When is Profit Bad?

Aside from money that is stolen or gained through fraud or deciet, is there any time that an honest, fair profit could be a bad thing?

I think there are at least three instances when I believe that a fair, honest profit is a bad thing and here they are:

1) When the profit is less than you could have earned doing something else more closely related to your core business. One of the biggest mistakes business owners make is failing to engage in their highest return activities. For me those high return activites are marketing and performing. That's why I don't get to post to this blog as much as I'd like to (even though this blog is a form of marketing in itself). When you spend hours working to build something that you could have bought for a few dollars, that is not a good investment of your time. You can say that it was profitable because you saved a few dollars, but if you could have spent that time in a higher return activity you would have earned even more.

This also happens when we work to please a client who drains our resources and cuts into our profits. When you have a customer who constantly haggles on price, demands that you stay longer hours, asks you to do things that you didn't originally agree to, you can either fulfill those requests or not, but recognize that additional work at lower pay is a lower value activity. You can make a profit, but you shouldn't aspire to cultivate clients like this.

2) A profit is bad if it is earned at the sacrifice of future profits. We shouldn't be doormats to our clients, but even worse is gouging them or taking advantage of them. If we fail to nurture our customers and clients they have no incentive to return and do business with us again. I would rather make a little bit less on this sale and know that I will keep the customer for at least a few more years than to worry about going out and finding a new customer to replace the one I abused. The local printer I work with inhereted the business from his father who still does business with MY father and now I do business with this same printer. He's not the cheapest, but he treats us fairly, holds our hands when we need it, and is always honest. I remember several occasions where he told me to go to another print shop who could do just as good a job at a cheaper price. He lost a sale, but he kept a customer for GENERATIONS!

3) A profit is bad if it is made at the expense of your integrity or happiness. While it is important to treat our customers with respect and dignity, it is equally important to treat ourselves with respect and dignity. If you have to do something that you aren't comfortable with, then the profit isn't good. And this doesn't have to be as nefarious as it might sound. If you are a birthday party performer who doesn't do balloon animals and a client wants you to do them, you can either learn to do them (not a bad option) or you can simply tell him that you are not able to do them and offer to find someone who can do that. But you needn't feel compelled to change your business model simply to please a client.

--Julian Franklin