During a recent meeting with a business prospect, he shared his frustration with the rising costs of most inputs, especially the commodities he has been purchasing for his dairy operation. He was quite adamant about it, too, stating, “What’s the use? I’m about to give up…” He has historically been very profitable, as illustrated by his strong equity position.
In response, I shared with him the following quote from the movie “The Art of Racing in the Rain” by Garth Stein: The main character Denny is advised by his driving coach that “There is no dishonor in losing the race. There is only dishonor in not racing because you are afraid to lose.”
The same is true for us today. Challenges will arise, but we must stay in the game. As I have stated numerous times, if you measure something, you can understand it. If you understand it, you can control that item, and if you can control it, you will be better positioned to improve it. This is true for both Revenue and Expense items in your business.
I complete monthly financial analysis for each of my Clients and I believe it has allowed us to accomplish several tasks. First, on the cost front, it has allowed us to catch expense items that are rising more quickly, providing us with an opportunity to make adjustments to their cost structure before these items get out of control.
Additionally, it has led us to start identifying new Revenue sources. While this may sound impossible to some people, I have Clients in the dairy industry who also sell Almonds, Walnuts, Grapes, Methane captured & converted into various energy products, Breeding Stock, Beef, Dried Manure for bedding and Feed Crops for other livestock operations. Are some of these possible for your operation? It is likely worth your consideration.
One final benefit that Clients have attained by having our financial analysis regularly. They know what their Break-Even levels are for Selling Prices, for their Costs/unit and for their various Production Levels. Just knowing these measurements equips them to fully understand what items need “fine tuning” and to what degree, assuming other variables stay the same. It provides them the information they need to take action and move toward greater profitability.
Can I assist you with this same process? If so, please contact me.
Let’s take your business to the Next Level!
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