My friend and mentor of twenty years, the late Jim Russell, used to say, “You must make a profit every single month.” I would, out of respect for him, nod in hearty agreement; but in my mind I was saying, “Yeah, but…..”
Jim was in the forms business, primarily serving the medical industry; me, I was in the painting business. RBF, Inc., Jim’s business, had a steady flow of revenues–and profits, regardless of what time of year it was. T. L. Hart, Inc., on the contrary, had little business in the dead of winter.
Jim passed away in 2005, but his words never did pass away. If it weren’t for the profit we did make in the years leading up to the ‘Great Recession’ we would have never made it. As it is, we lost all of it, then nearly twice as much–not to mention or 10,000 square foot offie/warehouse building and another property we owned. Moral of story? You need profit to sustain your company during difficult times.
These days I have made it my aim that, if it is within my power to do so, T. L. Hart, Inc. will make at least a dollar of profit every single month. To do that we faced some major downsizing at the beginning of 2010, and since then the firm has been wonderfully profitable every year. Because of this, it is well-positioned to weather the current storm we are in: the COVD-19 crisis.
Profit is essential for any business of any size, and at least some of should be retained (or saved). This is true for small companies like mine, large companies most definitely, and smaller, 1-man shops. A certain portion of your post-expense income (including your pay) should be set aside not only for difficult times, but for the occasions when a payment does not come through, or you need to make a major purchase. Doing so will both put and keep you positioned for whatever might come next–and God knows what that might be.
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