Profitability Over Revenue: Alvin Huang on Strategic Business Growth

In a recent LinkedIn post, Alvin Huang challenges a common business focus, arguing that revenue alone can be a misleading indicator of financial health. Huang emphasizes the importance of understanding true profitability and strategic margin improvement over sheer top-line growth.

Huang opens his post by stating a provocative idea: “Revenue is a vanity metric.” He elaborates on this by explaining that even with increasing revenue, businesses can struggle with financial clarity. “You can be growing every month and still wonder where your money goes,” he writes, highlighting a disconnect many leaders might experience.

Understanding True Business Health

Huang points to services like WorldFirst as tools that can provide deeper insights into a company’s financial standing. He lists key areas these services can illuminate:

• Which products have the most volume
• Where you can cross-sell or upsell
• If you’re charging the right price
• Where money is getting lost

The emphasis, according to Huang, is on identifying and addressing the actual drivers of profitability, rather than solely chasing sales figures.

Strategic Cost Savings and Margin Improvement

Huang draws a parallel between managing operational costs and optimizing product margins. He shares his personal experience using WorldFirst for over a decade to manage international payments for his teams across multiple countries. He notes the significant cost savings achieved:

“Instead of paying 2–3% on FX through banks, we can get rates around 0.3%. At our volume, that’s significant.”

This highlights how even seemingly small percentage savings on high-volume transactions can translate into substantial financial benefits. Huang argues that this principle extends to product strategy.

Focusing on High-Volume Products

Huang advocates for a focused approach to margin improvement, suggesting that efforts should be concentrated on the products that already generate significant volume. He posits:

“A 3–5% margin improvement on your bestseller will do more for you than a 30% improvement on something nobody buys.”

This strategy, in Huang’s view, is about optimizing existing revenue streams rather than spreading resources thinly across less successful offerings. His advice is straightforward: “Go where the volume already is. Then work out how to keep a little more of it.” This approach prioritizes efficient growth and maximizing the value of core business activities.