The Difference Between Profit and Value
As a business owner, we need to know the difference between profit and value.
In today’s world, many decisions made are based on profit, not value. Even when value is considered, it’s done as an afterthought to earn profit rather than a priority.
For example, if companies are focused on value, there wouldn’t be so many mass-produced candy brands today, much less companies that make candy advertisements targeting kids. A little candy once in a while is fine. But when you have way more junk options than healthy food options, when you see way more advertisements for unhealthy food rather than healthy food, then something is wrong.
If value is the driver, you will not have public transport companies that cut down on maintenance budget to maximize profit, thereafter causing a slew of transport issues. An example is the SMRT in Singapore, where there were alleged maintenance cuts as part of cost cutting, leading to a large number of breakdowns and disruptions in the 2010s. Sure that leads to more profits, but how does this help the common person? You should invest in the best equipment and maintenance budget to ensure performance standards are met, while trimming the fat from other places, including bloated management salaries with little place in a service for the public good.
If value is the driver, you will not see land “owners” or authorities raising rent again and again, in large increments and at short intervals, which then drives businesses out of the market. Every business takes time to build their audience and it’s more important to work on macro-guidelines that encourage value-driven businesses to thrive and serve the highest good of all, rather than regularly look for ways to cream off business’s earnings. A relentless focus on profit usually leaves us with highly capitalistic businesses that perpetuate low-consciousness behaviors such as materialism and junk food eating. Just because you can massively increase profit margins doesn’t mean you need to, because business owners deserve to keep some of their hard-earned money, which they can then reinvest to grow their work and spread value to others.
If value is the driver, you will not see online “coaches” with elaborate sales funnels trying to sell you something every step of the way. You will not see trainers who rag on you for not wanting to buy their stuff, even making an example of such folks in front of other people. Seminar trainers in Singapore are well known for doing this. You will also not see trainers who become so obsessed with nabbing the sale that they cross the line between (a) positively encourager a consumer to buy something that will be truly useful to them, and (b) psychologically manipulating the consumer to buy stuff — through misleading copywriting, empty words that shift one’s emotional state to buy something, exaggerated claims, etc. — and justifying that as “helping” others. Just because someone is louder doesn’t necessarily mean he is better. The latter approach only pads the trainer’s pockets but doesn’t actually serve people.
If value is the driver, you will not see endless clothing companies churning out new clothes every season, marketing them as the latest fashion, convincing you to buy them as a form of an identity differentiator, and thereafter trying to get rid of the stock at discount prices before bringing in a new batch of clothes and doing the same thing all over again — even though a simple T-shirt can last for many years before it gets worn out. Same for makeup, where beauty companies spend billions of dollars creating new makeup and convincing women why they should buy their makeup to look beautiful. Isn’t it more impactful to help girls and women recognize that they are beautiful even without makeup (or accessories or fancy clothes for that matter), and that beauty is a construct?
Profit is important yes, in this money-driven world. We are not bigger than the system and we need to abide by some rules of the world. So if we need money as a currency to live in today’s world, then we need to take steps to earn money to survive, pursue our dreams, and support others.
But there’s a big difference between (1) making decisions where creating value is the priority, and (2) making decisions where profit as the priority and value is simply a secondary afterthought as part of making money.
With the first scenario, you make decisions that better the world, while being profitable so that you can continue to do your work and serve others.
With the second scenario, you get decisions meant to pad shareholders’ pockets, that maximizes profit without regard of consequences, and where the audience’s well-being is considered as an afterthought — sometimes never. You get decisions where the bare minimum is done to honor people’s needs, sometimes even making decisions detrimental to the customers you’re supposed to serve.
With a profit-driven approach, you may get a wide selection of options in the name of serving others, like Chocolate with Almonds, Chocolate with Raisins, and Chocolate with Almonds and Raisins if you sell chocolates let’s say. But when most mass-produced chocolate today is unhealthy and all the options you get are really just one unhealthy variant after another (but with fancier packaging), having more options doesn’t uplift your life. It keeps you busy yes, it gives the illusion of choice yes, but it’s not going to improve your life, let’s kid ourselves not.
The profit-driven approach is also where the rich become richer and the poor become poorer; where people’s decisions are obsessively rooted in money and self-survival at the expense of others. It’s where societies become seemingly more affluent but are not necessarily happier or better-off — well, except for the top 1%. In some countries where the top few percent of earners literally control the national policies, you start to have a world like in Elysium — first in spirit, then reality. The scary thing is that this is happening right now, just that it’s happening so slowly that no one realizes that.
Doing what’s right may not be the easiest but it’s necessary. Consider the following:
- Do you make decisions driven by value or profit? Do you make decisions based on what gives the most value to people or what gives you the most money?
- Do you constantly think of ways to increase the top line at the expense of improving your products/services and what gives the most value to the end user?
- Do you pursue ideas that add no real value to the world just because they are lucrative?
- Do you allow yourself to work on projects that don’t earn big bucks but can serve the greater good?
- Do you measure your success by the money you earn or by the value you give?
- Do you beat people down in your quest to earn money?
- Do you consider those who earn less money as “inferior” because you assume that earning less money = giving less value? (Not true by the way)
Choosing a value-centered path isn’t always the easiest. But it is important as it helps improve humanity. When you focus on value (while still acknowledging the importance of making profit to self-sustain), you change the world in a far greater way than a profit-driven existence will. When you focus on giving value as priority, you help lift the world into the higher consciousness levels of courage, love, and perhaps one day, enlightenment.