May 2012
The Mistake of Profit Maximization

Maximizing profits is a mistake.  Not just in the short term, but in the long term as well.

Profit maximization damages relationships with customers and suppliers.  What makes it fair for me to squeeze my suppliers so I can have a bigger swimming pool?  Or for me to gouge my customers just because I can?

Profit is part of the navigation system in business. But too often, profit becomes the destination. And profit for profit’s sake is a dead end. Without profit we cannot sustain an enterprise.  We need to know how we are doing by monitoring revenues versus expenses,  and that first number needs to be sufficiently larger than the second to ensure we can stay around.

But why are we staying around as a business?  That’s another question.