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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