Business Studies – 1.5.1 Business objectives | e-Consult

A business might prioritize survival over profit in the short term for several key reasons. Firstly, new businesses often experience high start-up costs and may not generate sufficient revenue to be profitable immediately. Focusing on survival means ensuring the business remains operational and avoids closure. This involves managing cash flow effectively, controlling expenses, and securing enough sales to meet immediate obligations.

Secondly, in competitive markets, a business might initially accept lower profits to gain a foothold and establish a customer base. This 'loss leader' strategy can be crucial for long-term success. The business aims to build brand recognition and market share, anticipating higher profits later.

The consequences of focusing solely on profit in the initial stages can be severe. A business that prioritizes profit above all else might:

• Fail to invest in essential resources like marketing or product development.
• Neglect customer service, leading to a loss of customers.
• Operate with insufficient inventory, resulting in stockouts and lost sales.
• Damage its reputation, making it difficult to attract investment or partnerships.

Therefore, while profit is a crucial long-term objective, survival is often the immediate priority for new or struggling businesses. A balanced approach is essential for sustainable growth.