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Importance of Profits

August 14, 2012

Profits are a functional result of intelligently designed business systems that are effectively executed, it is not a ‘bad word’ or the telltale indication of illegal or unethical behavior. A Profit Plan is just as important as an operations budget, sales/distribution strategy, or even the design and production of the actual product! Yet in talking with business owners; the most popular profit plan is slightly more specific than a ‘hope for the best.’

Millions of dollars get invested – even in small businesses – into the design and packaging of products because everyone knows that well designed products tend to be more successful than those that aren’t. Getting this right could be the catalyst to business success. Two of my favorite examples of this are:

  1.  The Garbino from Umbra. The Garbino is a trashcan, and the only housewares item in the Museum of Modern Art (MoMA). It is sleek, stylish, and extremely functional.
  2. The iPod from Apple. It came in a box that made retail anti-theft systems look sleek, cool and stylish; it felt great in my hands and the wheel button navigation system just seemed intuitive. I enjoyed it before there was any music on it.

Without being told, consumers expect certain levels of service and/or a particular experience to coincide with various price points and distribution outlets. Without actually going through the process; we can imagine the difference in experience between buying a new KIA versus a new Bentley. And when you are looking for a place that serves Kobe (or Wagyu) beef; you know you can skip the family/buffet style restaurants.

Unfortunately for most of us, operations budgets seem daunting enough to follow, much less to create. Owners easily see the need for a proper facility, equipment, raw materials, labor, utilities, and other traditional costs of business. Yet, knowing the statistics of how many businesses start each year versus how many remain; there seems to be some debate as to the need for profit. I am inclined to go out on a limb and say profits are crucial to the success of every business.

Take a moment to look at your profit plan and remember this famous quote, “Failing to prepare is the same as preparing to fail.”

 

 

 

Copyright © David R Frick/SuccessVentures LLC 2012 All Rights Reserved. No part of this document may be reproduced without written consent from the author.

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