The choice between profits and growth

Starting your own company is stressful, and it is extremely confusing when you have got to decide on what your focus needs to be – growth or profits?

There has always been a tussle between profitability and growth. While profitability is extremely necessary for a company, it is growth that matters more. A startup is like a seed that you sow. It need to be taken care of. It needs to be watered on time, every day. It needs ample sunlight to help it grow. You will also have to take out the occasional weeds and the bad leaves for it to grow healthy. For it will bear fruit only after it has grown.

A startup needs to grow before it can show signs of returning profits.  Google, for the first 5 – 6 years, concentrated only on growth. They spent a lot of time in constantly improving their search engine. They then spent time in making various products that would help stream line the way people use the internet. In last year, Google earned about $6 billion from Youtube alone!

When Mark Zuckerberg started working on Facebook, he did not think about any revenue model or whether the company would be privately held or would he be starting an IPO. He had other people to think about it, but he never really bothered about the profits.

The result?

A product that earned about $2.33 billion in Q4 2013!

Such vast revenue does not come from concentrating only on the profits. In fact, if you do concentrate on the profits, you will be more worried about driving sales every quarter than the quality of your product/service.

If your offering is not the best, people will not accept it. If you have a product/service that will blow people’s minds away, then profits are bound to follow provided you concentrate on making your product/service the best in the market.

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Brilliance or team work?

Thomas Alva Edison had experimented about 1000 times before he could successfully make a light bulb. According to him, he did not fail, but only found out 999 ways of not making a light bulb!

He is just one of the many brilliant scientists who made their indelible mark. Be it Albert Einstein or Marie Curie – they all had one thing in common – they worked alone. And they produce the most brilliant results!

But that is not how companies run. A company’s aim is to survive and grow. Its aim is to serve its clients as best as it can. They have deliverables. And it requires the expertise of a whole bunch of people, working in tandem, to achieve the desired levels of excellence.

Why can’t you work alone?

Working in a team increases your efficiency
Team work goes a long way when you have big projects in hand. Doing everything yourself can have two effects, and both of them not good – you’ll not be able to finish the project on time, there’ll be an extra load on you, and as handling every aspect is not your strength, some parts may end up not being up to the mark. Hence, it would be wise to let other people handle various aspects which their expertise lies in. After all, it is about getting the work done on time, and not who gets the credit!

Improved relations
People for healthy relationships when they can depend on each other. When people work together, it gives them a chance to bond, to form relations that last. They also feel valued when their work is successful and appreciated. And since each member’s contribution is required, it leads to the generation of trust.

Play your strengths
Every project has parts. And one cannot be expected to be a pro at all. There would be a couple of aspects you would excel at, while you might have a general knowledge of a few. Similarly, your teammates might have the knowledge you lack. This is where you build a symbiotic relationship – each playing his/her strength.

A company does not want people who are the best, as that is usually accompanied with narcissism, a superiority complex, and a holier-than-thou attitude. It wants people who are ready to work with others, are ready to learn, and are not under the impression that they are always right.

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In an entrepreneur’s mind

Indians think that one cannot be an entrepreneur if they do not have the capital to invest. This was true till some years back. But now, with the burgeoning of so many venture capitalists who are ready to invest in a good idea that can bring about a change in the world, now all you need is a promising idea. Now, all entrepreneurs need is the resolve to start out on their own.

Being an entrepreneur is not a piece of cake. While you can see your company growing and your ideas taking shape, there can be extremely tough times. When my company was around two years old, we hit a rough patch. We were not getting enough projects. I had to pay my staff, and I did not have any source of income. Sleepless nights had become a regular affair at that time. Profits seemed a dream. I did not know where to get the money from.

In all this, my son had turned two. We had to enroll him in a school. The expenses increased, without any sign of them being replenished. I was running into debt, and the pile kept increasing. I had started doubting my choice of becoming an entrepreneur. What if I am not cut out for it? Did I make a wrong life – altering choice? For me, the answers to these questions were more painful because I had two people who depended on me – my wife and my son.

I started meeting other entrepreneurs, in the hope of finding some solution to my problems. Although I did not get any magic solution that would make my problems vanish, I did learn something important – all entrepreneurs have their demons. All might not have the same problems, but they are similar.

One guy committed suicide because his idea was not showing profits even after a couple of years. He could not sustain with the money provided by venture capitalists, and started picking up loans from various banks, without a thought about the interest rate. Once he could repay the bank, he took another loan from another bank to pay the first loan off. Thus started a vicious circle he could not get out of.

Throughout this difficult time, I had the constant, undulating support of my family. They gave me the support I needed, and without them, I would not have made it through the difficult times.

Difficult times do not last, even though they seem to go on forever. The fear of such circumstances should not stop you from pursuing your dream.

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