How does your company stand on profit? How does it compare with five years ago? Three years ago? Last year? Is it better, even or worse? If you’re celebrating record earnings, that’s great. If your company broke even, it prevented growth. If the numbers came up unpleasantly worse, it’s time to stop the profit bleeding.

Just when your company earns a few dollars in profit, rising operating costs pop up when you least expect it. When that happens, it sets the stage for a very frustrating road ahead by forcing some difficult management decisions for cutbacks to several budgetary lines, including the workforce.

Whether you’re a grower, packer, shipper, wholesaler or retailer, the goal is always to earn as much profit as possible. Although the desire is clear, accomplishing it may require a Herculean effort. With a tough economy these days, that means every single penny on the sales and expense line has to work much harder to get results.

Some executives responsible for an entire operation may often see profit results through rose-colored glasses. Many have said, “We’re turning the corner. Last year we lost $121million, but this year we only lost $54 million.” The fact of the matter is the company is still unprofitable. An improvement is when you make money, not lose it.

In spite of all the pressures for companies to turn a profit there are solutions that can help considerably. Get it right by concentrating on the following areas in order to protect and increase profit growth:

Sales

Are sales the only way to increase profit? It certainly is the vital starting point, but we often sacrifice profit for more sales. If putting effort into sales is your top priority, it could result in spinning wheels. Remember that marketing the business, product promotions and extra labor are all costs that go into it. If you just recover the expenses to get those sales, the profits won’t be there. Always check to see if you are making profits from those sales.

Budget

Most companies have a budget in order to control their operations. If followed seriously, budgets are supposed to steer companies toward profitability and should be reviewed at least monthly, especially the expense lines. If the supply costs are too high, labor is overspent, utilities are off or other expenditures are out of line, make adjustments immediately. Do not put it off. You cannot ever make up profit that was lost. It doesn’t work that way.

Raise some prices

This may sound shocking, but it’s essential. The rising costs of product and operating requirements necessitate it. Hardly anybody will fret over a 3-6 percent price increase. It’s part of doing business. Nobody ever made a profit watching costs continually rise while allowing prices to stay the same.

Offer a superior product

No matter which area of the produce industry your company is in, give customers something different and better. Consumers, buyers and retailers are willing to pay more for a unique product or program. They will even buy more.

Be frugal

Refer back to your budget. Spend less and charge a little more. However, do not lower your quality standard. If you do this and do it right, you will beat your competition to the punch and earn profit during the process.

Eliminate bad programs and products

Stop being sentimental. If it’s not working or not selling, get rid of it and do it fast. There’s nothing worse than to keep spending money on a losing proposition. Weed out all those expensive failing programs and product items that gather dust on displays. These losers just keep squeezing profit out of the business. Stick to what you do best and sell what you sell best.

Cut inventory

Each item in your inventory carries with it an extra expense outside of its original cost. The money invested in the product will sit stagnant until sold. Storing unused inventory pecks away at profits. It winds up being marked down in price resulting in eroding profit. Concentrate heavily on increasing product turnover.

Combat shrink

Canned and packaged grocery items can last a length of time on shelves. Unfortunately, fresh produce is alive and well for only a short duration. Therefore, it must be sold very fast. Produce can be nurtured up to a certain point, and then it shrinks, turns into waste and loses its profit. Because of this, you need to have a shrink-control program so comprehensive that waste will never dare to challenge it.

Negotiate and renegotiate

Bickering and bargaining are part of doing business. If your company has been with the same supplier year after year, it may be missing some simple details or obscured cost increases. Renegotiating contracts, terms and agreements should be an annual exercise. If other suppliers can offer a better package deal, a change should be considered. Every penny saved will improve profits. Remember, being fair is also part of negotiating.

If you don’t get the sale, you don’t get the profit. Selling is one of the most important responsibilities we all have on our work slate. Achieving sales is the driving force of every company in order for it to become successful.

Keep in mind that the difference between sales and success is always profit.

Ron Pelger is the owner of RONPROCON, a consulting firm for the produce industry, and a member of the FreshXperts consortium of produce professionals. He can be reached by phone at 775/853-7056, by e-mail at [email protected], or check his web site at www.power-produce.com.