Revenue vs Growth

 

Starting and owning a business can be exciting and terrifying for anyone. Profit, Revenue, Growth. Do these terms all mean the same thing? If not, what is there a difference? Yes, there is a difference, Profit, Revenue and Growth are not the same things.  To be successful and remain in business, both revenue and growth are important.

Revenue Focus:

Revenue focused business work to gain profits from revenue. This means “money in the bank”. One advantage of focusing on revenue is that it satisfies investors, however, a downside is that often businesses are short staffed and are slow to hire employees and train them. There is a balance especially with investors to put profitability before expansion. Businesses need to continually seek ways to improve.

As a business owner are you so tight-fisted that you don’t invest in marketing and growth? When you start a business, you need to be prepared that in the beginning there will be more dollars going out than coming in. A business owner needs to understand this and be able to select the market share demographics tics that make sense for the business to attract customers.

Growth Focus:

Growth focused businesses concentrate on expansion and experimentation. Identifying growth opportunities is important. This includes hiring employees, upgrade operations and increase marketing with the goal of expanding their customer base. They concentrate on customers now and monetization strategies later. Growth is crucial for companies in highly competitive industries and if you don’t invest in marketing dollars for expanding your market share then your competitors will draw customers away from you.

Customer Experience Focus:

A business cannot be successful in the long-term without earning both a profit and reinvesting some profit into growth. One contributor to Forbes.com said that a successful company cannot successfully focus on both growth and profits simultaneously. Growth will happen, but in order for more profits, you need to sell more products and services. For greater growth, you need to expand your operations and increase your marketing. The way to enable both profitability and growth coexist is that both are rooted in the customer benefit.  The customer benefit is creating the best customer experience, you can so that the customers become and remain loyal and tell everyone one they know about your business and their experience. This is the key to owning and running a successful business that will withstand the ups and downs of the fluctuating economy is to be sure that you create the best customer experience possible.

Regardless of how long you have been business you will cycle through these various focuses more than once throughout the lifetime of the business. There will be times when you will need more of a revenue focus, then other times you will have a growth focus. Today there is greater push for customer experience focus.

Cheryl Viola, Executive Director

Sources:

https://quickbooks.intuit.com/r/growing-your-business/revenue-vs-growth-new-business-focus/

https://exitpromise.com/earnings-growth-vs-revenue-growth/

https://www.investopedia.com/ask/answers/020415/what-more-important-business-profitability-or-growth.asp

https://www.forbes.com/sites/georgedeeb/2017/02/03/the-battle-between-driving-growth-or-profitability/#1c6095cb6135

https://www.amanet.org/articles/profitability-vs-growth-how-to-achieve-both/