Every product incurs losses. Traditional products run into losses at the end of the third financial year. Innovative products incur them when the ninth financial year is ended.
In some businesses (smartphones), it is possible to keep those losses under control by launching a new product on the market every two years. But in most companies, this is not possible. They try to keep losses under control through regular cutbacks. Nevertheless, they see their losses grow every two years.
From the year in which a company encountered its first loss, losses grow by about 2% per annum – Although in some industries the costs of losses may get up to 10% per annum. Before the 1950s errors at all companies had similar costs. But Chernobyl has proven that some errors are far more expensive than others – However, the losses are only visible at the end of the odd financial years. The chapter Mistakes when cutting back and the cause of high unemployment explains why this is happening.
A seven year old bakery (a traditional product) did not incur losses at the end of the sixth financial year. But at the end of the seventh financial year, it incurs a loss of 10% of the turnover.
A seventeen year old search engine (an innovative product) did not incur loss at the end of the sixteenth financial year. But at the end of the seventeenth financial year, it incurs a loss of 17% of the turnover.
The method described on this website, makes it possible for companies to gain control over their losses, so they can stop cutting back, and invest in their business again. Entrepreneurs, corporations and shareholders will benefit from this.