[BLOG] 5 Proven Ways to Boost Farm Profits without Raising Prices
27-08-2012 13:28:34 | by: Administrator | hits: 4142 | Tags:

by Tayo Solagbade.

This article will interest you if you run a farm business (or are aspiring). With today’s tough economic conditions, any smart business person will be open to ideas that can help boost profits.
Read the strategies outlined below with an open mind. They are not based on unfounded assumptions or theoretical musings. Rather, they have been used to increase profits without raising prices, in real-life batch operations similar to farm businesses. Adopt them today and begin to reap improved farm profits!

1. Reduce Your Variable Costs: Aim to spend less to produce the same farm output. I refer here to routine expenses to keep your farm business running.

Identify items responsible for up to 80% of your total expenses. Think up ways to spend less on them without negative results. E.g. feed purchases, wages etc.

Explore alternative feed ingredients (e.g. cassava vs. maize or Maggot Meal vs. Fish Meal) to lower feed costs.

Consider barter exchange. Burt Dubin – a 25 year veteran business owner - says “Barter is Smarter”. I agree. You don’t have to pay cash for everything. Would your staff accept (“off-spec”) farm products of equivalent naira value (e.g. crates of cracked eggs) as payment for overtime - or weekend work? That could save you a few thousands on wages.
What about your suppliers? I’ve had clients pay me in kind for 50% of my service fee. Do some creative thinking. Many possibilities exist. And you’ll never know if you don’t ask. A Google search could reveal more.

2. Reduce Your Cost of Sales: How much does it currently cost you to sell off your market ready products? Some farmers place expensive newspaper adverts. Unless they find a way NOT to pay cash, I consider it a waste of scarce money.

Some farmers have lamented to me about how market women buyers often hold them to ransom at harvest time. They sometimes have to sell their eggs at unprofitable rates when there is (supposedly) a glut in the market.

A simple and effective solution exists. Months before you need to sell, reach out to owners of facilities that routinely buy the kind of farm produce you offer.

From working with hotel and restaurant clients, I know they often pay two to three times MORE than what farmers get paid on farm. Why not sell directly to them and make more? You can even get them to pick it up from you!

Avoid chalking up expenses going on door to door calls. Use your phone, and email to get appointments. There are also smart low cost ways to use the web to attract such bulk consumers to buy from you on a continuing basis. Hotels and restaurants WILL be interested if your offer is good. Forget big name outfits. Contact small and medium sized ones. They’ll be flattered – and willing!

Some farmers have called me expressing fear of rejection. There’s really nothing to be scared of. You just need to know what to say, and how to say it. As a business owner, you must develop your selling skills. Need help? Call me.

3. Increase Your Farm Output By Innovating Inexpensively: Explore ways to increase your farm animals’ performance without spending money. For instance, I know farm owners who use cooked and mashed chicken intestines (and sometimes Indomie noodles waste) to supplement what’s fed to their fish.
The rapid growth recorded results in arrival at table size faster. They get more fish flesh at less cost, making more profits. You can do something similar.

4. Measure, Monitor & Manage Your Farm's Key Performance Indicators (KPIs): There is a saying that "You cannot manage something, if you do not measure it. Nor can you measure it, if you do not record it".
An article I published 3 years ago explains how to compute KPIs like Mortality Rates, Hen Day Percentages, and Feeding Rates as crucial indicators of the performance of any commercial poultry layers venture.
Other livestock businesses have KPIs that can be used to accurately measure and control the performance of the enterprise.

Using simple spreadsheet tracking, you can conveniently trend those KPIs to better understand your farm business. That will equip you to detect waste points or negative trends and take timely corrective action. Sometimes you’ll make discoveries that’ll help you thwart pilfering as well. All of which will increase your output and profits.

Most people can relate to MS Excel. But if you’d like help to create a simple spreadsheet to record and monitor your farms’ data and KPIs, get in touch.

5. Develop and Implement a Best Operating Process Management System (BOPMS):

This last strategy actually involves bringing together 1 to 4 above…and a little bit more.
Farm businesses are batch production processes. With poultry, you can start from chicks to growers, pullets, up to layers stages. A BOPMS requires establishment of standard operating procedures that will make your farm run optimally regardless of who’s on duty.

You would, for instance, create written work instructions documents detailing approved steps to be followed by each operative in carrying out farm tasks. The objective will be to ensure each task is done the right way every time.

Once that becomes habit, you’ll find that errors will be reduced, and your operations will run smoothly for longer periods. When fewer disruptions occur, your livestock will settle into a rhythm, and their output will become more consistent. And they’ll reach their peak capacity, and tend to stay there longer. That will translate to increased output and sales…and of course profits.


These Strategies Are Endorsed By a Well Known Guru
“Because its purpose is to create a customer, the business enterprise has two - and only these two - basic functions: marketing and innovation. Marketing and Innovation produce results. All the others are costs" - Peter Drucker.

The strategies discussed above are obviously in line with Drucker’s thinking. To increase your farm profits, make marketing and innovation more of a priority. It just plain common sense isn’t it? This is probably why many fail to get it – at first. Hopefully, after reading this write-up, YOU now do.

Good luck!

Author Byline

Tayo Solagbade works as a Performance Improvement Specialist/multipreneur, with a bias for Farm Research & Extension Advisory Services provision. He is the author of the Practical Livestock Feed Formulation Handbook and developer of its accompanying MS Excel-VB driven Feed Formulation spreadsheet software.

Visit Tayo’s Self-Development Nuggets™ blog blog to find out how you can get your FREE copy of his new Practical Guide to Important Feed Ingredients (with high resolution pictures, prices, nutrients, uses, etc.). When he’s not amazing clients with his superhuman skills (wink), Tayo works as the creative force behind his Cost-Saving Farm Business Ideas website, and the Public Speaking IDEAS newsletter (which he publishes to promote Burt Dubin's Public Speaking Mentoring service to experts working across the African continent).

 

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