Which is preferable – Revenue or Profit?

If you ask an Entrepreneur whether he/she would prefer growth in Revenues or Profits, the answer would probably be – both.

However both might not be possible for Entrepreneurs in growing companies. Depending upon the stage of growth of a company, there is a potential for a Catch-22 situation. If I have profits, I can have internally generated cash to invest in growing the top line. Or, if I had more Revenues, I would be able to squeeze out more profits due to certain economies of scale.

Choices have to be made at different stages of growth as to whether Revenue or Profit is more important to focus on. These choices would most probably change over time.

However, have you ever thought about what is better in the long-term – growth in Revenues or Profits? You might be surprised by your quandary!

Ravi Patel

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