The hardworking Vancouver-area industries that fill grocery aisles and put food on restaurant and household tables include growers and producers, processors and packagers, as well as importers and exporters. While these businesses are often interrelated, the challenges they face can vary greatly.
Along with finding and keeping skilled workers, they confront workflow and production issues related to food fads and nutrition trends.
It may be one challenge to work with typical growing seasons and production cycles; it’s quite another to respond to demand for a product or ingredient that can rise or fall in response to everything from a scientific (or nonscientific) report to a Twitter storm.
Even more daunting, perhaps, is managing around changing regulation. Keeping up with the FDA Food Safety Modernization Act alone requires logistical management, refined processes, detailed tracking and documentation, and investment in related technology. Add to that everyday business decisions on expanding, retooling or purchasing equipment, and company leaders are managing plates that are beyond full.
Of course, the savvy business owners in this important industry that I talk with recognize and even embrace challenges and change. To succeed for the long haul, effective leaders do a couple things really well: 1) Select and partner with internal and outside experts who can support their goals, and 2) plan and manage for financial agility – the ability to quickly increase capacity or adjust in a downturn.
Regardless of your company’s size, if you own a food-related business, here are a few takeaways you can apply to maintain a well-tuned organization that thrives in an ever-shifting arena.
In terms of partnership, it’s important to surround yourself with knowledgeable experts you trust—accountants, attorneys, engineers and other advisers. Including an experienced banker on your planning team can help you prepare for and manage change.
In terms of managing for long-term agility, it really comes down to tracking your numbers:
Make the most of financial reporting. Your profit and loss statement (P&L) and balance sheet provide a snapshot of your company’s financial performance. Not just for use by your banker and accountant, they can also assist you in measuring profitability, forecasting the future and improving performance. Keeping them current is essential when it comes to determining funding needs and seizing opportunities in a timely way.
Keep tabs on company debt. Leverage is helpful when used wisely. By tracking your company’s debt and holding it at reasonable levels, you’ll be in a better position to discuss options for paying it down or planning for increased capacity.
Consider your cash flow. Look to an experienced banker for an independent analysis as well as tips and tools to gain financial efficiencies. Even in a production upswing, it’s important to look for ways to save and improve your cash flow. It may be as straight forward as determining where you can delay payment or accelerate receipts in a pinch.
Have a plan to expand or retool your operations. You’ll be ready when opportunities arise, and you can always adjust the plan as your situation and the market change. Consider visiting with a banker who understands your business. The goal is to make sure you have the credit facilities and structure in place to support your plans when you’re ready to execute.
As you pursue your company’s goals in today’s economy, your key advisers should be in lock step with you. Your banker, in particular, should take time to get to know your company, understand your challenges and be an ongoing source of information and advice related to the work you do. A good financial partner will collaborate with fellow experts at the bank, help you understand the options and offer customized solutions with your profitability in mind. You deserve experts who work hard to earn your business and support your success.
Brad Buchholz, vice president and commercial relationship manager at Banner Bank, once owned a small light manufacturing and distribution business. He is active in the Northwest Food Processors Association. Reach Buchholz at BBuchholz@bannerbank.com or (503) 684-2339.