The goal of any company should be to create profit as a reward for supplying a great product or service. However, many entrepreneurs are so excited about making and marketing a product that they forget there are many stakeholders who will appropriate a portion of their profits.

Who are the Stakeholders in Profitable Companies?

Suppliers, distributors, accountants, lawyers, bankers, partners, executives, employees, unions, and shareholders are all stakeholders in your company. They directly or indirectly benefit from the firm's profitability. So, choose your stakeholders well. They can increase the profitability of a company, for example:

• Do not rely on only one supplier because your business could be held ransom at a critical juncture.
• Your sales manager can help you increase your bottom line.
• A good lawyer can help create contracts that protect your business interests.
• Your investment advisor can help you invest some of your profits personally in a mutual fund portfolio. Is it not wise to pay yourself first when so many other entities want a piece of your action?
• Your tax specialist can plan to reduce your corporate and personal taxes as much as possible.

The Inevitable Stakeholder

When a firm becomes profitable, the government becomes a stakeholder in the added value of the company, taking its share in taxes, as profits are taxable. Because the government makes the tax laws, it demands a huge share of your profits. So, treat Canada Revenue Agency (CRA) as a real profit-reducing entity when you want to expand your horizons.

The Ultimate Stakeholder

If your company is incorporated, your shareholders have a residual claim on the company's profits. To shareholders, whether one or thousands, profit, also known as the 'bottom line', is the measurement of a company's true success.