A Business Must Make a Profit
Let’s define what it means to make a profit. Basically, it’s the amount of money left over after you’ve made a sale and deducted the cost of the product or service AND you’ve allocated enough money to cover all your other expenses of running the business, including salaries. Technically you could be a business and not make a profit, but in the long run that business will not be able to survive. At some point you have to make enough money to pay you, investors, loans, and make an investment for the future.
Well run businesses understand the importance of making a profit. If they are not making a profit today, for whatever reason, they are probably working very hard to get to the place where they will in the future. If not, they will run out of money, which is the life blood of a business, and the business will die.
Even not-for-profit 501C3 corporations should heed this advice. They would substitute the word ‘profit’ with ‘sustainability’ but the issues is exactly the same. They also need to make sure that the amount of money they take in covers all of their costs and expenses with some left over for that rainy day and making the necessary investments for tomorrow.
We do a tremendous disservice to all the fabulous businesses in America when we make profit a dirty word and equate it with greed. Profit and greed are two entirely different concepts. Some profitable companies may be greedy, but we should not paint them all with the same brush.