It's impossible to run an organization at zero capital buffer perpetually (see: even Wikimedia likes to have a capital reserve). That's a great way to end up bankrupt. What you're suggesting is well beyond absurd.
When the recession hits how do you plan to buffer the revenue beating you're guaranteed to take? If you had built up a cash reserve, you can absorb some or all of the hit.
Where do you plan to get a large amount of capital to make opportunistic investments in expanding what you do? Debt? If you say debt / loans, that's just admitting the necessity of the capital buffer (which is better derived from profit via operations rather than paying for debt and the associated debt interest).
What's your plan for surviving a recession or industry change or regulatory hit (which can demand immense spending on compliance adjustment) with either near 0% revenue growth or low single digit growth? That's the most common business scenario, not 30% or 50% growth every year.
What if you have the opportunity to hire N talented engineers from a failed competitor. You've got zero or very low revenue growth and hiring these talented people could very plausibly alter your trajectory. It's an opportunity to jump on. Where is your capital for that coming from?
You can apply the exact same capital outlay scenario to equipment investment / upgrade opportunities.
How do you plan to absorb any manner of business disaster?
Profit is inherently necessary so that when inevitable bad things happen, you can afford to absorb them. It's also necessary for opportunistic expansion and investment, when you see an opportunity that requires a sizable upfront capital allocation. One of the biggest differences between organizations that seize on opportunities and those that don't or can't, is having the required capital to act.
> It's impossible to run an organization at zero capital buffer perpetually (see: even Wikimedia likes to have a capital reserve). That's a great way to end up bankrupt. What you're suggesting is well beyond absurd.
And yet, Wikimedia is a non-profit. So is Harvard. Non-profit doesn't mean you can't have a capital reserve. It only means you don't pay that capital reserve out to shareholders.
> Profit is inherently necessary so that when inevitable bad things happen, you can afford to absorb them.
Some of the longest-lasting institutions in the world are non-profit.
When the recession hits how do you plan to buffer the revenue beating you're guaranteed to take? If you had built up a cash reserve, you can absorb some or all of the hit.
Where do you plan to get a large amount of capital to make opportunistic investments in expanding what you do? Debt? If you say debt / loans, that's just admitting the necessity of the capital buffer (which is better derived from profit via operations rather than paying for debt and the associated debt interest).
What's your plan for surviving a recession or industry change or regulatory hit (which can demand immense spending on compliance adjustment) with either near 0% revenue growth or low single digit growth? That's the most common business scenario, not 30% or 50% growth every year.
What if you have the opportunity to hire N talented engineers from a failed competitor. You've got zero or very low revenue growth and hiring these talented people could very plausibly alter your trajectory. It's an opportunity to jump on. Where is your capital for that coming from?
You can apply the exact same capital outlay scenario to equipment investment / upgrade opportunities.
How do you plan to absorb any manner of business disaster?
Profit is inherently necessary so that when inevitable bad things happen, you can afford to absorb them. It's also necessary for opportunistic expansion and investment, when you see an opportunity that requires a sizable upfront capital allocation. One of the biggest differences between organizations that seize on opportunities and those that don't or can't, is having the required capital to act.