Do you want to grow or be profitable? There’s often a debate about which answer is best and whether this is a false choice. For any given company, the right answer can change many times.
Suster, Mark. “Should Startups Focus on Profitability or Not?” Both Sides of the Table. Blog Post, 27 December 2011.
Wilson, Fred. “Profits vs. Growth.” Blog post. AVC, 25 June 2015.
“The Slow Growth Advantage: How This Food Truck Turned Overnight Fame Into Long-Term Profit” The Growth Show. Podcast, 22 January 2014. Minutes 14:44-15:31
Wasserman, Noam. "Rich versus King: The Entrepreneur's Dilemma." Harvard Business School (2006) Academy Best Paper Proceedings, 2006. Web.
“Which is more important for any company: revenue growth or profit?” Discussion Forum. Quora, 28 January 2015.
“Choosing a Growth Strategy” - Scaling Your Company with Scale Venture Partners Rory O’Driscoll and Kate Mitchell
“Understanding Your Economic Model” - Scaling Your Company with Scale Venture Partners Rory O’Driscoll and Kate Mitchell
Questions for You
What is my vision for the company’s growth?
How does this vision relate to the company’s current growth? If the two are not aligned, what needs to change?
What is a realistic timeline for my growth strategy?
What are the financial implications of my growth strategy?
Questions for Your Team
What metrics and ratios must we be aware of in order to align our financial resources with our growth strategies?
How much can the company afford to lose in profits in order to ramp up scaling efforts?
How high does the gross margin have to be in order to offset losses and become profitable?
Tools and Exercises
Calculate your CAC and your LTV for the current business model. Decipher what your LTV/CAC ratio needs to be for your growth plans to be worthwhile.