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Frequently Asked Questions

While the following questions and answers may be of help to you, we invite you to contact us today for a no-cost, no-obligation conversation. Many business owners find this initial conversation highly enlightening in its own right, and often comforting. Plus, this time together allows us to answer specific questions pertaining to your business and your needs.

What is profit?

The concept of profit and profitability is quite simple. In a formula, it looks like this: sales minus expenses equals profit. Every transaction should contain profit. If it doesn’t, it’s probably not a good deal for you. Similarly, at the end of the year when you consider your total sales and expenses, your business should show a profit. The greater the profit, the more benefit to you personally and the more likely your business will thrive.

Who needs profit?

Every business needs to make a profit. Failure to make a profit means your business is operating at a loss. When you lose money month after month, you will ultimately reach a point where you run out of money and are no longer in business.

Why should business owners want to make a profit?

Typically, business owners invest as much money as they can into starting their business. They may borrow money from friends or relatives, take out bank loans or use their own credit cards. Future profit must be used to repay the money invested in the company by the lenders, as well as all the sweat equity contributed before the business owner can actually make a living from the company. In addition, operating profitably is the key to future growth because that profit pays for some or all of that future growth.

How do businesses grow profit?

This is another of those simple equations. The key to profitable growth is to increase the amount of money coming in (sales) and to reduce the amount of money going out (expenses). But, as they say, the devil is in the details. The entire organization needs to be focused on increasing efficiency in order to reduce expenses while simultaneously focusing on selling products and services that represent its primary niche.

When should you start thinking about profit?

In a word, NOW. If you’re new in business, start planning with profit in mind. If your business is only marginally successful, start thinking today about how to increase your profit.

If I make a lot of profit, isn’t it taxable? 

Yes, profit is taxable, but there are many ways to minimize taxes on profitability. Check with your tax accountant for a specific answer for your situation. Our advice is to always make a profit but work hand-in-hand with your accountant to minimize its tax impact.

Does the ProfitAbility Institute work with businesses of all sizes?

No, the ProfitAbility Institute only works with privately-owned or family businesses with at least $1,000,000 in total annual sales. Businesses at this level have sufficient critical mass to allow for changes within their operations. However, the ProfitAbility Institute periodically offers a condensed program suitable for smaller businesses.

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