Sales & Marketing: Problem with profits
Third, profits are needed to compensate for future risks and uncertainty. No leader can predict the future. The odds are always in favor of some loss or adverse condition in the future; therefore, it is critical to withhold profits for the inevitable future losses, costs and changes, which are risks and uncertainties that no one can predict.
The above thinking is necessary for any strategy and implementation process. If you have recently completed a planning process and didn’t determine future resource requirements and thus the minimum profit requirements to maintain an optimal growth trajectory, then you didn’t really complete the first steps of the strategic thinking process.
What is fascinating is to watch how much faster companies grow when they’ve adequately planned for future resource requirements and when they have repositioned the perception of profit both at the leadership level and throughout the team. This inevitably leads to great improvements in innovation and new profit.
Your first responsibility is to make enough profit to cover the costs of your business’ future, if you don’t, then there is no future for your business nor for all that it may be able to offer to your community and society.