5 Ways to Control Your Costs
Keep expenses from shrinking your bottom line.
by Michael Kovalycsik, National Sales & Marketing Director, Delta T Solutions
Replacing unit heaters with hot water heat can save your operation up to 40% in energy costs.
It’s the first rule of business: spend less than you make. But many growers aren’t careful to keep costs in check, and end up letting out-of-control expenses eat up their profits and more. Here are some ideas you can use to avoid that mistake.
1. Cut Expenses
Determine where you spend your operation’s money. If you don’t know where money is going, you are most likely spending too much. You can get a solid idea in as little as one month and as you continue, you’ll see patterns develop that you can address. Record everything you buy down to the last dollar. Include all of the obvious things like property mortgages and taxes, rent, utilities, gasoline, production inputs, employee salaries and insurance, but don’t forget any monthly ancillary items such as sponsorships or contract fees.
Use a Row-by-Column ledger, spreadsheet or other software to keep track every month. If you exclusively use a debit card for your purchases, the bank will do this for you. Immediately eliminate unnecessary routine purchases. While it’s likely this won’t be the largest savings area, it’s important and easy.
2. Reduce Labor Costs
By far, labor is the largest expense for most U.S. growers, so any cost savings available can add up fast. Automated systems in all production areas are providing growers with significant cost savings. Investigate areas of your business that can be automated to reduce labor requirements. While investing in automation equipment may mean high upfront costs, automated systems will pay for themselves quickly.
Meanwhile, paying more than the minimum wage, offering pay increases and bonuses to year-round and seasonal employees allows many growers to keep their labor supply consistent, saving money in worker training and recruitment.
3. Improve Energy Efficiency
To start, download Delta T Solutions’ heat loss calculator to find out where your energy dollars are going. This convenient tool takes five to 10 minutes to fill out and provides helpful data about how effectively your current heating system is working.
Next, inspect your energy bill. If you’ve been using the same utility company for ages and haven’t read your bill, it’s time to start. Research other energy providers and look into off-peak utility discounts. Call around to see what kind of deals you can haggle - and don’t forget to check with your current utility company and let them know you’re doing your research.
Put together an energy taskforce at your operation, where team members inspect greenhouses, environmental control systems, boilers and thermostats, energy curtains, coverings and doors to look for any existing leaks or inefficiencies and fix them. Extra sets of eyes can help catch problems that might have been overlooked. Keep this taskforce active throughout the year for a team approach to saving money.
Before the season started, heaters, boilers and gutters should have undergone a routine cleaning, but if you haven’t done this yet, it’s not too late. Using dirty heating systems is like throwing money out the window, as cleaning costs are paid back quickly. Gutter cleaning is a must to avoid ice dams from forming and causing potentially irreversible damage.
Using lower thermostat set points at night can also significantly reduce your heating loss, because it will lessen the temperature difference between the outside and the inside.
Investing now in food safety best management practices will cost significantly less than the expenses you’ll incur if your operation is the source of an outbreak.
4. Conserve Water
When it comes to using water, conservation is key - if you save water, you’ll save money. With water availability reaching a critical point, especially in the Western U.S., growers are turning to more efficient irrigation systems. Water runoff and nutrient input costs are two more major reasons to make sure your water management system is operating at the most efficient and effective levels.
You can fine-tune your system to make sure your operation’s recycled water is clean, disease-free and of optimum quality for your crops. Customized systems combining ebb and flood irrigation systems, pumping systems and water treatment and containment systems not only increase the quality of your water, but also conserve water and significantly reduce your water bill.
5. Invest in Food Safety
This month, the $1.4-billion food safety bill passed in both the Senate and the House of Representatives. The legislation will increase government regulation through more inspections of food processing facilities and mandated food recalls. Overall, the bill will place stricter standards on imported foods and require the Food and Drug Administration (FDA) to write and enforce new produce safety regulations.
Initially small-scale producers balked at the original bill because they said the increased costs associated with the food safety mandates were so high that implementing all of the changes could put them out of business; however, sponsors of the Senate bill eliminated some of the fees and cut back on mandatory inspections.
Growers should expect this legislation to change food safety mandates in the near future and invest accordingly in implementing Best Management Practices and Hazard Analysis & Critical Control Points (HACCP) standards to reduce your risk of a food-borne illness outbreak. Though developing a food safety plan and adopting safeguards to protect your operation will be costly, these expenses are nothing compared to the money and business lost should an outbreak occur. As the old saying goes, it’s better to be safe than sorry.
To learn about how Delta T Solutions can help you save money with heating system and water management upgrades, visit www.deltatsolutions.com, call a representative at 800-552-5058 or e-mail firstname.lastname@example.org.