Saturday, July 23, 2011
Even the most diligent employees won't watch over your money as carefully as you do. So if you aren't responsible for all of the purchasing decisions at your farm, you need to create incentives for employees to make cost-conscious purchases. The easiest way to do this is to set an annual budget for each type of recurring purchase - feed and grain, supplies, maintenance, etc. The budget should be attainable and realistic and there should be some reward to the person responsible for purchases (e.g. barn manager) for coming in at or under budget. Suggest possible strategies for reaching the budget goals - purchasing in bulk, buying generic rather than name brands, etc. Require that any major changes be subject to your review before making the change. You want to save money but you don't want to replace a satisfactory product with an inferior one.
Another way employees can help save you money is by following established safety procedures. Accidents or injuries due to an employee neglecting to follow established safety rules will be reflected in increased rates for your workers compensation and general liability insurance. If your worker is injured, it will cost you money in the form of additional labor costs, possible reimbursement of medical costs and even potential lawsuits.
Is it possible to utilize your workers to do some of non-income producing work that you currently do? If you could be producing income but are instead stuck behind a desk, that's a lost opportunity cost. For example, if you can find a suitable substitute, you can hand over responsibility for monthly invoicing of clients and start teaching more lessons yourself. Finding a suitable substitute may mean hiring a part-time bookkeeper at an hourly rate less than what you'll be making teaching lessons. You'll be making more than you are spending for the bookkeeper and you'll be interacting with clients, where you belong.
Ask your employees for suggestions for cost-saving measures. They may notice poor quality or waste that is costing you money. They see a side to your business that you may not and can be a great source for ideas. Also, including your workers in the decision-making process is great for team-building and instilling a greater sense of responsibility.
Your employees can be a drain on your business or a resource for your business. It's up to you to create a work environment to benefit you both.
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