Friday, May 25, 2012

Profit Motive

Much is being said about the profit motive these days. Most of it is negative. But is the profit motive really a bad thing?

First of all, what is profit? One makes a profit when income exceeds expenses. To put it another way, a profit is made when the amount of money received is greater than the amount spent. So, is wanting to have more money coming in than going out, an evil?

I think not. Now, let me be clear (as the President likes to say). Many people in the name of profit, have done some terrible things. But, I suggest that the profit motive is not to blame. What is to blame is the heart of man. But I digress.

Think of it this way. On a personal level, every household wants to have more money coming in than going out. If not, it won't be long until they will be in serious financial trouble. Therefore, everyone reading this has or should have, a profit motive.

But what about non-profit organizations, you might be asking. Aren't they better than those evil corporations, seeking profits above all else?

Let me fill you in on a dirty little secret. Every organization, even non or not for profits', wants to have a profit, they just call it by another name. That is right. All organizations want to have more money coming in than going out. Well you say, a non profit spends all of the money it receives. Does it now? OK, that is it's objective, but reality is different. Most well run organizations will put some funds aside for future use. It may be a rainy day fund or savings for a building project, but it is created by profits just the same.

But non-profits care about something other than the bottom line, you say. Maybe so. But if no attention is paid to the bottom line and expenses exceed income, then at some point, the organization will no longer exist.

So, the next time you listen to someone talking down profits, remember, without profits, even the best of us, will be in financial ruin.

Repeat after me, "profit is my friend".

I am in no way excusing bad behavior by some. It is just that we need to have some perspective. Common sense is needed, but unfortunately, not so common.