Profit - Why a Business Exists©

A Pond Bank Article - Created by Dale Lee

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Profit - Why a Business Exists©



Several years ago some political bullfrogs started croaking the idea that the duty of a business is to provide good paying jobs. Of course this was expressed by people that wanted people to have good paying jobs without having the qualifications to earn the salary. This is a foolish idea if that is what the self defined people of wisdom actually believed.

A business/company exists to make money for the owners or investors in the company. For a company to make money, it must have a product and/or service that people will trade their money for the product/service. A company makes a profit if the income (money) it received from customers is more than its operating expenses. If a company has no profit, it will fail to exist, and it will have no employees. This disputes the idea that a company’s duty to provide jobs.

Expenses are a nasty evil that all companies want like to ignore but can’t. Expenses are the cost of the goods, resources, employees and benefits, services, etc. the company has to have to operate.

The opportunity to make money is what will cause a person to invest money to start a business and invest money in a business such as buying stock. If the business does not make a profit, the person will lose the invested money. OUCH! Jobs are maintained if the business makes a profit. The more profit a company makes, the more employees it can support or hire.

It can be a challenge to decide what to charge customers for the product or service the company provides to customers. The price must cover the cost of providing the product, marketing and advertising, packaging, overhead, employees, storage, taxes, profit margins, etc. If not enough money is charged for the product or service, there will be no profit. If too much money is charged for the product or service, people will not purchase the product or service which will produce no profit.

It is amazing how many employees think they are more important than what is in the best interest of the company. Small businesses are so important to the owner that the owner can be the last person paid if there is enough cash in the payroll account. I wonder how many of the self appointed important employees are willing to make themselves the last one paid.

It is important to employ the best skilled employees so the effort of each employee will result in helping the company show a profit. Poor quality employees hurt the company’s ability to make a profit just as poor products hurt the company’s ability to make a profit.

A profit is the key to a company being successful and providing jobs.

Dale Lee

A former resident of Pot Neck, Tennessee

Date last changed, September 7, 2010


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