Profit and pro-labore of the entrepreneur

One of the most common misconceptions among entrepreneurs is the interpretation of profit and pro-labore. Pro-labore is associated with the remuneration of the directors of a company for the work performed, that is, the equivalent of a salary.

However, the entrepreneur tends to inject particular financial resources in the establishment and leverage of the business, with money coming from sales of real estate, property, savings and other items of family patrimony, which induces a sense of inseparability from what is natural person and legal basis.

From the beginning of the venture, the founders concentrate their energies for the consolidation of the business, which makes this the natural action at that moment, notwithstanding the success of the company.

As the withdrawals by the entrepreneur are directly related to the profit of the company, the profit becomes pro-labore. In the conception of the entrepreneur, "what I put I want to withdraw"!

This confusion of concepts can significantly impair the development of the business, since it is important to reserve the capital needed to take advantage of the business opportunities that may arise.

It is essential, therefore, to the entrepreneur, to distinguish the withdrawal of pro-labor from the profit, since it leads the company to healthy survival, due to the awareness of the need to build reserves for reinvestment in the business itself or for contingencies.

As for pro-labor, it is fundamental to establish the proportionality of this withdrawal, taking into account the size and capacity of payment of the company and what corresponds to the fair remuneration in relation to the professional performance of the entrepreneur.

Therefore, making absolutely clear these conditions leads to a more conscious and realistic management and as a result, the entrepreneur will not only take away what he has put, as much more!

To conclude this reflection, we find two scenarios. In the first, the individual, in the case the entrepreneur, concentrates his particular resources in the company. In contrast, in the second scenario, the resources of the company are concentrated in the individual, that is, the entrepreneur.

In both scenarios, the entrepreneur can be subjected to the continuity of that sense of inseparability, resulting in the confusion and mixing of personal and business accounts. This, at some point, will lead to a collision of roles and conflicts of interest, which may result in failure of the business and the entrepreneur.

[i] Mises, L. Von (2017). Lucros e perdas. ed. LVM.