Are You Kidding Me? How You Can Make Profit First
As we enter the new year of 2018, I was thinking about several items in the dairy industry that we are facing right now. Then, I started thinking, “Are you kidding me? Four years in a row with these calamitous prices?” I’m sure some of you are absolutely furious at this point if you have been watching projected prices for this year.
This led me to think back to a presentation I had heard where former Notre Dame Football coach Lou Holtz said the following: “At the start of the season, I don’t ask the players if they want to win. I assume they do, but rather I ask them if they can live with losing, because if they can, that’s exactly what they’ll get, because it’s so much easier to have.”
Are we facing a similar situation in the dairy industry? Are you looking at your operation and really digging into the details of all your costs and debt structure? I understand that this is a difficult year, but now is the time to bear down. This will be a requirement just to survive…
I want to share a thought with you. I recently was reading a book entitled Profit First by Michael Michalowicz. In his book, he points out that most business owners focus on keeping everyone else paid first and then see if there is anything left for themselves. Now, I want to make it clear that he is not advocating “shorting” any of your employees or vendors on what they are owed. However, he is asking what I believe is a great question on each and every expense item: “Can I afford this item?” It may be that it is simply time to “shop it” again; you know, do some price comparisons.
We have a Master Negotiator in the White House now. Why not take some lessons from him and ask for lower prices on many of your inputs. I’m not just talking about feed items when I point out that this is why they are called commodities, i.e. you can get many of them from several different sources. Shop them at multiple sources. Dig deep, look closely, and take no prisoners. Your very survival may depend on it!
If you cannot lower these costs, a second great question to ask, as suggested by Michael Michalowicz, is: “Do I need this item?” Of course, only you can answer that question, but I have started asking some of the same questions in my own business. I love the consulting work that I do, but I, like any business owner, need to remain profitable to keep operating. I hope you’ll join me in this “Profit First” endeavor that I call Next Level Thinking!
If you would like to learn more about similar topics and the tactics our Clients have used to improve their outcomes, as well as what applications of these lessons you can make in your business, please join us for our next Success Strategies Business Navigator Program series of quarterly workshops in July 2019. They are designed to teach more people the Finance & Strategy Concepts that I offer business people. Signups have begun, giving you the opportunity to learn these same concepts and meet with other producers who have overcome some of the same challenges you may be facing.
If you need assistance, please e-mail me at firstname.lastname@example.org or check out our website for many useful tools for your ongoing business evaluation at www.success-strategies.com. I’m always available for a follow-up call and wish you the best of success!