[true_religion]

Let's not redefined profits to mean "this busienss can pay for X people's salary".

What if I have five businessses, but none can pay for my salary individually, though in aggregate they make me fairly well off.

Can't I call any one of the busineseses (seperate entities, mind you, not just apps in the store) profitable?

[tonyarkles]

One of the key points in that article has to do with valuing your time. If you're running 5 businesses, then you're clearly not putting full-time 40hr/week into each one. Adjust accordingly.

If you could be earning a salary of $80k/yr from a BigCorp( ~$40/hr) and you have a business that you put 10 hours/month into, then a profit of $400/month from that business is breaking even relative to a full-time job.

[randomdata]

One of my businesses can easily pay the wages of an employee for the time they are needed, but being highly seasonal work, it would not pay for an employee year round. Or to put it another way: On a per hour of work basis, it makes a programmers salaries look like chump-change, but amortized out to a yearly income it's not enough to sustain a living.

Is that profitable?

[lmm]

Sure - that's the same as "my business is profitable, but can't afford to hire another employee yet", only it's a fractional employee that you can't afford to hire.

[damoncali]

In the context of this article, you have one business.

[true_religion]

According to the article, if you have one business and still work for someone else then the business is not profitable.

It basically states that multiple-streams of income means the smallest stream doesn't deserve the definition "profitable".

So questions like mine are valuable to fleshing out this theory....

[damoncali]

It's not so much a theory as it is a colorful way of explaining basic entrepreneurial accounting.

He's talking about the difference between paying yourself and not, in a round about way of getting to this concept: not paying yourself a sustainable wage leaves nothing for investors (even if the "investor" is just you.)

If you have five separate entities that combine to pay you a salary, you win. Any extra money can be used to grow one or more of those businesses. ..if they are all tied together in ownership (for example, they are all owned by one person).

If those 5 entities are not tied together in some way, then no, they are not sustainably profitable on their own. That is, each entity does not throw off enough cash so that there is some left over for reinvestment unless you combine them all together.