Why Revenue Growth is not always the key to Success

In this Latest Era of startups and extremely intense competition among them, The Race has come down to acquiring more customers as soon as possible, The obsession with customer and revenue growth has grown so much that CAC have gone through the roof.

The Cash Burn rate is the highest and constant losses seem to be no big deal, Here are a few points about why you should not be extremely concentrated on growing the revenue at the expense of constant burn.

1.Growth Can Wait, Survival Cannot:

Growth is important, but only till the point where it does not hamper your survival. There is nothing wrong with raising the prices of your goods or services if it makes you live to fight another day. Discounts/offers, No of users, YoY growth, None of really matters if your business collapses and you go bankrupt. So even if you have to slow the revenue growth to survive, It’s far more important and viable to do that.

2.Bootstrapping of Business:

Aggressive Revenue Growth is usually done with heavy expenses incurred on marketing and/or higher fixed investments along with heavy discounts/offers given to customers to attract them, Of course all of this requires abundance of funds and considering that startups are already extremely tight in funds, It’s almost impossible to bootstrap the business and raise no funds whatsoever. Don’t take me wrong, it’s not at all bad to use leverage and take on debt, but of course there are risks involved with it. And if you prefer having your business bootstrapped. This is something you should take care of.

3.Importance of Free Cash Flow (FCF): Free Cash Flow is like gas for a business, More FCF there is in a business, More Longevity there is in a business. There are different ways to generate it, Either through profitability or through raising of capital either through debt or through equity dilution. But there’s only so much equity that a business can dilute and only so much debt that can be raised without destroying the balance sheet. Hence the most lasting way of generating FCF is through profitability, Even if it means slowing the revenue growth in terms of CAC.

P.S: This is my first attempt at writing, Apologies for any mistakes :)

I’d also love to know any improvements or new ideas I can implement, Would love to connect in the comments:) If you liked my writing, I’d really appreciate if you could react with a like.

Disclaimer: This is just my opinion and is not any sort of financial advice, Kindly act at your own discretion.