Always think in terms of profits not cost control. I am going to say it once for all of those who can't seem to get by it if I leave it out...yes costs do matter and they matter a lot but reducing cost without understanding the impact on revenue is a common mistake.
The better way to think in times like these (or any other time for that matter) is that every dollar spent is an investment (not an expense). The difference between an investment and an expense is that an investment is made with full expectation that it will not only be recovered but that it will generate a positive return. Expenses or costs are paid with the idea that they are a necessity and that they are a payment for inputs. That attitude and those expenses should be dumped.
Any cost which is incurred that you cannot directly think of how it is going to generate income is a candidate (but not a sure candidate) for reduction or elimination.
There are two types of investments that you should think about making. First, those that are currently being made as part of the ongoing operations, and second, those you have not been making but may very well be something to consider (even though you are currently not making a profit on each animal sold). Yes, actually adding something during times of losses is on the table.
The first strategy with existing investments is to make sure you are acquring them at the lowest possible cost. We will talk about feed next time as it is obviously the elephant in the room, but for now, think small and save big.
No vendor leads or offers their lowest price at first meeting. Now is the time to be bidding everything no matter how insignficant it may seem. If you brush over items that even your employees know are not being acquired at lowest possible cost, as not worth the time and effort, you give them the idea that it is OK to do so with other items they may buy in the normal course of things (when you are not there) "because you are doing it".
Here are items which some will consider relatively insignificant so I will lead with them to help change attitudes. All of the following items have many different prices for the SAME thing in the market place on any given day.
Cell phone charges (get a business plan if you have more than five phones and make sure you are getting the best number of mintues for the price, get rid of add on charges in the plan you select for text messaging and "roaming"), long distance charges on a land line (pay from 2.75 cents or less to 45 cents per minute, its your choice). You can even go lower with a an "unlimited" minutes plan which is normally readily available.
Internet connection fees, health insurance, liability, vehicle and property insurance, life insurance, (with insurances of all kinds, you can save thousands perhaps tens of thousands per year depending on your size). Utilities such as LP, electricity and natural gas all have ways to cut the rates (not the use, though of course that is on the table too) but actual rates you pay.
Interest rates. Talk to your banker about a quarter or half point reduction on short term money if you have not already thoroughly negotiated that to its best possible level. That is not only possible it is likely for many businesses.
The cost of office supplies, computers, photocopying, printing, etc. are another area which people often do not watch since they think they are insignficant. Just about every business I go to, farm or otherwise, buys cheap junk computers to save cost. I could have purchased far better ones which would have lasted longer (by that I mean technological obsolescence) at the same cost or less. It amazes me the prices people pay for junk and information systems and technology are a backbone of your business.
If you are ordering from one of the more popular catalogs that producers use, make sure you pool everybody's order and pay one freight charge. If five to ten orders are made each month and could be consolidated to one order, you will save money on shipping even though the total weight shipped doesn't change.
Negotiate a better discount with FEDEX and/or UPS. I did a few weeks ago with just a phone call and I am a low volume user. Check the rates for overnight delivery that gets there real early, before 10:30 a.m. or in the afternoon. The differential cost is huge (up to $50 for a simple letter with the same weight). If you or your secretary is just checking the premium overnight service by habit, make sure the few hours difference is worth the money.
So you get the idea. Before we get into how to cut things, lets take a long look at the bad buying habits we are in for the things we already buy and will have to purchase even if we get serious about profit improvement.
More to come.
"cheap, junk computers"