ONE PAGE COST BENEFIT ANALYSIS TOOL Archive - - PowerPoint PPT Presentation

▶
one page cost benefit
SMART_READER_LITE
LIVE PREVIEW

ONE PAGE COST BENEFIT ANALYSIS TOOL Archive - - PowerPoint PPT Presentation

Feb 02, 2023 359 likes •826 views

An NGFN An NGFN Webinar binar August 20, 2015 ONE PAGE COST BENEFIT ANALYSIS TOOL Archive http://ngfn.org/webinars Presentation Outline Technical Orientation Welcome Jeff Farbman Wallace Center at Winrock International Pencil

slide-1
SLIDE 1

ONE PAGE COST BENEFIT ANALYSIS TOOL

An NGFN An NGFN Webinar binar

August 20, 2015

slide-2
SLIDE 2

Archive

http://ngfn.org/webinars

slide-3
SLIDE 3

Presentation Outline

Technical Orientation

Welcome

Jeff Farbman

Wallace Center at Winrock International

Pencil It Out

Questions and Answers

Upcoming Opportunities, etc.

slide-4
SLIDE 4

WALLACE CENTER AT WINROCK INTERNATIONAL

  • Market based solutions to a 21st Century food system
  • Work with multiple sectors – business, philanthropy,

government

  • Healthy, Green, Affordable, Fair Food
  • Scaling up Good Food
slide-5
SLIDE 5

NATIONAL GOOD FOOD NETWORK: VISION

slide-6
SLIDE 6

NATIONAL GOOD FOOD NETWORK: GOALS

Supply Meets Demand

  • There is abundant good food (healthy, green, fair and affordable) to meet

demands at the regional level.

Information Hub

  • The National Good Food Network (NGFN) is the go to place for regional

food systems stories, methods and outcomes.

Policy Change

  • Policy makers are informed by the Data and Analysis and outcomes of the

NGFN and have enacted laws or regulation which further the Network goals.

http://ngfn.org | contact@ngfn.org

slide-7
SLIDE 7

Presentation Outline

Technical Orientation

Welcome

Pencil It Out

Gary Matteson

Farm Credit Council

Janie Hipp

University of Arkansas Law School

Beau Sheffield

Farm Credit East Central Oklahoma

Questions and Answers

Upcoming Opportunities, etc.

slide-8
SLIDE 8

Pencil It Out

Janie Hipp U of Arkansas Law School Beau Sheffield Farm Credit East Central Oklahoma Gary Matteson Farm Credit Council

slide-9
SLIDE 9
slide-10
SLIDE 10
  • 1. The Big Plan (concept of business planning)
  • 2. The Magic Number (gross margin)
  • 3. The Little Plan (cost/benefit analysis)
  • 4. Legal Issues (exposure to risks)
  • 5. Risk Management (safe practices plus insurance)

Where we are headed

slide-11
SLIDE 11

What are your skills? What is your tolerance for risk? What is your capacity to deal with ambiguity? What is your capacity to lead others? What is your capacity for self-discipline?

Know Yourself

slide-12
SLIDE 12

Three basic business skills:

  • 1. Financial
  • 2. Production
  • 3. Marketing

If you are lucky you have two of these skills. Partner with or hire the skill you don’t have.

know yourself

slide-13
SLIDE 13

define success

enough net profit to meet your goals for your family and your business

slide-14
SLIDE 14
slide-15
SLIDE 15
  • Tell your story in a business plan
  • A budget is a plan in numbers
  • Cost/benefit analysis is a tool to

understand what to buy—or not

know your business

slide-16
SLIDE 16
slide-17
SLIDE 17
slide-18
SLIDE 18

PEOPLE FINANCIAL PRODUCTION MARKETING

slide-19
SLIDE 19
slide-20
SLIDE 20

Historical

Dollars % of Sales Sales (total income) $134,400 100%

  • Cost of Goods Sold:

(variable costs)

$80,096 60% = Gross Margin: $54,304 40%

  • Overhead(fixed costs)

$10,472 8% = Profit (Net Margin) $43,832 33%

The 5-Line Income Statement

Gross margin is the magic number for estimating future performance!

slide-21
SLIDE 21
slide-22
SLIDE 22

Analysis of a part of your farm business to compare the costs and benefits of change

cost/benefit analysis

partial budget analysis—marginal analysis—cost/benefit analysis

slide-23
SLIDE 23
  • informed decision & examine all

aspects

  • determine solid reasoning to acquire

the new item (other than you want it!)

  • thoughtful process to identify all likely

costs and all likely benefits

  • process applies to any business

cost/benefit analysis

slide-24
SLIDE 24

compare outcomes

buy new equipment repair the old stuff new production practice keep doing what works utilize new market sell to the same folks Invest in a business divest a business begin new enterprise fugettaboutit

cost/benefit analysis

slide-25
SLIDE 25

Benefits:

new or additional revenue reduced or eliminated costs

Costs:

new or added costs revenues reduced or lost

pencil it out: Benefits – Costs = Net Benefit

cost/benefit analysis

slide-26
SLIDE 26
slide-27
SLIDE 27
slide-28
SLIDE 28

Gross margin is the magic number for estimating future performance!

slide-29
SLIDE 29
slide-30
SLIDE 30
slide-31
SLIDE 31
slide-32
SLIDE 32
slide-33
SLIDE 33
slide-34
SLIDE 34
slide-35
SLIDE 35

Legal Issues to Consider

  • Using the examples of:

– Buying a new cooler – Installing a new irrigation system – Installing a wash station – Buying a new tractor – Buying a new high tunnel production system

  • What are the legal issues attached to

these examples?

slide-36
SLIDE 36
  • Are you borrowing money to pay for

equipment or improvements?

  • What contractual obligations do you agree to

when borrowing money?

  • Be aware that a lender files liens on your

equipment or property when you acquire debt

  • Understand borrower responsibilities for

keeping records, communicating with lender, repaying debt, not selling the collateral without permission, etc.

Legal Issues to Consider

slide-37
SLIDE 37
  • Are you buying or installing these

improvements to sell into new markets?

– Sell into new market such as farm stand, CSA, or farmers market – Sell to restaurants, grocery stores, or schools

  • Each of these venues has legal issues

related to being in that market

Legal Issues to Consider

slide-38
SLIDE 38
  • Not just financial cost/benefit
  • Legal or regulatory costs/benefits are

harder to determine

  • If properly addressed, legal and regulatory

issues can increase profitability

Legal Costs and Benefits

slide-39
SLIDE 39
  • Food Safety
  • Determine food safety requirements for new markets
  • Are these requirements under tribal, local, state or

federal law?

  • Are the legal requirements a part of administrative

regulations (like FSMA) or a tribal, state or local law?

  • Perishable Agricultural Commodities Act

(PACA)

  • Covers the sale and payment of perishable ag products

in the marketplace

  • School or other institutional procurement
  • Requirements of GAP certification or some other proof

that the operation engages in safe, sanitary processes

  • Interstate movement of food in commerce

Legal issues with markets

slide-40
SLIDE 40

Role of Insurance

  • Insurance is a common tool to mitigate inherent

risk of certain types of activities

– Homeowners insurance – Vehicle insurance – Carrier insurance – Product liability insurance – General tort liability insurance – Premises liability insurance for landowners – CROP INSURANCE

  • Insurance policies are contracts and each party to

the contract has roles and responsibilities

slide-41
SLIDE 41

Importance of Insurance

  • Covers protected losses
  • Provides legal representation in case you are sued

in relation to the activity that you purchased the insurance to cover

  • Covers the risks that you determine are important
  • Example: Tractors - - are inherently dangerous

pieces of equipment - - what happens if someone using the tractor has a serious injury that incapacitates them for life? What is your legal exposure as the landowner/tractor

  • wner/employer?
slide-42
SLIDE 42

www.AnnualCreditReport.com

slide-43
SLIDE 43

Questions and Answers

Janie Simms Hipp

Indigenous Food and Agriculture Initiative jhipp@uark.edu

Gary Matteson

Farm Credit Council matteson@fccouncil.com

Jeff Farbman

Wallace Center at Winrock International contact@ngfn.org

Beau Sheffield

Farm Credit of East Central Oklahoma beau.sheffield@aglender.net

slide-44
SLIDE 44

Webinars are Archived

TOPICS!

http://ngfn.org/webinars

slide-45
SLIDE 45

Get Connected, Stay Connected

slide-46
SLIDE 46

http://ngfn.org

contact@ngfn.org