Traditional
financial reporting describes the whole business. But the average can hide a
lot of details – both good and bad! Learn how to tell which segments of your
business are pulling their own weight and which ones are dragging down the
average. Then, learn to tackle each segment’s strengths and weaknesses to
improve your bottom line.
Diversified
farms present particular financial management challenges. Let’s use, as our example,
a farm with a farm market and a bakery, as well as pick-your-own and wholesale
fruit sales. The farm products are sold through three different channels. Which
of these channels earns the best return for the fruit produced? Which should
the farm do more of? Is the growing enterprise cost-efficient, or could the
market and bakery buy in fruit from a less expensive source?
Have you
ever wanted to learn about analyzing the true profitability of each of your
enterprises? The complexity diversification brings means that we’re often
managing by the average. But averages can hide a lot. If the farm boasts an 8%
profit, it’s likely that the combination of enterprises includes at least one
very profitable segment and one that’s losing money (or barely breaking even).
Focusing on
the individual enterprises means business owners can put their efforts in the
areas that need it the most in order to improve profitability.
- What is an enterprise analysis?
- Practical tips for completing an enterprise analysis
- Pricing considerations for homegrown produce (when selling from the farm enterprise to the market enterprise)
- Which enterprise should get the capital investment?
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| Can you tell which of your enterprises is the most, and least, profitable? |
During a
farm-market visit this past winter; farmer Jim, Rudy, Greg and I were
discussing consumer behavior, promotional activities, and market management. As
you have probably experienced yourself there were many twists and turns to this
talk as we looked at the many enterprises and how they did, or could, fit
together. Recognizing many other marketers might also have these same concerns
Jim said “yes” when I asked if we could use his market as the demonstration
site for a full day exploration of intensive study.
If the market / farm you mange has some
of the above concerns, perhaps you may want to consider actively participating in
an upcoming Intensive Study Day. Check the details
of this March 31st event and register
today.
The idea
for this event is for you to come with your knowledge and your questions. We
have confirmed a distinguished farm-marketer panel ready to share their
perspectives and practices. We also have an industry professional with years of
experience consulting with marketers and agritourism operators to help us
understand concepts of profitability.
This is an
open event to get your concerns addressed. Country Barn is the laboratory in
which we will explore the topics and resolve the problems. Farmer Jim is being
gracious by allowing us to use his businesses as our living examples. He hopes
to get concrete answers to his questions. Perhaps you will also?
