Survival and growth

Survival means continuing to trade is the business's main priority in the short term. The aim is to keep cash coming in and cover essential costs, rather than to expand. To do this, a business may cut costs, reduce staff numbers or staff hours, reduce its product range, or leave a market where it is losing money. These actions cut spending or free up resources, which helps protect cash flow when demand is weak.

For example, a small bakery selling celebration cakes and bread might find orders fall after Christmas. It could stop making expensive celebration cakes for a few months, cut a part-time baker's hours and concentrate on bread and rolls. Sales are lower, but costs fall too, so it can keep trading until demand recovers.

Growth means the business aims to expand. It might target higher sales, a larger market share (a bigger share of the sales in its market), more output or selling in more markets, such as a second town. Growth usually needs investment, for example in equipment, staff or marketing, so the business may accept lower short-term profit in return for higher sales later.

A mobile bike repair service with steady customers might buy a second van and train an extra mechanic. Fuel, wages and training costs rise, so profit is lower this year, but it can repair more bikes and gain a bigger share of the local market.

Businesses often switch between the two. A new business may focus on survival until it has regular customers, then set growth objectives. If demand falls or competition increases, it may return to survival to protect cash flow. A survival focus is not automatically a sign of failure; it can be a deliberate, temporary choice while conditions are difficult.