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Friday, March 20, 2015

Determining the profitable areas of your business.


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?
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?

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