Your business must make a profit


Today a post “Profit for Impact“, about the new triple bottom line and showing the following linear formula as iterative, a “righteous flywheel”.

Purpose + People + Planet = Profit

Today I want to emphasise that your business must make a profit. Yes, I may sometimes seem a bit holistic and “out of the box” on this site, yet trust me, I’m a Chartered Accountant who has spent almost his whole career building businesses and building value in businesses for others.

You can have a great sense of Purpose, be good to People and the Planet, but if you don’t make a profit you won’t be able to do much of that and not for long.

However, it seems we didn’t learn from the “smartest guys in the room” using financial engineering (too grand and inaccurate a title for trying to create something where there was no real value) and crashing the world economies in 2009.  In recent years it seems we have spent so much time raising funding to grow businesses, far too little actually building businesses from value and with value.

Last week Uber showed us they were truly an emperor (or a Unicorn, if you will) running around naked. Today, then, let me emphasise you must be a Zebra, not a Unicorn. No matter how crazy a Zebra looks, it is a real animal.

Be a zebra, make a profit.

I leave you with this from Reuters from last week, quite a headline to begin with:

Uber unveils IPO with warning it may never make a profit

This comes as no surprise to me and to many who follow the underlying business models of businesses and often countries.

What’s next to be shown as a Unicorn?

How about Turkey, a country with a President shored up by short term foreign currency debt for long term infrastructure project paid for by Turkish Lira. What could possibly go wrong? Well, the other week the ruling party lost mayoral elections in a country where the city of Istanbul is vast and pivotal. They are refusing to accept their loss and won’t let the mayor take his seat. Watch this space.

One more. WeWork. Yup. Largest commercial tenant in several major world cities. Investing in long term property investments, funded so far lead by one major investor (SoftBank) with lofty talk about uber-high (sorry for the pun!) valuations. Note, though, that their tenants are all short term in nature and many are highly vulnerable to the coming major recession (and yes, one is coming to the US, UK and beyond, the core indicators are there).

So, happy Monday morning. Go out and make a profit. Oh, and please stop valuing businesses based on their ability to raise funds, instead invest in those who can actually turn a profit, if not now, then at least at some point!

Also published on Medium.