CHAPTER THIRTEEN

image

The Delusion of Profits

MOST PEOPLE IN BUSINESS don’t seem to know the first thing about profit and profitability. And what they say to each other as well as to the public about profit and profitability inhibits both business action and public understanding.

For the essential fact about profit is that there is no such thing. There are only costs.

What is called “profit” and reported as such in company accounts is genuine and largely quantifiable cost in three respects: as a genuine cost of a major resource, namely capital; as a necessary insurance premium for the real—and again largely quantifiable—risks and uncertainties of all ...

Get Peter F. Drucker on Management Essentials now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.