Profit is not a dirty word despite the fact the some people believe it is the result of unethical businesses gouging their customers. Or greedy business owners amassing fortunes for themselves. Like all urban myths these beliefs are nonsense.
Profit is essential to build a strong and sustainable business. Profit is the fuel for business growth. Here are ten reasons you want your business to be profitable:
- Profit is a measurement of success. It signifies a well-run and viable business.
- A history of consistent profits is attractive to potential buyers of the business.
- Profits can fund growth. This means you don’t have to go in search of investors or loans.
- Profits increase the equity giving you greater flexibility when developing your strategies. For example, you have the money to hire for the new position; you can invest in a new website; when opportunity knocks on your door lack of funds is not a showstopper.
- You the business owner can be paid an appropriate salary commensurate with your responsibilities.
- People love to be part of a success story. Your team will be motivated by the success of the business.
- When your business is making profits and the cash flow is consistently positive you will sleep soundly!
- Economies ebb and flow and so there will be times when your business is making losses; past profits help you through those times.
- Without profits a business will stagnate; that is the road to oblivion.
- Profits mean your business pays taxes; that is a good thing!
As mentioned above there will be times when your business makes a loss. This is natural; however it is important to deal with this quickly. The longer you wait to correct red ink the harder it will be to get back to black ink. The next blog will discuss ways to turn losses into profits.