Rus Articles Journal

From where there is a profit and why it ceases to grow?

As in the conductor electrons direct in the set direction if for the ends to give tension, and any business activity appears only when the possibility of receiving profit appears. For this purpose “for the ends“ it is necessary to give tension too.

On the one hand, an opportunity to get or create certain goods or service in A. S`s price of other party has to be available, there has to be a buyer ready to pay for these goods or service the price In, and And has to be less, than V. Raznost In - And is profit.

It is known that at the same resistance of the conductor the tension is higher, the current is higher. In the same way and business activity of subjects is higher, than the profit is higher. To electric resistance in this analogy there corresponds “resistance“ business - Wednesdays, determined by commercial, financial, political, environmental and other risks.

So, any business arises at emergence of “tension“. But there is a businessman, works day and night and gradually increases profit. Reduces prime cost, raises the price, increasing thereby a potential difference, increases turns, reduces environment resistance … Everything goes remarkably: the profit grows, production extends, expenses on advertizing grow, demand increases, innovations grow, the output increases.

And there is an ambush: the master ceases to cope alone. He employs the worker. Well if sensible son or brother, they are interested in profit markup not less, than the businessman. But sooner or later it is necessary to employ workers from outside, on a salary. And they are interested in stable work, their salary does not depend on profit, increase in profit to them is uninteresting, on the contrary - excess efforts and risks! In general, long ago it is noticed that any bureaucratic system begins to work only for itself sooner or later, becomes isolated on himself, begins to extend, absorb more and more resources, and growth rates of profit inevitably decrease to the level of the business which is minimum accepted for the owner.

The owner can influence such succession of events only in one way: to interest bureaucratic system in profit markup, i.e. to share profit with the management, at least - with the top management. Usually for this purpose the enterprise will be transformed to limited liability company. Further increase in production leads to the fact that owners of the company can already attract with the profit new investors: the enterprise will be transformed to the joint-stock company at first closed, and then and open. The profit begins to attract money, and money creates new profit.

However at such development also risks grow: the property begins to be redistributed, sprayed. The owner cannot make decisions individually any more, he is forced to submit to requirements of shareholders, and stocks of the enterprise become the speculative tool in stock market and their cost comes off real production more and more, submitting to laws of stock market more and more.

Besides, what the enterprise becomes more profitable, that it begins to be of bigger interest to criminal structures, raiders, the corrupted officials. Sooner or later the owner and the founder can be simply deprived of the share, is thrown out and destroyed. Such risk should be considered, especially in the former Soviet Union.

Here also leaves that the far-sighted investor stops on some profit level which increase already for it is undesirable in distant prospect. Better a titmouse in hands, than a crane in clouds.