Contracting Profit
In biology, every living thing is driven by two imperatives: survive and propagate. In business, the analogue to survive and propagate is profit.
Without profit, an organization cannot fulfill the needs of its owners who at some point will redeploy their assets somewhere the risk/reward relationship is in better balance. Without profit, an organization cannot grow because growing companies need an increasing supply of working capital just like a growing child needs more and more blood in its body to support a larger organism.
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Working capital can only come from three places: you earn it, you borrow it, or you trade equity for it. If the company is not profitable or can be seen to become profitable in a reasonable time frame, it will have little or no borrowing capacity nor the ability to attract investment as a company's value is ultimately a function of its ability to create profit.
Lanny Goodman is a strategic planning consultant and president of Management Technologies Inc.. Since 1980 he has helped entrepreneurs build highly vital and productive companies. Lanny has developed a unique process to create self-managing companies based on the emerging scientific principles of self-organizing systems. His company works in a very wide variety of industries in the services, manufacturing and not-profit for industries with clients ranging from $1.5m to over $1b in sales. Contact Lanny at www.lannygoodman.com
