A little research can make a big difference
- By: "Farm Tender" News
- Ag Tech News
- Oct 30, 2018
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By Kelsey Miller - Stocka
Recently I wrote about how to get a sense of the impact your selling costs have on profit. Working out how to recoup some of that cost without losing hard-won revenue is the important bit.
When it comes to maximising profit, every farmer's situation is different so making sure you understand your own operation and the options available to you is the key. Selling options are many and varied and at times can feel confusing if you look to change, there is a couple of things you can do to better inform yourself on the best path for your business to take.
The first thing is to break down the selling costs so you get a sense of where your biggest expenses are. For example if you consistently sell to a feed lot or processor using an agent this is pretty straightforward. Your main costs will be transport and your agent's commission (can’t do much about your levy payments).
So for example, if you sell 1000 sheep over the hook averaging $150 a head generating 150K in revenue, your selling costs may be as simple as 5.5% for your agent fees (including transit cover) = $8250, your transport costs will vary of course depending on how far you will need to transport, in this example let's assume it costs you $3000 in total transport which in total = $11,250 in selling costs that you control.
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Now you have it broken down it's worth taking some time to think though the answer to three questions:
1. What do I get from the money I spend?
2. Is it worth the money I spend?
3. What options do I have to reduce my cost and still get what I need?
Being clear on the best place to focus to improve your returns is half the battle, once you know where your biggest bang for buck is, if it’s been a while since you did this kind of review it might be time to start investigating what options you have to cut some of these costs. Given the pace at which new propositions and options are hitting the market with a little research you might be surprised by what you find and just how much you can save.
Kelsey Miller is the Founder and Director of Stocka
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