What are profits and why are these important to a business?

Profit is the surplus remaining after total costs are deducted from total revenue, and the basis on which tax is computed and dividend is paid. It is the best known measure of success in a firm.

Profit is a very important concept for any business  (particularly a start-up).  Profit is the financial return that firm aim to achieve to reflect the risk that they take. Given that most firms invest in order to make a return, the profit earned by a business can be used to measure the success of that investment. Profit is also an important signal to other providers of finance to a business; banks, suppliers and other lenders are more likely to provide finance to a business that can demonstrate that it makes a profit (or is very likely to do so in the near future) and that it can pay debts as they fall due.
Profit is also an important source of finance for a business. Retained profits are an important source of finance for any business, but especially start-up or small businesses.  The moment a product is sold for more than it cost to produce, then a profit is earned which can be reinvested.

Profit can be measured and calculated.

PROFIT = TOTAL SALES less TOTAL COSTS