PROFITABILITY OR GROWTH: The Million-Dollar Question for New Entrepreneurs

What should you weigh heavier: profitability or growth? All the entrepreneurs who have recently established their businesses, find it toughest to decide what to prioritise: grow and flourish their business or simply start making money.

Some think of prioritising growth while some incline more towards profitability. While both approaches are correct, each has its benefits and drawbacks. Let's first try to understand the meaning of both terms and then try to analyse which approach suits you best.

What is Growth?

Business growth simply means a stage where the business reaches the point of expansion and seeks additional options to gain more profit. The expansion makes the company bigger, increases its market and ultimately helps to earn profits. Some indicators like the overall revenue, market share, number of employees, and turnover help in evaluating the growth.

When You Keep The Growth First:

It opens the door to obtaining follow-up funding from current shareholders of the company

As the focus is on growth, the company attracts media attention

Getting a necessary head-start on the market share from the competitors

Demerits of Putting Growth First

This may lead to a negative perception from the public if rigorous steps are required to earn profits

May face the consequences of failing to meet big growth targets

A constant fear of running out of funds

What is Profitability?