There are some differing theories as far as what profit really is. After all, some people think that profit is any money that you have left out of what you take in, after all of your expenses are paid. Other people think that profit is the additional money that you have taken in, after you have paid yourself back for all of your initial investments into your business. And still other people believe that profit is something that does not reach you at all- that it can only really be calculated from the point of view of an outside investor who has put money into your business once it already exists. All of these different arguments do have their merits. So let’s take a quick look at them, and you can make up your own mind.
The profit that you take in after your expenses is something that you can pay yourself. While some people think that the money that you originally invested into your business should be the sum that you should pay yourself back (plus interest, of course), some other people think that it goes deeper than that. Consider how many long days and night you put into your business during its early phases. How much is that worth? Is that time something that you can ever properly be compensated for? Or will you never be able to take home a “real” profit, because of that inability to gauge it?
On the other hand, some people think that the profit that your business takes in really has nothing whatsoever to do with what you have originally put in. After all, you are financially (and let’s face it, emotionally) far too close to your business to be able to be completely dispassionate about its level of success. It would be like calling your own child profitable. That means that only an outside investor can really judge how much profit they can receive from it.