Between accelerated expansion and a focus on sustainable profits, many companies walk a fine line. After all, what should come first: growing to gain market share or ensuring profitability from the outset? The answer depends on the industry, the company’s stage, and its strategic objectives.
In mature or low-margin markets like Brazil, financial sustainability is more than desirable, it's essential. An inspiring mission is not enough; without profit, there’s no reinvestment, strategic autonomy, or crisis resilience.
Conversations with leaders from national and multinational companies reveal a common paradox: Brazil is a massive market with over 200 million people, yet operationally challenging. High taxes, compressed margins, and elevated operational costs act as brakes on unchecked growth.
The sports sector offers a compelling case study.
Nike operated as a direct subsidiary in Brazil from 1994 to 2020. During the World Cup and Olympics cycle, the company heavily invested in marketing and distribution channels, pushing the vision of a country with 200 million athletes. Despite the ambition, the operation was never profitable. Its structure remained misaligned with the country's actual revenue-generating potential.
Adidas, while facing similar challenges, had greater flexibility to recalibrate after the Olympics. It downsized, restructured, and returned to growth in a more controlled and sustainable way. Today, it operates more efficiently and with continuity.
Another notable example is Netshoes. From a promising e-commerce startup to the largest sports platform in Latin America, its growth was meteoric. It raised over US$100 million in its IPO on the NYSE but never reached consistent profitability. In 2019, it was acquired by Magazine Luiza for US$115 million, a case of market share success with questionable financial returns.
These examples show that rather than choosing between growth and profitability, what matters most is having a clear plan. In digital markets, for instance, initial focus often lies on relevance. YouTube channels or digital platforms may need to invest for years before monetizing through advertising or licensing.
There’s nothing wrong with choosing to grow at a loss in the early stages, as long as there’s a solid plan. What are the investment limits? The expected timeframe for returns? The costs of acquisition, infrastructure, media, operations, and capital?
Eventually, financial indicators become unavoidable: profitability, payback, ROI, IRR. More than market size or presence, what ensures longevity is the ability to generate consistent value.
Growth without control can be fatal. Growth with awareness and ongoing adjustments is what turns relevance into permanence.
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