Profit is quite literally only the money left over after a business accounts for all expenses. Reinvestment is not seen as an expense, as it can only happen in the business cycle after the money was generated.
It doesn’t really matter what you define it as, profit has two distinct purposes, and the first is for reinvestment into the company that created it. The second is to pay shareholders and generate wealth. The second purpose is what socialism and sane people are opposed too, but you cannot run a profitless firm, it is not possible.
A worker can never receive 100% of the value they generate, as it would not be materially possible even without profit because of taxes. They should receive as much as possible, however a portion must be divided out for investment back into the labour.
That’s why socialism advocates for coops owned by the workers who can make those decisions themselves, and state ownership, as the state is not motivated by greed.
What happens when an emergency occurs? Where does the company get funds to replace vital broken equipment, pay for a worker to take paid sick leave? Or a number of other emergencies?
How does the company expand operations? Where do they get the funds to hire and train additional workers? Open a new branch? Etc?
Do you take on debt? How do you pay off creditors if you’re breaking even? Do you issue bonds? Do you issue bonds? Then how do you pay the premium?
If your company is breaking even, then your company is dead. You are one small emergency from insolvency.
What happens when an emergency occurs? Where does the company get funds to replace vital broken equipment, pay for a worker to take paid sick leave? Or a number of other emergencies?
Okay… but that doesn’t come from profits. So long as you’ve got the revenue you can budget for that. Those are just costs of doing business. Unplanned costs can be carried on credit cards or you try to work out a payment plan with whatever you’re needing to call on to deal with an emergency.
How does the company expand operations? Where do they get the funds to hire and train additional workers? Open a new branch? Etc?
Why would a company expand operations when they don’t have revenue? If you’re not making more than “break even” money… why would you need to hire new workers. If you’re not planning on expanding… Businesses don’t “have” to grow bigger than what they already are. If you’re just wanting to make jelly in your kitchen and sell it to your neighbors, you aren’t looking to rent an industrial scale kitchen and hire on a workforce.
Do you take on debt? How do you pay off creditors if you’re breaking even? Do you issue bonds? Do you issue bonds? Then how do you pay the premium?
The same way a person deals with paying for things on debt. You juggle your cash.
If your company is breaking even, then your company is dead. You are one small emergency from insolvency.
Heres a funny story, my partner has been self employed for about 15 years now, doing small farm stuff. The only people who do the labor are … us. The farm revenue makes enough to keep the farming going to make enough revenue to keep the farm going. Its a rare year that there is a “profit” by the end of the year. Do you wanna know how we pay for things? I have another job that pays me money, and that money is used to pay for things like the electric bill and the groceries that can’t be grown outside and the phone bill, etc etc.
Some people, actually just want to do a thing and be able to make some sort of living off of it, even if its a small one instead of create “business” for the sole purpose of selling the business to the highest bidder. I know right? Its mind blowing.
If he has no shareholders and no outside sources of debt funding (loans) to repay, his “business” never needs to make a profit though.
Yes it does. How does it grow? How do you expand operations or upgrade equipment? If you’re breaking even and something breaks, how do you replace it?
Would income be profit if it were used to build the business? I wouldn’t say so, necessarily.
It is.
Profit is quite literally only the money left over after a business accounts for all expenses. Reinvestment is not seen as an expense, as it can only happen in the business cycle after the money was generated.
It doesn’t really matter what you define it as, profit has two distinct purposes, and the first is for reinvestment into the company that created it. The second is to pay shareholders and generate wealth. The second purpose is what socialism and sane people are opposed too, but you cannot run a profitless firm, it is not possible.
A worker can never receive 100% of the value they generate, as it would not be materially possible even without profit because of taxes. They should receive as much as possible, however a portion must be divided out for investment back into the labour.
That’s why socialism advocates for coops owned by the workers who can make those decisions themselves, and state ownership, as the state is not motivated by greed.
Yes you can. That’s the whole point behind the term “break even.”
What happens when an emergency occurs? Where does the company get funds to replace vital broken equipment, pay for a worker to take paid sick leave? Or a number of other emergencies?
How does the company expand operations? Where do they get the funds to hire and train additional workers? Open a new branch? Etc?
Do you take on debt? How do you pay off creditors if you’re breaking even? Do you issue bonds? Do you issue bonds? Then how do you pay the premium?
If your company is breaking even, then your company is dead. You are one small emergency from insolvency.
Okay… but that doesn’t come from profits. So long as you’ve got the revenue you can budget for that. Those are just costs of doing business. Unplanned costs can be carried on credit cards or you try to work out a payment plan with whatever you’re needing to call on to deal with an emergency.
Why would a company expand operations when they don’t have revenue? If you’re not making more than “break even” money… why would you need to hire new workers. If you’re not planning on expanding… Businesses don’t “have” to grow bigger than what they already are. If you’re just wanting to make jelly in your kitchen and sell it to your neighbors, you aren’t looking to rent an industrial scale kitchen and hire on a workforce.
The same way a person deals with paying for things on debt. You juggle your cash.
Heres a funny story, my partner has been self employed for about 15 years now, doing small farm stuff. The only people who do the labor are … us. The farm revenue makes enough to keep the farming going to make enough revenue to keep the farm going. Its a rare year that there is a “profit” by the end of the year. Do you wanna know how we pay for things? I have another job that pays me money, and that money is used to pay for things like the electric bill and the groceries that can’t be grown outside and the phone bill, etc etc.
Some people, actually just want to do a thing and be able to make some sort of living off of it, even if its a small one instead of create “business” for the sole purpose of selling the business to the highest bidder. I know right? Its mind blowing.
Its all relative to time periods.