Highlighted
Community Product Host

How do explain the trade-offs between long and short-term gains (profits) to partners and clients?

When you talk to friends, family, colleagues and potential partners about profits, how do you approach questions around strategy? How do you make investments that will ensure the long-term success of your business? Is it difficult to see past the immediacy of cash-in-your-pocket?

2 Comments
Super Contributor

Re: How do explain the trade-offs between long and short-term profits?

I'm not sure what you are asking. Profit is sales less expenses. Investing is something else again, and are you investing in infrastructure, equipment, new venture, or ...? Or maybe something with a return, like CD's, a higher yielding but restrictive MM account, or ..?

Community Business Host

Re: How do explain the trade-offs between long and short-term profits?

I think this is a great question, @JamesOng! Case in point: A friend of mine owns a cookie shop in San Francisco. In her first year of operations she was barely turning a profit, and the profit she did make was plowed right back into marketing and making a name for her new business. Basically she didn't pay herself at all for the first year.  That was a choice that required extreme self-sacrifice (but it did pay off eventually).  Meanwhile, her friends and family were concerned that she was spending all this time and energy in a business that didn't enable her to pay her own rent.

 

So the question is...having decided to reinvest in her business rather than draw a salary, how does she explain this difficult choice to well-meaning family and friends who watch her struggle and just don't get it?