One percent is a tiny fraction. A question I have asked many times of clients, and management in my former corporate life is ‘who could not……… by one percent?

The blank is filled in by a variety of items:

Raise prices, reduce trading costs, reduce overheads, increase volumes, and so on. Nobody ever says ‘No’ to the proposition.

When you look at the impact, particularly cumulative of those one-percenters, they supercharge profits.

We are all in business to make profit, without profit, we are not in business. While there is an extremely important place for calls to be good corporate citizen, provide all stakeholders with a mission and vision to which they can relate, and to build for the long term, none are possible without commercially sustainable profits.

Many SME’s I talk to fail most basic understanding of the make-up of their P&L, and how the one percenters impact on profitability. Usually it is simply because their accountants have failed to break their costs up into fixed and variable, and they have no idea of the impact of the one percenters as they have never done the exercise on a spreadsheet which makes it incredibly obvious.

Profit is not  a bad word, it is the gold standard.

It also not a useful objective, which is a role played way too often. Profit is an outcome of a whole range of other, often very small things, done successfully.

Cartoon credit: Dilbert.  Anyway, who would want to do business with an unprofitable business?

Related posts:

What makes the Pareto principal work? 2 legal ways to make obscene profits Understanding your break even point. The 6 evils of Cost Plus pricing.