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What are Continuing Operations?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 04 December 2016
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Continuing operations are the business operations that a company intends to engage in for both the present and for the next several years. This is contrasted with the concept of discontinued operations, which are any type of business operations that the company supported in times past, but will not be continuing into the future. Continuing operations are understood to still have the potential to generate revenue and capture the attention of the consumer.

There are many companies that include both discontinued and continuing operations in their history. One example would be well-established business machine producers of the early to latter 20th century. In the earlier years, many of these companies offered lines of manual and electronic typewriters, as well as simple mimeograph machines. Over time, some of these selections were phased out as newer technology made the older equipment obsolete. Instead of producing typewriters and mimeograph machines, these same companies began to manufacture desktop computers, laptops, and high quality copy machines. Since computers and copy machines are projected to be with us for the foreseeable future, they can be said to be examples of continuing operations or products those companies will continue to produce and sell.

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Key to evaluating continuing operations is properly assessing the ongoing market potential for a given product. If it is determined there is still a market for a given product, even if that market is shrinking, the company may choose to continue manufacturing and selling the goods as long as there is a reasonable amount of profit generated. At the same time, the company is likely to begin a new product line that is aimed at an emerging need within the market place, often connected with a newer technology. This approach allows the company to continue to meet the demands of long time clients, both with the older goods and the newer products that are rapidly gaining attention.

The basic structure of continuing operations demands that a company sometimes change focus in order to remain a viable business entity. Companies that choose to ignore the principle of continuing operations and remained focused on products that are no longer desirable or obsolete often do not last for very long as the market for their products continues to shrink down to nothing.

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