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Without blood, life will cease in the human body. Without profit, a company will eventually die. The paradox however is that cellular activity and growth can be a symptom of life or a signal of impending death in any organism – human or business.
For example, in the human body, cancer and cell inflammations are activities and growth are signs of approaching death rather than healthy blood or life. Similarly, increased activities and growth in a business organization may be an indication of profitability or a prelude to the sickness or death of a company. Many companies are occupied with a lot of activities that generate cash flow but remain unprofitable. They are very busy, and highly occupied working for financial institutions but not profitable in the real sense of it.
While the collection of financial data and interpretation of financial ratios provide a good basis for evaluating a company’s profitability, the approach is reactive rather than proactive. The fact that our financial ratio is showing good profitability today does not guarantee that the company will remain profitable in the next five or ten years.
The only thing that guarantees a company’s profitability today and in the future is the existence of and maintenance of effective profit designs, profit drivers, and profit systems. A company cannot become profitable on a sustainable level just by desiring more profit or employing additional resources.
Profit is an effect, not a cause. It is a fruit, not a root. When a company has in place a well-established effective profit design and systems that are intertwined with its culture and value system, it generates profits as the output of the system on a relatively consistent and predictable level irrespective of external challenges.
This course is designed to expose business owners and managers to strategic profit designs, drivers, processes, and systems that world-leading visionary companies have mastered and entrenched in their genetic code.
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Get all the latest business growth, productivity, and profitability tips.