Ka-pi96 said:
eh, I'd say 1B in revenue with 0 profit is much better than 100k revenue and 99k profit. In the former you just have to cut costs for the next year, or further increase your sales, and you could end up making tonnes. In the latter you can make money, but you're unlikely to ever make as much money as the former example could. |
The inherent problem in the 0 profit scenario means that you spend a billion to make a billion. If no changes are made you will likely spend $2 billion to make $2 billion.
If you simply cut costs you stand to decrease sales unless you cut correctly and gradually. Cutting typically demoralizes a workforce which will in turn decrease revenue.
You would want to do both. Increase revenue while making systems more efficient, people more passionate about their work, and people better at their jobs. If you do both you will turn a profit.
The second scenario is the preferred for me. If I spent $1,000 to make 100k, I know I have atleast 50k to spend next year. I have a good model and if I use wisdom, Kanban, leadership, developmental tools/plans, service and stick to my vision I stand to make well over a billion revenue dollars (quick math puts it at $5 billion the the following year, but that is unrealistic when dealing with people) in a few years while still maintaining a great profit.
In short, and from experience. It is hard, very hard to take a unprofitable company and make it profitable in a long term way.
