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Too much profit is dangerous

  • By Alan Knott-Craig
  • August 22, 2016

entrepreneur profit

 

Too much profit makes you lazy. It lets you hire people you don’t have work for. It lets you rent  fancy offices you don’t need. It lets you increase salaries to above market-related.

 

Too much profit lets you increase your overheads without feeling pain.

 

That’s all fine and well until the day the game changes and your profit starts being squeezed. Suddenly you’ll realise that your biggest costs are not variable. They’re fixed.

 

You’ll realise you need to downscale offices, retrench staff, abandon vanity projects.

 

You probably won’t survive the experience, and if you do, you won’t like it.

 

Beware of too much profit. Keep your overheads low, you never know when the music will stop.