Which Profit Shouldn T Be A Dirty Word In Material Handling

When profit is eliminated from the economic equation, no one benefits. With the economy improving, many people in the content management industry are hoping for a good time without any change in the way they do business. Unfortunately, this means continuing a particular practice that played a major role in crippling the economy a few years back. When "dot.com" was soaring, they experienced rapid growth from a simple method of offering impossibly low prices and continued expansion into markets they knew nothing about. They worked losses for years on end, promising investors that all this would change when they achieved substantial market share. After all, sure, this "lose a little on each deal but make it up in volume" business model blew up in their face. One by one the balloons exploded, and the economy followed them down the tube. In the content management industry, this discredited business model is still very much in evidence. Too many companies have played the game of mergers, putting themselves in markets they know nothing about. Many people have played the numbers game, moving money from pocket to pocket (this is called managing for stockholder value) to make themselves look good for another quarter, complete with long-range planning. Kind of forgotten. Worst of all, many companies have adopted the concept of giving up profits in pursuit of market share with the idea of ​​becoming profitable after the competition is over. This is called "buying a job", which means submitting a bid that offers little or no profit. In theory, this has two advantages. It gives you work, making your sales figures (if not your profits) look impressive. More over importantly, for some people, it prevents your competition from getting the job. But let's look at the downside. Without profits, you don't have money to invest in research and development, capital expenditure, etc. Your growth is on paper, and will disappear as soon as you run out of money to buy a job. With minimum profit margin, you have neither the money nor the inclination to do the after sales service. The result is an unhappy customer, and that's never good news for your company's long-term prospects. Finally, let's say that your strategy of reducing competition works, and your nearest competitor goes bankrupt. What happens? Someone buys his property for $25 and opens a new business. Since his initial investment was so low, he may be cutting your prices. You haven't eliminated the competition, you just made it worse. Profit is not a ***** word. No one - least of all customers - benefits when profit is eliminated from the economic equation. I'm not saying we shouldn't be looking for efficiencies that allow us to keep prices down while maintaining a reasonable profit margin. Of course the customer benefits from lower prices, but the economy in general and the materials handling industry in particular will be much healthier when we all want our fair share. If you are satisfied with the 3% gain, I suggest you buy a government bond. It is more secure.