Is Profit the Most Important Factor for a New Business?

For a new business, there are many very important factors, profit arguably being the most important. Profit is the financial gain that a business makes after total costs are deducted from total revenue. The business gets to keep this financial gain as a reward for their success.

Profit is an extremely important factor for a new business. One reason for this is due to the fact that providers of finance to the business will be greatly influenced by the profits that the business has made and they may even decide whether they will provide finance to the business purely on if the business has sufficient profits or not. Additionally, the amount of profits a business has may be able to prove to the providers of finance such as banks if they are able to pay debts efficiently or not. Another reason that profit is an extremely important factor a new business is because profits can be used as a source of finance. This is called retained profits and is a very useful internal source of finance for a business. Retained profits can be used very efficiently and doesn’t require any money to be paid back. Some people may argue that because of this reason profits are the most important factor as new businesses need sources of finance to survive and this is a good option.

On the other hand, saying that profit is the most important factor for a new business may be exaggerated. For a business of any kind it’s extremely important for a business to make sure they survive. If a business does not specifically set this as their goal then they have a likely chance to fail and therefore not make any profits whatsoever. If a business makes their prices too high in the hopes to make bigger profits then they may not make enough revenue in order to pay off their costs and therefore fail. Many people and businesses will argue that survival is the most important factor for a business and feel that profits are not as important as this. A second reason against the idea