A Simple Lesson in Profit Making
When you sell something for more than it costs, you make a profit. So when my grandkids wanted to open a lemonade stand, I gave them a lesson in profit making. They decided that one glass of lemonade cost exactly one dollar. They raided their piggybank for the initial investment. But they wanted to sell each glass for 75 cents. After their first sale, they had to go back to their piggybank to get another 25 cents to make the next sale. It didn’t take them long to figure out that soon they wouldn’t have any money left in their piggybank.
So they decided to sell their next glass of lemonade for exactly one dollar. This solved their problem of not having to dip into the piggybank. They had the dollar to make the next glass of lemonade, and things were looking up. But then they wondered why they were putting all this work into their lemonade stand and had nothing to show for it. And it rained that day so they had to replace their sign. Again, they were forced back into the piggybank.
Then they decided to sell their next glass of lemonade for $1.25. After the first sale, they put the extra quarter back into the piggybank. And in a few days, their piggybank was overflowing.
The lesson of this story is that the investment you make in money and time pays for your business today, while the profit pays for your business tomorrow. Sooner or later, without profit, your business will not succeed.