Devoted to Managers and those that seek to improve their management skills

In many cases, in both small and large business, not keeping a firm grip on financial parameters can be the difference between failure and success.

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This article gives you a good, primer on calculation of fixed and variable costs. The major purpose is to continually remind yourself of the costs of doing business. It is very easy to get involved with the excitement of interacting with customers without keeping a steady eye on the cost of that involvement.

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Mike Wilson, in writing to the farmers in his area, talks about the need to do the same. He also concurs in his field, that this is many times the difference between profitability and financial failure.

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He comments, “But before you jump on the tractor let me suggest one more management exercise - something that could save the whole year. Are you ready for this? Get out the books (not again!), sharpen your pencil, fire up the calculator and - are you ready? - nail… down… those… production costs. Find the magic number. Memorize it.”

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“It sounds like a simple exercise. Yet, only one fourth of commercial farmers in Iowa can actually tell you what their production costs are,” claims Iowa State Ag Economist Mike Duffy.

If the breadbasket of American agriculture has only 25% of their farmers knowing what their production costs are, you can be sure that other areas of business are the same.

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What a strategic advantage for your business to simply do the responsible thing and be way ahead of the great majority of competitors you are contending with.