Profit = Revenue - Costs

[safe]

Profit = Revenue - Costs

No matter how hard you try to imagine things working differently in the end all business runs on this simple math formula. Profit ends up being what you have left over after bringing in revenue (by selling a product or service) minus things like wages and taxes.

We (in America) have been in a very low tax environment for years and so business has been given the "Green Light" to get to work, make a profit and hire more people.

This is looking to change because taxes are going to go up and so if we go back to the equation:

Profit = Revenue - Costs (taxes count as "costs")

...for every one percent tax increase that's a one percent loss in profit and that means someone needs to be fired. (taxes go up, so wages must go down to compensate)

The only possible bright spot is that special government tax breaks are likely possible in order to not kill off the chances that "Going Green" will get started. It's not much to hope for, but that's the reality we are looking at.

The excitement about "Going Green" is looking a little less attractive in the future for America. (well unless McCain can sneak into the White House)

Any thoughts about how this negative business atmosphere emerging in the horizon can be dealt with?

I'm finding it a doom and gloom outlook... (despite the "hype of hope" for the masses)

When the masses start talking about raiding business to fund their ambitions we need to all worry.

[Drunkskunk]

[TylerDurden]

How true... we should continue the current policy of raiding pension funds to aid profitability. No worries there.

[safe]

It's still a valid formula:

Profit = Revenue - Costs

...if you raise the cost of doing business then in order to survive the business has the following options:

Lower Wages.

Layoff a few Employees.

Find a Way to Increase Revenues. (which is hard to do)

Most businesses have a profit margin of about 10-20% which is very narrow. I know when I used to work at a bike shop that the bicycle business is a VERY low profit business and everyone barely scrapes by. The markups are very low.

All I'm saying is that people need to be prepared for the fact that raising business taxes (you know... tax the rich) means that business loses it's profit and has to react. The economy slows and we get a repeat of the Great Depression if we let it go on too far.

Bernanke has been talking about this at the Fed... he can't do much more with the current "Credit Crunch" than to lower interest rates, but when asked about raising taxes he said that doing something like that would undermine what he's trying to do.

Lower taxes and lower interest rates tend to promote growth.

Higher taxes and higher interest rates tend to retard growth.

...so if taxes go up (for massive social programs) then the economy goes down. It will be like the Jimmy Carter years with high taxes, high unemployment and sluggish growth.

I'm old enough to remember. (that's the problem with being old you know too much and the stuff that kids fall for don't work on you anymore)

You have to understand that there is a "Business Cycle" and we are at the end of one of those cycles. If we can just hang in there and not change things too much the market will recover naturally. It's when people over react and reach out for radical change that they tend to make things worse. We are currently about to do the radical changes that history (and simple math) have proven to be the wrong choice.

Just do the math and ignore the rhetoric...

[Mathurin]

This thread needs more graph regarding the average height of the WTC:



Edit: sorry the axis are labelled.

[Link]

This thread needs more graph regarding the average height of the WTC:



Edit: sorry the axis are labelled.

Methinks I see an anomaly in that graph there .

[deardancer3]

"Any thoughts about how this negative business atmosphere emerging in the horizon can be dealt with?

I'm finding it a doom and gloom outlook... (despite the "hype of hope" for the masses)"

Soooo, what was your goal in starting this thread?
To get folks to agree/disagree with the above?

I personally disagree with a blanket statement of the above for the future. "negative business atmosphere emerging in the horizon " The present negative business atmosphere, (and the near future) is largely a function of the housing/credit crunch- brought on by a large scale conspiracy of willing conspiritors and victims- Home builders with houses and not enoug buyers in 2004/5, overly creative mortgage brokers, lax oversight agencies, overly optimistic home owner buyers, and a general attitude that the good times would never end.

in 1997/8/9 all computer buyers were told that the Y2k bug would bite everyone unless they all bought new h/w and s/w. so they did. then in 2000 and 01 no one needed any new computers, everyone had one, since the y2k bug turned all future customers into early customers, and NO customers in 2000 and 2001, so computer sales crashed.

Similar thing happened to housing, starting in 2004. Not enough buyers for new homes, creative loans turned non-home buyers, (rentors) into buyers. More and more loan creativity, ARM's, then zero down, then negative amoritization loans, then zero documentation loans.

When the loans recalibrated or home buyers hit hard times, some buyers went belly-up. Too many bellyups and home prices quit going up. Then the "home owners ATM machine" - or house as some call them, quit putting cash into homeowners hands for refinancing the increased value. And no new buyers because they had already tried to buy a house before they had a decent job, downpayment and the income to support a normal mortgage.

So our housing inflation and credit oriented cunsumer based economy stuttered.

Time to sober up and get thru the hangover, change our ways. Admit we are Debt-aholics and get straight, or we are doomed to repeat this over and over again.

Not a negative business environment, Its a "get real" envirnonment. Most Good businesses will do OK. if they get real.

[mvadventure]

I've typed and deleted my response on this thread a couple of time, maybe this time it'll actually get submitted.

The gloom and doom remains relative to a specific area and mindset. It's probably not a good time to open a retail store specializing in Crisco but may it could be ideal for alternative transportation. Product, marketing and customer service will likely succeed when based upon realistic goals for your market. There is no realistic formula however for profit than revenue - costs, the whole key is to manipulate the revenue and costs to generate the most profit.

IMHO the marketeer who can garner public acceptance of the product, the manufacturer who can deliver the product at an acceptable price in a timely fashion and the retailer who can deliver customer service for that product is a very powerful combination. Since this is an electric vehicle forum and using electric vehicles as a product it's easy to see that now may be the time for such a product to appear.

When the product appears however, the combination of marketing, manufacturing and customer service should appear together for maximum impact. Wal-Mart has the product with the Currie, they have the distributorship yet have ignored the marketing and customer service aspect. A bright innovator with national marketing aspirations could very well take a working local concept to extremes not heretofore imagined assuming product would be available. I don't think the Currie in it's current configuration is the right vehicle for this attempt but if something like the Optibike could be manufactured in bulk and distributed with a wholesale price in the $1,000 range (and it can) then it's time for the experiment to begin. Marketing such a product, in the hands of skilled professionals, could generate sales of the product in the hundreds of thousands if not millions.

Who knows, I might even do it. Probably not but could be. At least start product development.

Mike

[safe]

House Gone Empty? Raid Businesses

This chart sums up the magnitude of the American boom and now bust in housing. Look how extreme the "Home Price Index" got recently and these number go back to the 1800's.

What's happening is that the poorer and less educated people bought big homes that they could not afford and they are losing everything as the values plummet. The left leaning politicians are promising to raid business in order to float the bankrupt people. The wealthy and conservative will not be harmed by business being crushed by heavy taxes (because they will seek safety with their money and just wait for better days) but the poor will actually be hurt the most by unemployment.

This is a "rerun" of the Great Depression in that the money boom (2000) is followed by a credit crunch (2005). All the mistakes of the past are repeating.

[OneEye]

This thread needs more graph regarding the average height of the WTC:



Edit: sorry the axis are labelled.

Methinks I see an anomaly in that graph there .

Yup, the average for 2001 should be only about 2/3 as much, as the building was only standing for just over 8 months that year.

[safe]

Cycles Repeat - History Repeats

The last business cycle ended in March of 2000. By the time in 2001 when the attacks took place the market was already on the way down. It was as a response to the "Money Boom" that every time in history you get a "Credit Boom" that follows. (which is where we are now at the close of the "Credit Boom")

It's human nature...

History repeats itself because human nature is a constant.

People remember their OWN history but FORGET the history of people who are dead.

So in America we have FORGOTTEN the history of the 1930's because all the people from that time are now dead. (but people today are keen to be nostalgic about the 60's, 70's, 80's or 90's)

Got it?

911 was not the cause of the last business cycle decline, but it was well timed to make a big splash.

From a terrorists perspective this would be a great time to attack, but with Obama (our own radical muslim clone) potentially taking over anyway they might resist the temptation so that their guy can get elected.

[safe]

Reality Check

My point about this thread has been that we need to face reality that we are at the end of the Credit Boom and Bust cycle and the fact of the matter is the future for "Going Green" will suffer if the economy is bad. You can't grow fast in a situation where money is frozen (debt problems) and the government starts to raid the businesses in order to feed itself. I'm just trying to express the reality here and the fact that unless people are smart about dealing with this situation you can expect EV profits to be slower than you might hope.

Even though the "Going Green" economy will be profitable it's not been so this far. I've seen the reports on the "Green Business" profits and they've been pretty weak.

If the boom for "Going Green" is really going to happen we need to have some sympathy for business.

You can't hate business and then expect business to grow green.

Going Green Means "Business" (they are one in the same thing)

(as the joke goes: "How have you been keeping busy? ...because that is your 'busy-ness'")

[Mathurin]

Long winded argument that showing that that captain oblivious is hard at work on previous posts, including some of his own. Good deal of neko mimi slughtering. Pointless repost of graph that has been demonstrated to be inaccurate: