IF NOT PROFITABLE, THEN WHAT IS THIS ALL ABOUT?

Let me first of all discuss profit in a manner that I would hope no one would disagree with:  A Company should bring in enough money to pay its bills, its taxes and its payroll.  If it does not then it will either become a burden on society or more likely go out of business and not provide any jobs or taxes.

But understanding profit can be difficult, especially if that is not interesting or fun for the owners.   Not all revenue for all companies is profit, and not all money leaving are expenses.  It can become complex.  And I do know that many struggle with the idea of how does a profit and loss statement differ from a balance sheet, and why should they care?  Well, both can have big impacts on a business

So for those who do not wish to spend their lives in the world of finance, these items can get quite complex - assets, cost of goods sold, revenue versus profit, journal vouchers, accruals and more.  Sometimes revenue coming in is not just profit, but a mixture of profit and payback for some of the company's expenses. And sometimes it takes some mathematics to separate the issues.

And when all is done, and it seems the business finance is complex, how does one run their business?  How do they set goals?  Well, the way several big companies do it is to keep it simple for most employees and even the owners.  We as humans cannot think long in the complex world, but need to set our sights on something easy to understand.  When we understand the financial basis for a company and then adjust that to simple goals we can understand, then ensuring that bills get paid can get much easier. 

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