Tuesday, December 4, 2012

Show Me The Profit - Grandpa

In a recent senior management meeting, our Chief Financial Officer, who is a CPA, reminded this CEO Blogger that in considering a new business venture, it is not about the revenue potential; but rather the profit potential that counts.   Of course, this is Business Management 101 and a lesson I learned at the foot of my Italian grandfather when I was about 10 years old.   My grandfather only had a fourth grade education when he came America from Italy, speaking no English, to pursue the American dream, so he learned about PROFIT hands on, not out of a book.  

Grandpa started with a horse and buggy selling olive oil and eventually ended up selling fruit door to door, owning a successful grocery store, importing grapes from California by the box car when people made their own wine, selling fish by the lug and Christmas trees during the holiday season.   Grandpa told me that the PROFIT on each of those 10 or more box cars of grapes, he imported from California to Ohio, each year, 60 years ago, was $13,000.    A new Buick in those days cost about $2,000.   So, by any standard, Grandpa understood the concept of PROFIT, even though he only had a fourth grade education and frequently lectured me about it, when I was a kid during his winter visits to where we lived in California, once he finally retired. 

My grandfather took the PROFIT he was earning and bought real estate with it to secure his family future because he knew one day he would not be able to work 24/7.  Because he was very community minded, my grandfather worked with others in the small town in Ohio they lived in, to build the Catholic Church, that still stands today, where many of our family members, born in the United States, were baptized.   Yep, Grandpa knew that it was not what he sold the box car of grapes for that mattered; but rather the $13,000 in PROFIT, per box car that was critical. 

In fact, Grandpa never told me how much he paid for the box car of grapes, or how much he sold the grapes for to determine PROFIT.   All he described was the PROFIT because that was the number that stuck in his mind.  Maybe if he had been a CPA, like my Chief Financial Officer, he would have given me all the details.  Oh well, since my Grandfather only had a fourth grade education, I guess he only learned about the bottom line in fourth grade math.   That is a lesson everyone in managment in any business needs to learn.  Thanks for showing me the PROFIT grandpa.  This CEO Blogger learned those lessons well.   

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