Video Transcript: "The Purpose of Profit"

In this video, we're going to talk about the question of, what is the purpose of  profit? What is profit? Does profit matter to God, and if so, how are we called to  manage it as Christians? So first of all, let's dive into this question of what is  profit, simply put, earning a profit can be defined as simply selling something for  more than it costs you to make it. So if you're selling something for $2 and it only costs you $1 to make it, obviously you've made $1 profit. That would be gross  profit, and then you have your overhead expenses on top of that, that would  have to be paid out of the remainder, but hopefully there's something left over  after that your profit doesn't make what you're selling less valuable. So I think  one of the problems that people have with business when they have hang ups  about money and all those you know, capitalists, or those people that are just  money hungry, those people that are sort of top of the corporate ladder, and all  of these sort of stigmas. I think a lot of what they really wrestle with is this idea  of profit and selling something for more than it cost you to make it. And so I just  want to point out here that your profit doesn't make what you're selling any less  valuable to that customer. All it is is really a reflection of value that you've  created, and your efficiency, your your ability to be able to get your cost down  and to be able to render that product or service in the market at a price that the  customer just couldn't get any other way. Were it not for your commitment to  making that value and driving down your cost to make sure that you able to  bring that service or that product to the marketplace as cost effective and low, at  the lowest price possible for that customer, and it enables us to multiply our  resources. This is just a wonderful thing about profit, is that when you are  profitable, when you're selling things at a higher price, then it's costing you to  make, hopefully and your business, it's not costing you more to produce what it  is that you're selling. Otherwise you're going to go out of business. Otherwise  maybe you're already out of business. In many cases, that's ultimately what  drives companies out of businesses that is costing them more to produce and  render the services and products that they're trying to bring to the marketplace  than they're able to sell them for. And so when we have profit by producing  profit, we are enabled to multiply our resources. And there's a term called  Scaling, where you have a service or a product and you're able to deliver that to  the marketplace at scale. In other words, the customers just aren't there's no  way that they could just go get that product one off. When you've got a whole  supply chain, you've got a whole manufacturing process, you've gone through  the product development, all of that. I mean, for a customer to have to go  through that process, it would just cost them way too much money. It would be  cost prohibitive, unless they were trying to set up a business as as you have, if  you're that business owner that set up that that manufacturing process to deliver that product to the marketplace. So it enables us to multiply our resources. And  I, and I'm going to go back to Truett Cathy, as we have a couple of times in this  in this series, because it's just such a legendary Christian business leader. But 

this quote that I brought up in a previous segment on management, I think,  really gets to the heart of why God believes, why God created, really profit, and  why profit is so critical to us as business professionals. Where the here, here's  the scene. He's at this board meeting with the Chick fil A board, and there's  they're really fearful about one of their other competitors, and how this  competitor seems to be rapidly advancing and kind of overtaking their share in  the marketplace, or at least potentially they might be overtaking their share. And  so they're thinking, we need to just start to expand much more aggressively. And so Truett Cathy slams his fist down on the table and says, gentlemen, I'm tired  of hearing you talk. Think about how we need to get bigger. If we get better at  what we do, our customers will demand that we get bigger. So this is what  profitability and profit generation is all about. Is getting better at what you do. I  mean making it as making that product or that service as excellent as possible,  but then driving down the cost, that is, that is costing you to deliver that to your  customer. And then when you do that, your customers are going to demand that  you'll get bigger and you'll have the margin, you'll have the profitability to be able to do that. So the purpose of profit, then, is to help your company grow. And  another way of looking at it is that it also prevents it from dying, because without profit, a company will not grow, a company will die. Profit is like oxygen, so you  don't enter life with the ultimate purpose of breathing oxygen. I mean, that would just be dumb we're put on this earth for a much greater purpose than just  breathing oxygen. But profit for a business is like that oxygen. I mean, you  cannot survive without it, and not only is it going to help you to survive, but that  profit is going to help your company to grow. And another great thought that I  think really gets to the heart of what profitability in its purest form is all about,  from Walt Disney, where, you know, he was accused of being this just kind of  greedy filmmaker. And what he said in response to those critics was, we don't  make movies to make money. We make money to make to make more movies.  And so that's what profitability does, is that it allows you then to have enough left over after you've paid all of your people, you've paid all of your cost of goods,  you've paid all the overhead, and now you have enough left over to then  reinvest into bringing more of those products, into bringing more of those  services, again, that are making value for the marketplace, as we talked about in a previous video. So profit is oxygen to your business. And these are, these are  some of the reasons why profit matters to God. God, if you are bringing a  service or product to the marketplace that is truly serving people, that is truly  revealing the character in the heart of God, in the way that you are helping to  add value to people's lives. Again, this is what discipleship is all about, which is  simply setting the standard. And that's what we're called to do, as business  professionals, as business leaders, as business owners is to set the standard,  and profit enables us to do more of that. And so profit matters to God. And  you're probably familiar with the parable of the talents in Matthew 25 there's a 

very similar parable and Luke 19, known as the parable of the Minas. I actually  have a research paper that I wrote on kind of the comparison between the  parable of the talents and the parable of the Minas, which we won't get into here in this video. I'll leave that there in the in the course notes, so that you can take  a look at that if you're interested. And I would certainly encourage you to do so,  because there just, this is a little bit of a sidebar discussion here. But looking at,  you know, why are some of these differences? Why do they show up in the in  the parables, when one parable is told a certain way and another parable is told  another way, but there they seem to be the same parable, are they or are they  not? In this case, they certainly are not. Luke 19, the parable the minas Matthew 25 the parable the talents. These are distinctly different parables, even though  they have some pretty, pretty clear similarities. But in Luke 19, the parable of the minas. the master. He is going away on business, and he says to engage in  business until I come. In other words, make value until I come. And then when  he comes back, then he said that he was actually a ruler, not a business, a  businessman per se. Then he said to those standing by, take this Mina away  from him and give it to the one who has 10 minas, sir. They said, he already has  10. He replied, I tell you that to everyone who has more will be given. But as for  the one who has nothing, in other words, he didn't generate any profit. He didn't  generate any interest. He didn't even take it to the bank and just leave it there so that it would at least get that minimum return on investment from the interest of  being in the in the bank. But as for the one who has nothing, even what they  have will be taken away. And so this is the parable of the minas where we get a  clear picture of the character of God and the way that he expects that when  there is a stewardship entrusted, as we talked about how that essentially is what we are as business professionals. We are not owners, we are managers. We  are not creators. We are stewards. We are formers and reformers. We don't just  kind of bring things out of nothing. We are simply working with the things that  God has already put into existence and that we will tune into the voice of the  Holy Spirit. We will discover more and more of those creative ways to synergize  some of these different things God has created, as we talked about in the  innovation unit, but but in this case, we are there's a clear picture here that God  expects profitability, that that Even this guy that just buried his talent, that he just buried his Mina, he didn't, we're referring back to the Matthew 25 parable, the  talents. Same thing here, where he just did not do anything. He didn't generate a profit. He didn't because when you make value, inherently you are, you are  going to be generating profit, as long as you are main you're managing your  costs well. But he says to everyone who has more will be given that's that's  profitability. That's when you are faithful with the capacity and you're fulfilling the  capacity that you currently have the master, which is God, which is Jesus, will  expand your capacity for more. And there's a wonderful statement here, said of  the Proverbs 31 woman, she perceives that her merchandise is profitable. And 

so when you see that word merchandise, that's really what it means. She  actually brought goods to the marketplace and sold them at a profit, and that  was a virtuous, honorable thing for her to do. And because that is the way that  God views profit, he expects a return on the investment. So God values  profitability. It helps your company to grow and prevents it from dying. It's like  that oxygen and God wants your business to grow. So what are some of those  potential uses of profit? How are we called as stewards of the profit that we are,  and again, we are simply stewards of the Prophet, even though we may be the  quote, unquote, owner of the company in the earthly sense, as it relates to the  other people, from God's perspective, we are all simply stewards because we  have nothing that we have not received. As the Bible tells us, we brought  nothing into this world, and we will take nothing out of it, in the in the natural, in  the physical, in the material. But what are some of those potential uses of profit? So if you were the owner, you were able to control that profit, maybe one use is  you might spend it on yourself, or save it for yourself and and so some of you  maybe, if you've got sort of this employee mindset, you're like, oh, yeah, that's  what selfish owners do. Is, you know, they just kind of spend that profit on  themselves. They don't take care of anyone else in their company. Well, you  know, owners certainly have a right to do with you know, what their what, what  their their profit as they see fit. But ultimately, if you view yourself as a steward  to where you are, working unto God, not unto yourself, you really need to get in  touch and in tune with what it is that God's will is for that profit. I mean, I can tell  you, in an early stage of a company that profit many times, you're going to need  to spend it on yourself. You're going to need to spend it on your family, because  if you've kind of taken, you've kind of shaken off the golden handcuffs of your  nine to five, maybe they're not so golden. Maybe they're more like a bronze  handcuffs, but, but you're you've taken that leap into entrepreneurship to start  your own business, and you're pursuing profitability. You know, you're going to  have to spend that money on your family. You're going to have to, in many  cases, use your business as sort of like an ATM. And I can totally relate to that.  And as I think anyone who has ever started a business can Another use is to  expand capacity and and so what might that look like? Maybe it means hiring  more people to work in your company, more talent to grow in certain areas. And  it could mean maybe you need, maybe you've got machinery that's broken in  your factory, and it's really causing a bottleneck in your process. And so if you  could just, if you could just expand your maybe your machines aren't broken,  and you don't need necessarily to fix something. You just need another machine  so that you could speed up your output. And that would be a capital expenditure  research and development. This would be maybe things are going well in your  company, or you've kind of started to reach a point where you're you're not able  to really grow as much exponentially in certain areas as you had in the past. And so maybe a great use of that profit would be to put it into research and 

development, to grow in into new potential profit centers. Peter Drucker  famously said that, and I'm paraphrasing here, that marketing and R and D,  research and development are the only things that matter in business,  everything else is a cost. Everything else really is just an expense, because the  marketing, selling, the research and development of the innovation, that's what  really brings the revenue into the business in order to enable it to do what it  needs to do, another potential use of profit would be to share it. And there's a  variety of ways that you could share the profit, potentially, maybe if in your  company, you have a profit sharing agreement with your employees, to where  they have some equity, to where they have some skin in the game, and they're  able to foster more of an owner mindset than just sort of a hired hand mindset.  And so maybe another expression of that would be end of year bonus. I know  people that are particularly in the sales profession, where they've done well and  the company does well at the end of the year, they will then pay out a bonus  that's got to come out of the profit of the business, that just can't come out of the top line revenue. They have to see what had, what is left. That's the profit, and  then they can share that with the employees. Potentially, maybe it shows up in  employee care programs and and, and so maybe, and we talked about some of  the things that, for example, the Polydeck screen Corporation is doing, maybe  hiring a corporate chaplain and, and, you know, maybe, I think the way that from the corporate Chaplain that I've talked to and their marketing program, they  don't even necessarily sell it as something that you just kind of do with your  profit. But this really is so vital to your company. It's, it's like, I mean, it's, it's just  so essential, like a healthcare benefit or just taking care of your employees to  make sure that their spiritual, emotional needs are met. There are many different employee care programs that can be funded through the profit of the business,  and another use of profit is philanthropy, and certainly this is one that we like to  talk a lot about in the Christian world and the church world, because this, I  mean, were it not for business owners and their philanthropy? Where would the  church be? I mean, without taking that money and investing it into other  kingdom endeavors? Because certainly the business, and I hope we've  established this throughout this course, that the business itself is a kingdom  endeavor, if it's in the business of disciple making, which is to set the standard.  Again, I'm going to constantly reiterate that through that throughout this course.  But potentially philanthropy is a use of the profit. And I think really it ought to be  a combination of all of these different, different potential uses of profit. I mean, is there anything wrong with an owner spending some profit on his or herself?  Absolutely not I think that's, I think that's. Perfectly biblical to expand capacity, to be able to render, do render more of those goods and services that are making  so much value for the marketplace? Absolutely, research and development.  Even though it might seem like, you know, Thomas Edison famously said  something along the lines of, you know, when he was asked by his critics about, 

you know, don't you get discouraged after all these failed attempts at developing this, this light bulb that you have in your mind? He said, No, I just found 1000  ways that it, that it doesn't work. And so he knew that he was getting closer to it.  So research and development getting closer. I mean, just being willing to make  that what might seem on the front end like a sacrifice, realizing that without  innovation and research and development that companies, really, you know,  companies going into the future just won't be able to survive, and then sharing  with employees through potentially profit sharing or employee care programs,  and then philanthropy with other charities and so forth. Are all wonderful uses of  profit. And I want to point out here as well that you must have some ownership.  And I put ownership in parentheses because we know in this course, with the  worldview that we have as Bible based Christians, that we are simply managers, that God is the one that owns it, also as stewards, we are operating as though  God owns it all which which he does, certainly, but you must have some  ownership in earthly sense to control the company's profit. And I want to bring  you right over here to what Robert Kiyosaki has developed, this, this wonderful  model that's really helped me understand this. This this process of going from  employee to self employed to business owner to investor, which he calls the  Cash Flow Quadrant. So the employee is where probably about 80% of workers  are and, and so that's where you have a job, and so you're not able to  necessarily control the profit. I mean, yeah, you might be the one in charge of of  carrying out the the wishes and of the owners, as they have directed, but  typically the employees are not the ones who are controlling the profit. The self  employed is where you own a job. So maybe you're the only person in your  company and and so if you were to stop working today or tomorrow, then your  income most likely would stop. And that's where you own a job, because when  you stop working, you stop showing up to work for your boss, you're not going to get paychecks anymore. And it's really the same way with self employed. So  what Robert Kiyosaki is encouraging people to do is to transition over to this  right side of the Cash Flow Quadrant. This is really game changing stuff. I know  that it was for me years ago, and then you need to become a potentially, and I  want to qualify this, that everybody is has a different calling. But if you sensing  God leading you to be the one that is controlling profit, that is the one who, and  I'm going to go back to this slide here, that you're the one who decides what that use of the profit is. You're going to need to become a business owner or an  investor. And so in the with the business owner, you own a system, and the  people work for you, and so that's where everything sort of becomes, where  you're delegating tasks. And now when, if you're to go on vacation, your income  doesn't stop, not because you have a two week paid vacation, but you could go  for three months, your income would continue. You wouldn't get fired. That's  what being a business owner is. And then for investors, is where they are  investing in those systems, and their money is working for them as investors. 

And so ideally, we can, if this is what our calling is, to be the ones who control  the profit. We need to get onto this right side of the Cash Flow Quadrant,  because employees are typically just paid enough to cover their own living  expenses. They're not really given. And certainly, I believe that we're all called to tithe, regardless of whether employees or business owners, because God. Is  interested in percentages, not necessarily in the gross amount, but but to control profit, to produce profit, it's very difficult, and kind of by definition impossible. As  an employee, employees can generate the profit for the company, but they might not necessarily see any of that profit unless there's some profit sharing  agreement that they agreed to upon getting hired as an owner, I want to say,  don't charge just enough to cover your expenses. This is the temptation that I  faced early on as an entrepreneur, is that I just I don't want to scare anyone  away from my from my prices for my company. Because of my prices, we're  gonna get into this in another section on marketing and sales. But as it relates to this section on on profitability, you have to charge more than it's costing you to  produce that product or certain to render that service. Otherwise, there is no  profit, so you have to charge enough to be profitable. And in this final slide here  of this segment, here on profit or profitability, I want to encourage you to be  eternally profitable, and we can contrast the foolish rich man that Jesus talked  about and the unrighteous steward. So the foolish rich man was the one that  was, you know, he was just kind of fat and happy and he had more than enough. And so instead of figuring out, how can I share this with others? He said, Well,  this is mine. You know, I earned all of this. Or whatever his mindset was, either  way, he viewed himself as the ultimate owner. There wasn't any inkling of of  sharing it or putting it back into the marketplace for for to make that potentially  turn into more profit and to more value in the marketplace, he decided, I just  want to store this up in some barns. Oh no, my barns are full. So his solution  was that he would go and build bigger barns, which is pretty ludicrous. So  contrast that with the unrighteous steward, where the master saw that the guy  just kind of screwed up everything in his company and and then, so what he did  was that he ultimately just went out and started forgiving the debts of all of that  master. Oh, all of that company owners, those who were indebted to him. And  so this guy was the unrighteous steward. Was a steward. He was the manager.  He was not the owner and and, but he shared the profit by marking down these  debts of those who owed his master, and so why is that to be in and actually the  master commended him. And this is a characteristic of God, as we're seeing  revealed here in the parable that Jesus is telling. I mean, why would the master  commend this man for basically, and you know, one way of looking at it is it's  almost like he defrauded him, and in many ways, he kind of did, because it  wasn't really his place, at least the way that I read it to be the one to just mark  down so that whenever he got fired and was unemployed, that he would have  friends, these people whose debts he marked down. But I think one of the ways 

that you can one of the lessons here is that we really shouldn't just view  ourselves as owners. We should view ourselves as managers, and we should  also be those who share the profit, who reinvest it and again, that could look in a variety of ways. So sharing profit does not just mean giving to charities. It could  mean expanding the capacity of your business, hiring more people. I mean,  what's better to hire somebody or to give it to a charity? I don't know. It depends  on what God is telling you to do. But certainly, as far as just looking at the  bottom line, result of spiritual impact, financial impact, all of that, there's a case  to be made there. And there's a concept here of lost leader living. So what is a  loss leader? It's living in such a way and well, a loss leader, in and of itself, is  basically a product that a company might just sell at a loss. Like one of the  places I love to go here with my family is called Jason's Deli, and they have this  amazing salad bar, and it just has always baffled me how they could, they could  sell salad Unlimited, all you can eat salad bar at such a low cost. And I was  asking one of their managers about he's like, oh, yeah, that's that's our loss  leader. We really don't make any money off of the salad bar. We just hope that  people are going to order some of our other sandwiches or something else on  the menu. So that's what a loss leader is, in a lot of ways. That's the way we're  called to live our lives as, really the loss leader, where we're not trying to just  accumulate a lot of a lot of money, a lot of fame, all of that here on Earth that we would truly lay up our treasures in heaven and live this life as a loss leader for  the next life. And make no mistake about it, God promises rewards. It says in II  Corinthians 5:10, that we all must appear before the judgment seat of Christ.  And that Greek word there is Bema, it's, the Step Up where, like, what you're  looking at the and the Olympics, you know, stepping up to receive the reward of  a job well done, so that each of us may receive what is due for us for the things  done while in the body, whether Good or bad. And and so we are going to  receive the things that are due to us, whether good or bad. So this is not talking  about your eternal salvation. This is taught. This is something. This is something beyond that, to where there will be rewards in heaven and certainly just being  able to have eternal life with Jesus Christ is an amazing reward, but there will  also be rewards for the deeds done while in the body, as it says here in II  Corinthians 5:10, and Jesus gives us another taste of that when he says, then  your Father, who sees what is done in secret will reward you. So as we're  seeking to be eternally profitable, it doesn't mean that we need to view it as you  know, because sometimes we could say, oh, this is going to be a great PR  opportunity or a great publicity opportunity for our company. If we give away all  of this stuff, it's just going to establish a lot of good will with you know, really take a good look at your heart motivation for doing that. Because, yes, discipleship,  setting the standard, doing things that are setting the example for other  companies, for other business leaders to follow, certainly is a worthy and godly  motivation, but to do it, just to get the praise, just to get our name and lights, to 

get our name on a building, to get, you know, whatever kind of accolades it is  that that's not what God is going to reward. He's going to see what is done in  secret in our heart, really in our heart, motivation, yes, he'll reward us openly,  see you in the next video.