This series started with a promise to show you how to improve your bottom line.
There’s no great magic in making your business more profitable. The authors of these columns, who are myself, Ross Daily, Louis Dionne and Gordon Williams, talked only about basics. Those basics included the importance of being a proactive manager, having a financial plan, having a good people manner, earning a return on invested capital, and getting over the hump in succession planning.
If what we’ve written makes sense and has motivated you to make changes in your farm business, then read on. I’ve got a bonus for you in this column, the final in the series.
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The bonus is this: You’re not only in a position to make your business more profitable, you’re ready to expand into a new enterprise. The concepts used to make a business more profitable can as easily be used to create a successful new enterprise.
If you’re open to change, can adequately assess your position and can handle various financial concepts, then you’re ready. All you need is a good idea and a sound business plan.
Not convinced? OK, here are four lessons that I’ve learned from my entrepreneurial endeavours. But they’re really just a long-winded way of saying that all you need is a good idea and a sound plan.
- Know your target market. I started an on-farm market because I realized if I wanted a larger share of the food dollar, I was going to have to take some additional risk and do it on my own instead of sending my cows to the packing plant.
I knew nothing about running a market, so research became my passion. We started by doing a traffic count on the highway that runs by our farm. But we’ve never stopped. We keep our eyes and ears open and ask questions of anybody and everybody.
We’ve learned you don’t want windows in your market because sunlight dehydrates your produce. The fellow who installed the light fixtures told us we needed one type of lighting for produce and another for the meat display.
When we’re in other markets, or any retail operation, we study their layout, where they locate their impulse-buy goods and how they handle their displays and signs. I can’t emphasize enough that you must be curious. Ask questions and never stop learning.
- Do a budget. I can tell you exactly how many hours it takes to bone and wrap a side of beef. Doing a budget means including every single cost and leaving some wiggle room for unforeseen expenses.
If you want to do a good budget, start by vowing that you will not go one nickel over it. Knowing that you’re bound by the budget really keeps your pencil sharp. In fact, I make a game out of trying to come in lower than my budget, and often I do.
- Have enough working capital. Gordon Williams did a whole column on this. A bare bones financing plan is a big mistake. It’s bad enough when you get hit by some unforeseen setback, but it’s a heartbreaker when you lose all the hard work you put in because you don’t have enough money to ride out the tough times. It’s almost as bad when an unexpected opportunity falls into your lap and you can’t take advantage because the line of credit is exhausted.
- Be passionate. If you’re not getting all charged up by your business, why are you doing it? To my mind, if you don’t have a passion for what you’re doing, you should just drive a truck for somebody.
This goes back to point No. 1. The best people to learn from are those who are passionate about their business. Study what they do. You’ll be surprised at how quickly you get a feel for things. It’s so obvious when it’s done right.
So that’s it. You now know how to improve your bottom line. Armed with that knowledge, the world is your oyster.
The One Year to a Better Bottom Line series is archived at the website of the Canadian Farm Business Management Council, which prepared the columns. The website is www.farmcentre.com/bottomline. Jim Lorraine of Truro, N.S., has a 350-head beef herd and an expanding fruit, vegetable and agritourism operation, including a greenhouse, farm market and corn maze. He and his wife Tricia were the 2002 Outstanding Young Farmers for Atlantic Canada. The farm employs as many as 20 full-time staff and up to 50 seasonal workers.
