DEFINITION of 'Lucrative'

Lucrative means to produce wealth. To be lucrative means that an item or idea can create a large volume of income. The term lucrative is generally used to describe something with the potential to make money. The potential revenue source can include anything from collecting coins, creating a new invention or idea, or a person. Lucrative can be used in both past and present tenses. If used in present terms there is no guarantee that a particular idea with be a profitable venture, but if used in the past tense it signifies that the idea has been proven to produce wealth.

BREAKING DOWN 'Lucrative'

For example, an analyst may suggest that a stock is highly lucrative. What the analyst is suggesting is that this stock has the potential to be profitable. People can suggest that the stock market is a lucrative place to make money, but it is also a place where large amounts of money can be lost. People will always have their own interpretation of whether an idea or item is lucrative.

Ways of Becoming Lucrative

Lucrative can be used to describe individual or organizational efforts to produce profit on a short or long-term basis. Lucrativeness is more associated with the net earnings rather than gross revenue. An individual may want to pursue a lucrative career or want to launch a business, for instance, that provides a positive return on investment. Their occupation or venture might have the potential for high revenue generation. There may be additional costs, risks, and other forms of exposure related to that occupation that reduce the lucrativeness of that position. For example, a business owner may need to procure a variety of insurance coverage for themselves and the company in case of workplace accidents, product liability, or employee-related matters.

Compliance with regulatory requirements, such as disclosing material information on a consistent basis or adhering to operational guidelines, can incur additional costs that further reduce the lucrativeness of a business. For example, heavy industry may have to clean up waste material produced by their operations.

The path to achieving lucrativeness can be complex. For instance, a startup company might raise capital through numerous funding rounds. The investors and the founders alike will need the company to pursue strategies that maximize the operating revenue and earnings, as well as create the potential for profitable returns for the investors. If the company were to sell to a buyer who offered less than the overall investment that was made into the company, plus its debts, the deal would not be considered lucrative.

RELATED TERMS
  1. Startup Capital

    Startup capital is money required to launch a new business, whether ...
  2. Venture Capital

    Venture Capital is money provided by investors to startup firms ...
  3. Exit Strategy

    An exit strategy is the method by which a venture capitalist ...
  4. Mutually Exclusive

    Mutually exclusive is a statistical term used to describe a situation ...
  5. Opportunity Cost

    Opportunity cost is a benefit missed when an investor, individual ...
  6. Down Round

    A down round is a round of financing where investors purchase ...
Related Articles
  1. Trading

    Active Traders Are Turning Bullish on Financials

    The financials industry is often considered one of the most stable segments for investment. Is now the time to buy these ETFs that track the financials?
  2. Trading

    3 Sectors to Watch in 2017 (XLF, XLI)

    By analyzing the charts of sector-related exchange-traded funds, three stand out as prime candidates for watch lists in 2017.
  3. Investing

    Best 5 Small Business Ideas You Can Start From Home (EBAY)

    Understand what a small business is and how small businesses are classified. Learn about five small business ideas that you can start from home.
  4. Trading

    When in Doubt, Buy Precious Metals

    The recent pullback in precious metals has pushed prices toward major levels of support, generating lucrative risk-to-reward ratios.
  5. Small Business

    Risks Associated With Government Contracts

    Government contracts can be rewarding, but they also come with a variety of risks.
  6. Personal Finance

    Good Debt Vs. Bad Debt

    Is there really such a thing as good debt and bad debt? Read on to find out.
  7. Personal Finance

    Sizing Up a Career as a Ratings Analyst

    This ratings analyst field is lucrative, but do you have what it takes to score this job?
  8. Trading

    How to Trade the Uptrend in Aerospace and Defense

    Nearby support on the charts of these aerospace and defense stocks suggests that now could be the ideal time to buy.
  9. Financial Advisor

    Targeting the Ideal Client for Your Practice

    Expand your definition of a lucrative client and uncover a new demographic for building your book of business.
RELATED FAQS
  1. What is the difference between the equity method and the proportional consolidation ...

    Discover the differences between the equity method and the proportional consolidation method of joint venture accounting, ... Read Answer >>
  2. How do returns on private equity investments compare to returns on other types of ...

    Learn how private equity performance compares with other alternative investment asset classes and traditional types of investment ... Read Answer >>
  3. Is it more important for a company to lower costs or increase revenue?

    Examine the question of whether a company's desire for increased profitability is better served by focusing on cutting costs ... Read Answer >>
  4. Is operating profit the same as net income?

    Understand the difference between operating profit and net income, including how each type relates to the other and how both ... Read Answer >>
Trading Center