Profit: The Air We Breathe

If we want to practice architecture, interior design, or landscape design for very long, we must find a way to make a profitable business of it.

It cannot be merely a happy accident.  Or an occasional thing.

Profit must be the very air we breathe.

I’m not advocating profit for profit’s sake, mind you.  But, rather, because it frees us to do our best work.

It’s also the difference between life and death for the firm.

We cannot, and should not, rationalize a lack of profitability, other than for a short time.  Over time, and most all of the time, we must make a profit.  (Or a surplus, if we happen to be running a nonprofit organization.)

Everything good about the firm, from compensation and benefits, to the intangibles of culture and morale, derives one way or another from the firm’s financial health.

  • It feeds the flow of cash– the blood in the firm’s veins.
  • It allows us to pay ourselves well.  (Why would we want to spend our careers being underpaid?)
  • We are able to recruit and retain the best staff.  (And remember the obligation we have here?)
  • We can buy ownership back from departing owners.  (What is ownership in the firm if it has no value later?)
  • We are able to make capital expenditures and buy new technology; in other words, invest in ourselves.
  • It sustains growth of the firm when opportunities knock and we must act on them.
  • It buffers us from tough economic times, allowing us to reposition the firm or change our strategy.

Conversely, lack of profitability has a serious cost.  Somehow, somewhere, there will be a reckoning.

Most firms can probably withstand a short run of monthly losses.  Like having a bad cold.

But we just cannot survive for long without profit.  Everything grinds to a halt.  Which, I don’t have to tell you, is really bad.

But, other bad things may happen on the way to really bad.  Here are some of the most damaging:

  • The firm’s cash flow will begin to tighten, as our billings lose ground to our expenses.
  • The firm may need to borrow to cover cash shortfalls.
  • We can no longer invest in better salaries, better tools, or better processes.
  • We may lose our best staff to other opportunities.
  • Our work may suffer from lack of focus or sufficient staff.
  • Morale and company culture begin to deteriorate.

Once begun, these symptoms can snowball into serious illness.  At some point, it can be irreversible.

Profitability must be as important to the firm as the air we breathe.

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