What's profit? And why is it so important to everyone not just business owners and entrepreneurs?

Here's a simple quiz. When you spend a hundred dollars on a new pair of shoes,

does a shop owner get to keep that one hundred dollars?

The answer, of course, is no. The shop owner has to pay all of his business costs, employee salaries,

inventory, rent, supplies, taxes, and a dozen other expenses.

His profit is what's left over. It's his payment for the time and money he spent and the risks that he's taken

to keep his business going.

Thank goodness for profits.

Profits motivate people to work hard for themselves and make life better for others.

Take the example of Bill Gates. How did he become so wealthy?

The answer is that he came up with something that millions of people so wanted and needed that they reached into their pockets to pay for it.

His windows operating system, word software, and other Microsoft products.

What's more, he produced these products in a way that efficiently used resources.

And what motivated him and just about every other successful entrepreneur to work so hard,

the answer is profits.

Without the incentive of profits, why would anyone spend his savings, work countless hours,

and take all the risks necessary to bring their product or service through the marketplace?

There's a simple answer. They wouldn't.

You don't have to make billions like Bill Gates.

Take a Montana cattle rancher who goes out in the data winner,

even in blizzards to feed his cows to keep them safe and care for them,

making huge personal sacrifices so that New Yorkers can sit down to eat a nice steak.

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