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Business Growth versus Business Profitability

Business and Enterprise

Business Growth versus Business Profitability

Small business owners are usually confronted with different dilemma. One of such dilemma is, having to choose between growth and profitability. While profit makes your business successful, growth signals a potential for longevity. 

Growth used to be the major focus of business in order to secure long-term survival. To this end, profits made were pumped back into the business. But in recent times, the focus begins to shift to the bottom line having realized that your strength for the now provides a strong basis for a growth that happens steadily. However, to stay strong in the face of stiff competition in the modern business environment, a balance of both is essential. 

Sometimes, balance does not mean creating an even point between both. As occasion demands, emphasis on one over the other may be necessary. What matters is to understand the situation at hand and what better addresses. 

On this note, here are some of the ways to establish a balance between growth and profitability:

  1. SET TARGETS: Setting of targets is an effective measure to give start-up a solid foundation to grow upon. For example, you can decide a minimum profit level that must be reached. When this target is exceeded, the additional profit may be invested in profit-focused ventures. 
  1. FREELANCING: When starting out, the need may arise for certain talents on a particular project. This may cause you to think of employing a new hand, until the project is completed and you realize you don’t need this talent on a consistent basis. So you keep paying salaries hoping a project in which such talent is needed will come soon. This affects profitability negatively and cripples the prospect for growth. But help is now a call away as freelancing is more prevalent than ever. Freelancers should be called upon for one-off project while full time staff serves regular aspect of the business. This way, you maintain your cash flow while facilitating growth. 
  2. LEVERAGE EXISTING CLIENTS: It is more difficult and costlier to acquire new clients than to keep the existing ones. Therefore, in order to simultaneously facilitate growth and build profitability, it helps to focus on your existing client base. Expand your business through them by creating new offers and service to expand your clientele
  3. STRATEGIC PARTNERSHIPS: Rather than trying to do it all alone, partner with businesses that offer complimentary services. This way, you are expanding your client-base through collaborations that se you serving clients that are not yours. 

In summary, knowing what to focus on between growth and profitability is important, but more important is striking a balance between both. 

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