Check out this amazingly clear and concise explanation of breakeven analysis, by Amy Gallo at the Harvard Business Review. You can determine breakeven analysis for your own products, by using their interactive tool.

A Quick Guide to Breakeven Analysis

Hi, my name is George. This coming October, I will have worked at Red Wing Software for 25 years. How quickly the time has passed. I work with the web site, web services for our products and other areas as needed. I work from my home in Colorado. My daughter (Clara) and I enjoy Jeep’n around. We have a 1946 CJ-2A, and a 1994 YJ Wrangler. We are working on a newer TJ Wrangler for Clara’s first car. She will be 15 in November and starts her first year of high school in August. Yikes! Thanks for using our software and I hope we can continue to be a source for all your accounting needs.

As I write this, we are approaching a very important date in the history of the United States. This may sound a little strange at first, but I choose not to celebrate the 4th of July. Don’t get me wrong, our offices will be closed and I will be taking the day off. However, I will be celebrating Independence Day, it happens to be on July 4th.

I feel we have developed a tendency to recognize, observe, and celebrate dates rather than the events that made the dates important to us. So, while I think it is important to remember the special events that happened on a date, it is even more important to recognize why that date is important.

These thoughts can carry into your business management, as well. Every day, week, month, and year we run a variety of financial reports to track how our business is operating. We look at a Balance Sheet and get a snapshot of the financial health of our business, but do we dig into it and determine what actually caused the changes on this report? We run an Income Statement, P&L, Statement of Farming Activities, or Statement of Revenue and Expenditures (depending on your type of organization), but do we take the time to drill down and determine why the business is heading in the direction it is?

Every country and business has events and reports that they recognize and review at certain times of the year. Let’s make it a point to remember the reason we are running these reports, and especially the reason we are celebrating these dates.

- Ken Hilton, President

This story is a must-read! Writers by Ezra Klein and Susannah Locke came up with maps, charts, and historical information about how food in America has changed over time: where it's made, what we eat, how it has evolved and more. You will not be disappointed.

40 Maps that Explain Food in America

By Stephanie Elsen

Keeping track of financial information for your farm is crucial to generating profits. Tracking that information allows you to analyze the numbers, so you can see what’s working and what needs improvement. If you are currently using manual methods or a very basic bookkeeping program, you can benefit by taking your farm record keeping a step further. You might be amazed at the results and growth you will experience by analyzing your numbers, and basing your decisions on those numbers. Here are some of the advantages to upgrading your financial management system.

Easily provide your banker with any documents needed.

An agricultural financial management system, when used properly, allows you to keep track of important information. When you need to provide documents for loans or loan renewals, that information is already stored within your system, so you can pull up reports such as a balance sheet or income statement with ease.

Plan for profits.

Knowledge is power, and when you have accurate information available at your fingertips, you are able to plan for future profits based on actual history, using tools like budgeting, asset information, and cash flow analysis. None of these are available with manual record keeping methods.

Track each enterprise as its own entity for analysis.

With manual recordkeeping, it can be hard to know how each area of your operation is performing. By implementing a computerized farm record keeping system, you will be able to see which of your profit centers are performing poorly and either improve or eliminate them. Also, knowing which areas are performing well will give you insight into what you should continue to focus on for maximum profits.

Distribute expenses to the right profit center.

Wondering what your true cost of production is? Understanding your cost of production gives you valuable insight that makes it easy to see where cost cutting or pricing adjustments are needed. Using a good Ag financial management tool allows you to distribute costs to multiple profit centers or production centers from one transaction, so you can run reports and understand your true cost of production. And with this information in hand, you’ll be on your way to increased profits.

As with any process or system, you get out of it what you put into it. Using a better financial management system for your farm record keeping, and making sure you keep it up to date, will send you on your way to increased profits. With your effort and an Ag financial management tool, you can improve your farm’s profitability and be more confident in decision making for your farm.