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- #31
Scot
Salad Dressing Empire
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This concept may work if you have an extremely simple business, but I would argue that this mindset of profit entitlement is not a good one.
Let's say you import product to sell on Amazon. You order $500 of product and project that you will make $200 profit if they all sell so you put $200 to your profit account and spend it on other things. What if a new competitor forces you to lower your prices and you have more returns than expected? You either cough up the money or your customers that want returns are getting screwed.
It's nice to talk about expenses as if they are easily removed and flexible. Most of the time they're not, especially in small businesses. Most of the expenses are payroll and cost of goods. These things require cash-flow planning. If you decide you can't afford product or staff once your bank account hits $0, it's way too late and your entitlement is screwing someone else over when you can't pay.
You profit last. Wishful thinking doesn't change that.
Yeah, this really does make sense. For a simple business with straight forward cash flow, it would probably work.
However, I'm thinking about my business and what it will look like once I get products into retail, this system would fall apart in a week when dealing with payments and chargebacks from distributors and stores.
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