What does profitable mean? Definition and examples
If a business is profitable, it means that it generates a profit rather than a loss. In other words, the business achieves a financial gain. In a non-business context, the term means ‘useful’ or ‘beneficial.’ For example, if I say: “I’ve had a profitable day,” it means a worthwhile day, a beneficial or useful day.
This article focuses on the meaning of the term when we use it in a business context.
The Cambridge Dictionary has the following definition of the term:
“Resulting in or likely to result in a profit or an advantage.”
A profitable organization
When we use the term for organizations, we mean businesses that make a profit. A profit occurs when you generate more income than you spend. In other words, more money comes in than goes out. All business enterprises aim to generate as much profit as possible.
Businesses use many different tactics to make a profit. Before deciding whether to approve a new venture, senior management will try to determine whether it is commercially viable.
Viable, in this context, means profitable, but not just over the short-term. A viable business or project is one that we expect will make profits year after year.
According to SmallBusiness.Chron.com:
“A profitable organization is one that generates more money than it expends. Profitable organizations are businesses that use a variety of tactics to make a profit.”
Etymology of profitable
Etymology is the study of the origin of words and also how their meanings have evolved.
The term emerged in the English language in the thirteenth century with the meaning “yielding benefit, useful.” It came from the Old French words ‘Profitable, Porfitable.’
It was not until 1758 that it also acquired the specific sense of “money-making.”
Most profitable small businesses
In some businesses, it is inherently easier to make a profit than in others. Perhaps the expenses and overheads are exceptionally low, or consumers are willing to pay a high price for a product or service. SmallBizTrends.com listed the following as the most profitable small businesses in 2018:
- Tax Preparation and bookkeeping. Bookkeeping involves recording all of a companies day-to-day financial transactions.
- Catering services.
- Website design.
- Business consulting.
- Courier services.
- Mobile hairdressing.
- Cleaning services.
- Tutoring online.
- Logo design.
- Real estate brokering.
- Property maintenance.
- Warehouse storage.
- IT support.
- Personal training.
As far as small businesses are concerned, services are more profitable than, for example, manufacturing.