Are you really making profits on your direct marketing enterprises? What value are you actually getting from your direct marketing efforts? This workshop will help you look at your farm as a whole and look at each enterprise as a “profit center.” We will demonstrate how to use your existing financial statements (balance sheet, income statement, tax returns) to evaluate your overall business. We will also help you allocate your operating costs and your ownership costs to each enterprise. This will allow you to determine: breakeven selling prices or breakeven sales goals; allocating your resources between each enterprise to improve your profitability; sensitivity analysis of key factors of production; the relationship between marketing, risk management, and financial performance.

Participants will walk away with examples of financial statements, enterprise budgets, and partial budgets. You will be provided with worksheets to help you analyze and improve your operation.

Outline:

A. Basic Financial Statements for Overall Operation
Balance Sheet
Income Statement (Tax Return)
Cash Flow Statement
Basic Financial Ratio Analysis

B. Enterprise Accounting & Enterprise Budgets
Allocating costs to individual enterprises
Sources of existing enterprise budgets
Developing and using enterprise budgets and/or job cost estimates
Short Run Profitability
Long Run Profitability
Resource needs
Breakeven analysis
Breakeven selling prices and quantities
Breakeven input costs
Sensitivity analysis on key variables

C. Evaluating the impact of changes in your operation
Partial budgeting