Should you focus on growth or profit?

Expanding in 2018: Should you focus on growth or profit?

Share This Post

Share on facebook
Share on linkedin
Share on twitter
Share on email
Share on whatsapp

Note: sign up to our B2B Community here if you like this post.

Extra funding can be a huge boost for any small business with a burning desire to expand. But how should you spend an influx of cash? Should you go for growth or profit?

Scaling up can be a make-or-break moment. Perhaps your launch went well and now you’ve got some traction? With a well-designed core product or service, some encouraging financial figures, and a thriving customer base, you’ll be on your way to attracting a second round of investment. But should you focus additional funding on growth or profit?

It’s good to have a clear idea of whether you’ll use funding for growth or profit before you even start approaching investors.

 

Going giddy over growth

Broadly speaking, young business bosses usually look for growth because they need to get known, and are maybe challenging established players, if not industry assumptions. This is understandable.

However, focusing on growth does not mean the business model shouldn’t be profitable, or that the business should give its products or services away for the sake of reaching as many customers as possible.

There’s also the temptation to grow by starting to own more things and employing lots of salespeople and other staff on permanent contracts. Then you need a lease on a larger premises, heftier insurance, HR people, lots of IT and much more. This might feel good at first. But in reality, you’re narrowing your options for the future and increasing your liabilities.

It’s also possible to run into problems quickly. Without orders, you’ll be like an empty machine. With too many orders, the operations side of your business may feel overwhelmed and unable to keep up with the delivery of products or services.

 

Note: this post has been published as an article on Real Business, where you can find the full version. It was previously featured on The Guardian.

Sign up to our B2B Community here if you liked this post.

Recent Posts

More To Explore

Help! My business partner is from another planet
Entrepreneurship

Help! My business partner is from another planet

Note: Join our B2B Community here if you like this post.   It can feel like that sometimes. When companies are growing fast, pressures can bring personal