Is Profit Really More Important Than Growth?
There is a lot of conflicting information out there about running a successful business and knowing where to focus your efforts can be difficult, especially if you are founding a startup for the first time. There seems to be two main areas that people argue are the most important, profit and growth. Some business owners will argue that profit is key thing to focus on when you are running a business, whereas others claim that growth is a far more important. Though there are arguments that support both, experts do seem to be in favour of profit being more important. So, why is this?
Why is Profit More Important Than Business Growth?
There is no denying that both profitability and growth are important and necessary when it comes to surviving as a startup business. With such a competitive and saturated market, all businesses need to make a profit in order to operate. However, they also need to grow to guarantee long term success. Some business owners make the mistake of wanting to grow their business as quickly as possible, assuming that the bigger the business is, the more successful it will be. Though there is some logic to this, it doesn’t put enough weight on making a profit to begin with. Without a profit, you cannot keep up with the day to day costs or running a business. It brings with it the risk of early financial failure and investors backing out.
Profit comes after the running costs and overheads are deducted. It’s the money that goes into the bank and can be viewed as what the business has gained financially. It benefits owners, shareholders, investors and the business as a whole. Without profit, it’s very hard for a business to continue as there is no money to put back into the company. You can direct potential customers to Ultimate Banners to access marketing and advertising tools to ensure growth and profitability.
That’s not to say that growth isn’t important, it’s actually a very important part of any business. It’s just not quite as important as profit initially. When a business is first starting out, the focus should be on making a profit and having money in the bank. Once a profit is being made and there’s a budget for growth, growing the company is something that can be considered and different opportunities can be looked into. By growing a business you are increasing its market, boosting turnover and making it more profitable. Once a business is profitable, growth is the obvious next step. Whereas profit is the key to financial stability, growth is the key to holding a long term place in the market. They go hand in hand. A business that has a profit in place can work on growing and growing will bring in a bigger profit.