How do we define profits? Most of us know the simple answer that profits are the gains that one makes by selling things at a price more than what was spent in making that thing saleable to a customer. The opposite of this is termed as losses. Profits and Losses therefore, are the two sides of the same coin. Businesses are generally aiming for profits. Because, when there are no profits, it cannot survive for long. If there are no gains in a business it will not be able to maintain the support system strongly enough to sustain the establishment and this would result in the untimely collapse of the business.
So what do we aim for when we are a part of a business establishment? Our target invariably is maximizing the profits.
So what do we normally do to maximize our profits? We aim for consistent progress of our business, we are in a constant look out for gainful parameters, we look to establish greater yields, we promote our products in the most innovative style, we try to find opportunities to establish our products more firmly, we aspire for enhanced quality level, we increase operational capacities, we hire trained manpower, we dream for advancement and so on..... All this is done by us irrespective of the size, type and system capabilities of our businesses maintaining the sole objective of maximizing our profits.
But is all this sufficient? Can we really maximize the profits without concentrating on the other side of the coin i.e. on the loss aspects? No, we cannot because losses encapsulate the gains.
Losses are absorbents which have an uncanny knack swallowing the gains without making the act obvious. No business can flourish unless the losses are controlled. You may price your product much higher to its cost of making. But unless the losses are controlled and / or minimized, the gains that you make will vanish. A pond exposed to the atmosphere allows consistent evaporation of water from its surface without this becoming conspicuous. It is felt only when you find the level suddenly very low or you realize after a certain period of time that inspite of consistent inflow, the level is not rising.
So what is more important for the success of the business? Is it minimizing the Losses or maximizing the Gains? They may appear to the same in retrospect. But the former controls the latter if the former is itself not controlled.
The flow of losses across a business does not make any sound. It quietly moves like water finding its own way and making its path, how-so-ever zigzag it might be. It is not clearly visible either. We often tend to neglect a slight stream of water trickling out from a huge tank without realizing the enormous quantum that it would lead too if it continues for a sufficiently longer period. The thin losses can easily carry the mighty weight of the profits.
Profits are generally hard earned; they require persistent attempts in positive direction, a consistent approach and relentless input of energies. Losses are like tiny free-flowing particles in the atmosphere. They are generally not visible. But they attach the gains with them and dissolve them at the slightest of opportunity. They also make invisible holes through which the gains get drained out without serving notice.
Losses move like rabbits if gains can be compared to tortoise. The famous old story of the race between a rabbit and a tortoise needs understood in a modern perspective. It is not just sufficient to keep running like a tortoise as far as acquiring gains in a business are concerned; one has to block the path of the rabbit which has this uncanny ability to randomly jump across hurdles, move ahead of the tortoise at times and ruffle the business scene.
Losses have to be explored. They need to be realized. They should be plugged. They are required to be arrested or squeezed to maximum so that they are unable to carry gains alongwith them. Loss making activities move around in business premises in disguise of many things. They often assume the shape of lucrative things. They misrepresent the facts. They mask the valuables. They blanket the gain, veil the profit and facilitate its depletion. To arrest them, we have technologies readily available, which can tackle all kinds of losses. But the need is to recognize the losses in a true perspective and establish proactive systems to eradicate them. For recognizing them we need to first apply ourselves in searching for them.
The most pertinent question here is how do we recognize the losses? This may be initially much more difficult & energy sapping than working directly for gains. But it is not so if we change our attitude towards losses.
The safest home for losses is the junk yard of an organization. They get strengthened as the junk accumulates more & more. Any material making its way to the junk yard should therefore be subjected to a strict control system. Regular survey of scrap yards by efficient & intelligent eyes is one method of arresting the losses before they can play havoc with the business profits.
Effluent from the company is another big outlet for the gains to accompany the losses. Effluent has the capacity to carry alongwith it substantial quantities of the valuable product itself. The water in it is itself an expensive commodity.
The flue gases, water vapors, steam leakages, radiated heat etc. carry so much energy with them that changing them into financial figures can make the accountants look in dismay.
Many businesses might not have the above mentioned sources for losses. But all businesses consume a common precious commodity which is known as ‘Time’. Time is most precious as it has a big cost associated with it, which can never be recovered once lost. Each minute of every person involved in a business set up is crucial for the survival of the business.
Competition is increasing exponentially. No product is now a prerogative of a select few. The demand of market is for better quality with a lower price tag. People have become more adventurous in businesses. Experience alone is not the best parameter. Aggressive techniques are fast gaining prominence. Cost cutting has therefore become a business ‘Mantra’. And cost cutting is unthinkable if losses are not arrested in which ever form they appear.
When the losses are trapped the profits automatically stay. So search for losses not for profits.