What does profit mean to you?
Your immediate inclination is probably positive. Profit is good. It’s something we want. It’s hard to succeed if we’re not profitable, right? So it’s essential to growing a business.
However, I’m not asking whether profit is good or bad. (I think we all agree that profit is good.) But how do you define it?
Today, I want to explain how each of us can have a proper perspective of profit. In order to do this, we need to define each of these terms.
Proper. If something is proper, it is suitable, appropriate, or right. It is the correct way of doing something, or in this case, it is the correct way of viewing something.
Perspective. Our perspective is the lens through which we view things. It’s our attitude or disposition toward something, and it’s our point of view. Our perspective is important, because the way we view things changes how we do things. Therefore, our perspective is essential to understanding and applying this definition of profit.
Profit. Profit is a term that has evolved over time. If you look at some dictionaries from the early 1900s, profit is defined as payment for value added. Historically, it was about the money earned for creating value. Only in the last 100 years has the definition evolved to simply be the difference between revenue and expenses.
Too often we oversimplify and undervalue profit by only asking, “Did you make more money than you spent?” In doing so, we fail to recognize the vital importance of adding value.
A couple of years ago, Volkswagen was caught cutting corners in vehicle production to save money. Some of their diesel-engine models contained software that allowed them to cheat emissions tests in the US. Volkswagen confessed to cheating, and in this effort to save money, lost billions of dollars. Because Volkswagen was more concerned with earning money than adding value, they lost dollars and their reputation in the process.
The best organizations, companies, and leaders have a proper perspective of profit. Sure, they understand that we need money, income, and margin to survive and thrive. But, when we view profit through the lens of adding value, the result is better products for our customers, enhanced experiences for our clients, and positive environments for our employees.
If you’re adding value, dollars will follow.
Do you have a proper perspective of profit?
Seek ways to add value to your work this week. Your profit will have a greater impact than a simple dollar amount ever could.