Considering the rising costs of so many inputs today, are you concerned about your bottom line results this year? If so, I think you are on the right track for meeting with greater levels of success. Congratulations for thinking ahead!
As I have stated so many times previously, if you measure something, you can understand it. If you understand it, you can control it, and if you can control an item, it is far easier to improve it. Yet, to truly measure our bottom-line results, we must have a system to accomplish this process. That is where an Annual Budget becomes crucial. It’s very difficult to make Actual to Budget comparisons when you don’t have your expected results budgeted.
As we consider the current rise in other operating expenses, a person can start to feel overwhelmed. I understand.
Ultimately, however, we each need to rise above the pressures & move forward. No one ever said that life would be easy. I love the following quote from management guru Peter Drucker in his book entitled The Age of Discontinuity:
“The best way to predict the future is to create it.”
What does he mean? I believe he is saying that we need to do all we can to create the future we want to have. Wherever we are in life, we made an appointment to be there. Our positions today have been determined by choices we made in the past. Future results will be influenced by what we do today.
1.) The volatility of all agricultural markets has risen during the past 20 years. That’s a fact. However, the tools to deal with this change have been in place for quite some time. You can use put options to protect against severe downturns in milk prices without giving up the upside potential of higher prices. I know that they cost money & may go unused, but not using them just because they may not be exercised makes about as much sense as scolding your insurance agent because he sold you house insurance and your home did not burn down!
2.) You can contract some costs as much as you are comfortable with. Many of my Clients have been doing this for years. Unfortunately, during the last 10 years, I have observed that many feel the need to lock in every item at the absolute minimum cost. This is probably unrealistic for anyone. Do the best you can, but don’t hesitate to make the decisions you need to in a timely manner.
3.) All of your other expenses can be projected and should be monitored on a monthly basis. Regular review of your expenses can be critical to catching those cost items that are getting out of line earlier. Start by developing a reasonable budget to make your comparisons with, and if you need assistance, please contact me.
4.) Finally, even with a solid plan in place, you can occasionally get off track. The key is to recognize the problem early & get back on course.
Are you positioned for success? If the consideration of these four points can boost your financial results, why not give them a try? I have seen this process work for my clients. If I can assist you on this process or in seeking increased efficiencies, please contact me.
Let’s take your business to the Next Level!