Farm4Profit Podcast

15 Ways to Make Your Farm More Profitable

Episode Summary

We summarize a list from INC.com for businesses and relate it to your farm. A list of 15 ways to make your farm more profitable.

Episode Notes

This list is from INC.Com. Written by David Finkel a professional business coach.
Here is a quick list of the simple things you can do to increase your company's gross and
operating profit margins. 

  1. Speed up your design cycle (Decision Making).  This can allow you to accomplish
    more tasks in half the time, potentially increasing your profits over 30 percent. The
    faster you can make a decision the more efficient your team can become.
  2. Eliminate tasks and activities that don't add value to the company or customer.
     Every dollar you save by eliminating the cost of things that don't add value to your
    company drops directly to your bottom line.
  3. Increase pricing.  If you bill hourly, review your billing rates and push them higher.  If
    you charge per product, look for ways you can command a higher price.  Could you
    bundle more value into a package?  Improve your marketing and sales scripting to
    effectively sell at a higher price?  Or could you just boldly increase your pricing?  Most
    farms/businesses set their prices when their business was first launched, and since
    they were so hungry for business, they set pricing levels low. Over time, the business
    likely only made nominal increases to pricing every few years, but rarely did the
    owner ever sit down and fundamentally rethink his or her pricing model. Well take a
    close look at your pricing now.
  4. Regularly review your administrative and operational staff levels closely.  Let your
    revenues grow faster than you’re hiring. If you have underutilized staff create
    methods of task that can add to your bottom line.
  5. Shorten your sales cycle.  How can you close your sale faster?  This will decrease
    your sales cost per transaction and free up a lot of hidden cash flow that previously
    was locked up in your sales staff. – biggest ones are early season discounts, interest
    expenses, and product condition.
  6. Increase the dollar value of every sales transaction.  Ask, How can I get each
    customer transaction to be for a larger dollar amount?"  What upsells, cross sells, or
    resales could you strategically implement?  What package offers could you test and
    introduce?
  7. Do the trucking yourself
  8. Manage quality (in the meat, grains, etc)
  9. Deliver to final destination
  10. Deliver on their schedule
  11. Beware the steep cost of attrition/retention. Customer retention is a strategic
    expense if spent wisely.  How can you increase your customer retention?
  12. Landlords
  13. Private Meat Sales
  14. Grain Merchandisers
  15. Employees
  16. Feed your winning sales people more leads (even if that means you starve your
    lower performing sales people of leads.)  This is not a time to be "fair", but to be
    strategic.  If every lead you give to John is worth $2,100 and every lead you give to
    Sarah is worth $3,200, then you've got to take this into account when you divide

leads. Be transparent about this and let it be a spark to help John learn how to
increase his own dollar value per company lead given to him. Think of this with
employees. If one employee is better at a task, give them the option for overtime and
send the others home. More worth your money.
9. Strategically map out systems. Look for ways to educate your staff on the ideal use
of their time with your product or service.
10. Shift a cost from a fixed to a variable expense to give yourself greater flexibility.
 This is a way to protect your cash flow.  It is extremely important for unproven
tactics and strategies.  Flex leases, variable rate loans (inverted now), basis
contracts.
11. Shift a cost from a variable to a fixed where the value is proven.  Make this shift
only when you can negotiate a substantial price savings by doing so. Fertilizer, seed,
insurance, interest rates (now)
12. Consistently look for ways to lower your fixed overhead.  Scrutinize your base
expenses to eliminate non-strategic expenses that just don't add value to the
company or to the customer.
13. Negotiate hard.  Take the time to plan out your negotiation strategically.  Create
competition for your dollars.  Create a list of concessions you want, with extras for
you to trade off.  Research the market to better understand the best deal you can
expect.  Even hire an experienced negotiator to help you make the purchase on the
best price and terms you can.  If the asset you're buying for your business is large
enough, the ROI on your negotiation work can be immense.
14. Get clear on all the costs of inventory: cost of capital; storage; insurance; etc.  This
will help you make informed stocking levels. – placing insurance premium
equivalents into a reserve account can add up over the years and create a pool of
income generating self-insurance.
15. Set optimal inventory levels and stick to them.  Constantly be on the lookout for
ways to safely reduce your inventory levels.  If you have inventory you're unlikely to
sell, scrap or donate it so that you can free up the space and write off the inventory.