By Brian E. Ravencraft
A method to address the reduction of unnecessary costs is to first establish which activity of the farm operation generates those costs.
Step 1: Identify activities which generate costs and provide no added value.
Step 2: Decide if changes to that activity will affect business turnover
Answer: NO? Then is the activity necessary or adding value?
Answer: YES? Cost reduction techniques may have adverse effect on business profitability.
Beware: cost cutting can have a long-term negative impact. For some farmers, failure to invest in people, marketing and technology can leave you falling behind your competitors. You are increasingly likely to provide a product and service of inferior quality. You will also be likely to experience above-average team turnover. And ultimately, your customers have a choice, and you will cease to be it.
Deferring payments to suppliers and service providers helps you keep the cash in your pocket longer.… Continue reading