So with zero profit, operating on a razor line at all times, what's your plan for major acquisitions or severe shock events outside of your control (eg national economic recession)? Where is the cash to come from on that terrible rainy day or when a huge opportunity presents and you need cash.
If you're not building cash, how do you plan to avoid catastrophic, unnecessary damage to your business structure when a recession hits? Banks hate to lend during recession, and lending gets a lot more expensive when times are bad.
And banks generally are horrible alternatives when it comes to capital for acquisitions, unless you're a large corporation.
Dependent on venture capital? Another horrible, expensive alternative to profit.
You're seeing inefficiency in profit because you're not pricing in everything in the operating life of a business correctly.
I think GP is using 'profit' to talk about wealth extraction from the business. Putting surplus cash into an emergency fund, maintaining a cash balance for unforeseen costs, or similar wouldn't be quite the same thing. One way to think about that is that if your company has a financial goal of $X for a cash reserve, the lack of it can be considered a liability, diminishing net profit.
If you're not building cash, how do you plan to avoid catastrophic, unnecessary damage to your business structure when a recession hits? Banks hate to lend during recession, and lending gets a lot more expensive when times are bad.
And banks generally are horrible alternatives when it comes to capital for acquisitions, unless you're a large corporation.
Dependent on venture capital? Another horrible, expensive alternative to profit.
You're seeing inefficiency in profit because you're not pricing in everything in the operating life of a business correctly.