How can Patagonia survive as a company if it gives way all of it’s profits?
In: 0
“Profit” is what’s left after the costs of running the company are covered. So *the company* is, by definition, fine. The money used to pay for manufacturing the products, to pay employees, or to pay rents for the physical stores count as costs of running the business, not profit.
Normally, the profit goes to the owner. A small business owner might use the profit to pay their rent and buy groceries, etc. A large business may not *have* a single owner, in which case the profit might be split among multiple owners, or shareholders.
The only person theoretically threatened by Patagonia’s move is the owner of the company. Presumably, the owner has another source of income, or maybe they already have enough savings to decide they don’t need the profit from Patagonia.
Now, if the company were to give away its **income** (which is what the company gets *before* the costs are covered), they’d be screwed.
**To use an example:**
I’m selling a cake. The ingredients from the grocery store cost me $10. My delivery guy charges me $5 to deliver the cake to my customer. I charge my customer $20.
So, my income is $20, but my profit (income – costs) is only $5.
Latest Answers