Reaching Profitability During a Recession :: Fundamental #1
It’s time to address the news of a recession and recession-proofing your Good Food Business.
As costs continue to rise, and talk of the impending recession heats up, good food business owners have finances and profit margins at the top of their minds. And understandably so!
Through the years, I’ve identified three main fundamentals in maintaining a healthy profit margin. These are, by no means, the end-all-be-all of recession-proofing your business, but they are a great place to start, here is #1.
Know Your Costs
Do you have a system in place that enables you to track all your costs so you always know exactly how much you’re paying?
Tracking your ingredient and packaging costs is fundamental to keeping a healthy profit margin — you can quickly assess whether that $2/lb price increase *really* is affecting your bottom line. It could be minor, but it could be catastrophic. By tracking each and every cost, you’ll be able to quickly assess what moves you need to make accordingly.
I can’t stress enough how important it is to have accurate data . We’ve had clients go through all the trouble of raising their price by $.25 only for them to report back that it didn’t impact their finances because it wasn’t a large enough to boost the margin. However, that price increase when coupled with more efficient production practices, did ultimately make a meaningful difference.
Now is the time to make informed, strategic decisions for your company around pricing, labor, and COGS, and my goal this month is to provide you with as many tools as possible to make your business recession-proof.
I’m here to support you — so join us in the Profitable Food Business Community to ask questions and get more great information and resources to guide you toward profitability, even during a recession.
About the Author: Sarah Delevan is a Food Business Financial Coach and Consultant with over 7 years of working in the food industry. She received her MBA from Rollins College and In 2017 she founded Sarah Delevan Consulting based in Los Angeles, CA and serving clients across the United States. She is the creator of the Financial Success Formula and the founder of the Profitable Food Business program as well as the host of The Good Food CFO Podcast. To learn more about Sarah and opportunities to grow a more profitable food business Click Here.