What is more important….market share or profits?

This is a question that every entrepreneur should ponder.  How you answer this question could determine the faith of your small business.

The bottom line is market share and profits are important.  An entrepreneur should be focused on both market share and profits.  Hence, the question becomes which do you prioritize.  Do you focusing on market share first then profits 2^nd or do you focus on profits first then market share 2^nd.

Market share is important and should not be ignored.  Having a greater share of the market enables you to drive away competition and use your large share of the market as leverage to better price your product to achieve profitability.  When you have a larger share of the market you don’t have to spend as much on branding your business.  Your customers will play a big role in branding your business for you.  Also, when you already have a large market share that gives you a huge audience to introduce your next product to.  It gives you a significant advantage to grow your business.

Achieving profitability is crucial for small businesses and businesses in their startup phase because of limited resources and the lack of funding.  Achieving positive cash flow and profitability is essential.  In order to fight for a greater market share your business has to be able to survive for a long time to compete with competitors already in the market and fighting for the same market share.  Hence, for a small business or startup it makes sense to pursue profitability first.

So in conclusion, assess your situation and determine which one is best for your business.  If you’re well funded and market share is critical to growing the business, then pursue market share first.  If you have a limited amount of cash to keep the business afloat then pursue profitability first.