I wondered that as well as I'm in the same situation, but then I wondered if it works as a target if it means we should be spending more on staff and reinvestment to grow even more? But that'd mean the %age gets even higher so.. maybe not ;-)
I also don't really understand why having a higher margin is useful in a declining business. It's either a lost cause or one should be reinvesting in reversing the growth problem, no..?
In a declining business, either you want to extract as much as possible before the market disappears, or you want to invest in turning the decline into growth.
Either can be valid answers. Consider a business that is in decline because the market it is serving is disappearing. In that case this guideline tells you that if you try to invest money into getting it back into growth, and you fail, then you should instead focus on minimizing cost and maximizing price to extract as much value as possible (to e.g. reinvest in another business).
Alternatively if you find investing more leads the growth rates to increase accordingly to keep matching this guideline, it indicates that you have untapped market potential that is worth exploiting in order to put you in a position to extract far higher earnings (in absolute terms) down the road.
You can reformulate it pretty much as: Invest in growth when growth is cheap, and extract profit when it is not.
Not necessarily. Might just be a shrinking target audience, but if you can keep a good margin there's no reason not to keep serving a non-growth market.
I also don't really understand why having a higher margin is useful in a declining business. It's either a lost cause or one should be reinvesting in reversing the growth problem, no..?