I have a startup which is 2 years old. I would like to know whether I should be more concerned about growth or profit margins?
My startup is a software development firm.
It depends is the correct answer.
The west coast movement in software 'start-ups' I think has been skewing the mentality of a lot of new entrepreneurs. That model is all about growth, users and traction. They have a climate for businesses to get money to fund their ideas and growth with the expectation that profit and payback will come in the future. However, I don't think this option is available for most businesses.
I run a web/mobile consulting company and my concern is profit margin. I have no interest in rapid growth if my margins aren't there or if I'm losing money. If you are losing 10 cents on every widget you make building more faster isn't going to help you out. However, if you only fund and support areas of your business that can prove to be profitable and those margins will grow over time then you should be alright.
Wow, that's a hard question. I remember when Jeff Bezos first started Amazon - I thought he was crazy. He was losing money on every sale. He'd add venture capital, take on additional products, and just lose money faster. But he knew exactly what he was doing. He was gaining a user base and market share. Once he had that, he could turn up margins whenever he wanted.
I think the answer to this question is totally dependent upon the business model. If you have a subscription model or high lifetime customer value then scrape together enough cash flow to survive and GO FOR GROWTH!