Why is profit a requirement for Business?


5 Answers

David Shabazi Profile
David Shabazi answered

Well think about it...what is business without any profit? No profit ruins the whole point of running a business.

Derek Alvarez Profile
Derek Alvarez , President, CEO of, answered

Profit is what the business runs on.  If you have no profit, you don't get to pay yourself, grow the company or purchase anything for the company. 

 A business without profit can only last as long as the initial investment.  Once the investment money runs out, the business will close without profit.

Christy Mathew Profile
Christy Mathew answered

Running a company without profit?  Then how did you get your pay?  How does the owner of company earn the money that he invests in company?

dom smith Profile
dom smith answered

If you do not make a profit you will not have money to reinvest to improve the business and you stand the coincidence of owing so much money that in the end the business cannot pay its debts and have to close. Profit is a requirement of every business because without profit business never grow and some time you have to close your business.

Bikergirl Anonymous Profile

Profit isn't a 'requirement' as much as it a goal.  Profit (or loss) can also help determine the value of a business from an 'income approach' perspective.

A business 'can' function with zero profit, actually quite well  .. A business, for example that makes a million dollars in revenue .. but spends a million dollars in expenses (like equipment expenses, wages, office supplies, rent/lease expenses, insurance, purchasing capital expenditures and items .. etc etc etc) .. provides a zero profit .. which also means zero loss.  It breaks even.  

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