Strategic Business Lesson –

CASH IS WHAT COUNTS

(Originally Posted 4/13/2021)

 

In my years at The Boston Consulting Group,

we showed that the “harvest” time for a business/industry

came in the late years of its life cycle as growth slowed

and demand growth of 1-2%/year could be accommodated

through productivity increases without requiring new capital expansion –

thus greatly reducing or eliminating “cash use” while improving “cash generation”.

 

So, this latter life cycle period is wonderful for “net cash generation”, making the market share leaders in the industry become “cash cow machines” with solid income and cash distribution opportunity. 

Recent history has shown this pattern to hold again, for the tobacco industry, and the pattern bodes well for  income-motivated investments in energy pipelines, as we have pointed out to Subscribers over the last three years. 

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