Growth versus profitability. This is a challenging balancing act for many new business owners. Both are necessary for the success and longevity of any business. But which is more important?
Profit is the primary goal of any business venture. Without it, no business can survive for a significant amount of time. And it’s through growth that a business can reach profitability. Growth is expansion. It’s about making a company bigger, increasing its revenue, entering new markets, and fostering more relationships to promote profitability.
So, should a new company prioritize growth or profitability? The answer is: Both. Investors want to see growth potential to determine the value of a business. However, plenty of business owners still put profits before expansion. After all, money in the bank means a company doesn’t need to give up control and make itself accountable to investors. Yet, companies with impressive profits still need to explore growth opportunities in order to survive long-term. After all, no business attracts more competition than a successful one.
Every business owner wants both profitability and growth, which is an ideal goal because growth and profitability aren’t mutually exclusive. On the contrary, both are often necessary to build a truly successful company. A business needs profits for short-term survival and growth for its long-term success.
Prioritizing profit and growth may seem like an impossible balancing act, but sound financial guidance will help. If you’re unsure which path needs to be a priority now, reach out to the professionals at Boris Benic and Associates.