The Ultimate Goal: Profit - More Than Just Margins!

Jan 2
12:04

2024

David Bancroft

David Bancroft

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Entrepreneurs, executives, and managers of small businesses are constantly pushed to enhance their performance. However, many focus on boosting sales without considering the ultimate goal that keeps every business afloat - PROFIT. Profit, or net income before taxes, should be the primary objective for all businesses, whether they are small internet-based startups or multi-billion dollar corporations. While sales are contingent on the budget size, profit is the true indicator of success.

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The Importance of Profitability

Even the most successful internet IPOs,The Ultimate Goal: Profit - More Than Just Margins! Articles like Amazon.com, will have a limited lifespan if they fail to achieve profitability before investor patience runs thin. The stock price can only soar so high without the ability to pay dividends. Eventually, the coffers that are being depleted will run dry. This is not to suggest that Amazon will not continue its success story. It's simply a business reality that the bottom line must be in the black more than the red for any business to stay solvent.

Profit and Employee Satisfaction

The same principle applies to small businesses. If a business doesn't generate enough profit to offer salary raises and basic benefits to its employees, let alone for growth, it's bound to fail. Many entrepreneurs overlook the intricate relationship between these two aspects. Even a highly profitable small business can quickly crumble if employees are not compensated for the profits they generate. It's not just about the product or service margin, but also about how a company can cut costs through vendor selection, policy development, and other means. Furthermore, incentive programs, affordable benefits, and other employee-centric programs can generate profits above their cost due to employees striving to do their best for the company.

The Need for Continuous Learning

It's crucial to educate yourself and your key employees. Stay updated with competitive developments, new marketing techniques, new business and internet software programs, new business trends, potential strategic alliances, partnerships, and acquisitions. Listen to your customers and seek outside assistance if necessary. All these factors can make a significant difference in maximizing profits. This might mean sacrificing short-term income to achieve long-term annual net income.

The Role of Strategic Planning

Strategic planning is an excellent business discipline that can guide even a small business. When properly developed and implemented, it becomes the roadmap to optimizing profit associated with the sales forecast and minimizing loss during severe economic or competitive situations.

Remember, while dollar sales are great, they must result in a profit. Here's to your success in profiting both online and offline!

Amazon Strategic Planning

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