor in your company's financial growth. You then need to consider how long this trend may last. Consider:
 
- How long have similar trends lasted?
- Is there a sustainable area in the market for this product?
- Are you seeing any levelling out in your growth?
 
If the trend becomes a stable part of the market, it's great news for your business. If it dies away, however, it'll drastically affect your company's financial growth so account for this in your financial plan. 


PS: We strongly recommend you check out the Practical Accountancy Loose Leaf service.  It will show you how to improve your cash flow, eliminate simple accounting mistakes, analyse your financial statements, identify errors, slash your audit fees and eliminate fraud in your company.
 

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