When building businesses, projects, and even more so communities, the topic of profit often seems taboo. However in all my ventures, I’ve always been very clear from the beginning that the goal is sustainable profits.

Sustainable profits

It’s pretty easy to make a profit on a single task/job, but the key question to keeping the project sustainable is whether you can regularly achieve the profits required to keep the project going for the length of time that you’re aiming for. Making a good profit on the first try and earning nothing for the next 12-months isn’t a very good way to sustain a project.

The great article on profits

One of the best articles I’ve read on profits, and always kept in mind, is this one titled Why We Chose Profits at 37Signals. I align with many of the points in the article, which suggests that profit:

• Buys you time and flexibility
• Protects you from your ego
• Provides insulation
• Is just simpler
• Focus the mind
• Creates stability for customers

It effectively covers everything I want to say and more, but I am going to add some of my thoughts here too.

If you love your project, you should prioritise profits

I always hesitate or feel bad when I charge someone for any service I provide. I often take the position that I’m being the good guy by waiving off the charges for my service or time.

However when there are projects that go beyond a personal scope and are impactful or beneficial to others, to ignore the need for profits is naive at best, irresponsible and selfish at the worst. Operating a project without any profits in sight puts the project on dangerous ground, often unable to make the hard decisions as needed, and unable to source for and retain the necessary talent to grow and sustain the project.

By not prioritising profits, the project is placed in a position where there is a high possibility of failure, and once you factor time into that equation, the eventual failure of the project is almost certain.

There are always costs

There is a cost to everything, directly or indirectly. Even time contribution is a cost. Someone contributing time to a project is taking time away from their family, earned time, or income generating activities.

If a project doesn’t generate profit, it is only sustained by the generosity of the people behind it, and thus unsustainable.

Non-profits and charities

There are many non-profit and charity entities out there, they work, but it’s not an operational model that I find suitable for myself. Just recently listening to the conditions imposed upon non-profits in Malaysia makes me feel that a lot of effort will be going into ensuring the compliance to retain the non-profit status, which will divert attention from the main mission of the project.

While non-profits aim to avoid the profit motive, they will still have to rely on financial resources to operate effectively.

Non-profits, charities, and government grants are also sustained via the profits of other ventures, whether it’s donations and charity (profits from others), or grants (theoretically profits from government surplus). Therefore, profits are needed, it’s just whether it’s generated directly, or at a layer or two away.

Conclusion: The key is balance

In the end, I believe balance is the solution to everything. Profits will help on the journey to sustainability, but excessive focus on profits will effectively turn into greed. The other side of the coin which is austerity isn’t healthy either. The key is to find the proper level of profits needed to ensure there is balance.

As I continue to learn, it’ll be interesting to see if a reusable framework for this can be built, with adjustable parameters such as ratios, margins, and runway for different projects.