I won't close down a business of subnormal profitability…
“I won't close down a business of subnormal profitability merely to add a fraction of a point to our corporate returns. I also feel it inappropriate for even an exceptionally profitable company to fund an operation once it appears to have unending losses in prospect. Adam Smith would disagree with my first proposition and Karl Marx would disagree with my second; the middle ground is the only position that leaves me comfortable.”
About This Quote
This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation.
He argues that a business must be profitable before investing further, and that even highly profitable firms should not fund perpetually losing operations, seeking a balanced stance.
In simple terms: Only invest in profitable businesses; avoid funding endless losses.
Key Takeaway
Prioritize profitability over marginal returns.
Themes
profitability
investment
balance
risk management
Mood
pragmatic
analytical
Type
business
strategic
When to use this quote
- corporate finance
- budgeting
- strategic planning
- investment decisions
Key Concepts
economic rationality
shareholder value
strategic restraint
Questions to Reflect On
- Is a losing division ever worth keeping for strategic reasons?
- How do you define “acceptable” loss?
A Different Perspective
Ignoring long‑term strategic value can limit growth.