By Stephanie Oaks
As homesteaders and entrepreneurs there are many endeavors that we choose to take on because we are passionate about them or because they meet a need for our families. Some raise goats because of their love for animals and to provide milk for their families. The extra is sold to others or used to make value-added products such as soap or goat’s cheese. Others grow fruits and vegetables that their families enjoy and extras are sold at farmers’ markets. These types of ventures allow a certain lifestyle for families that they desire.
But what about the projects that we take on for the sole purpose of making money? They may seem like good ideas when we first start out, but how do we know if they are truly bringing in the income that we need them to bring in? In the busyness of life and/or homesteading, are we counting the costs in terms of resources and valuable time to make sure that our business ventures are justified?
When most people hear the words cost accounting, the term can seem overwhelming, or even a little scary, but it doesn’t need to be. Cost accounting can become a part of our regular bookkeeping, or it can be tracked for a designated period of time. We all have to record the financial aspects of our business for state and federal returns. Why not use these systems that we already have in place to our advantage? Set up customized expense categories by project or area of business, and when entering invoices and receipts, record what project the cost is related to. The same should be done for income. At the end of each month or season, analyze the profitability of each area.
In addition to cash going in and out, there is also time spent by us and by members of our families. Take a period of time and keep track of how much time each employee and/or family member is spending on each area of business. You might be surprised at what you find out.
Personally, I am an organic farmer and my husband is a professional musician. We already know that we only make pennies for each hour that we work! Even still, we have to constantly reevaluate projects that are taking too much of our time—time away from our family. Yes, for us, these are areas of passion and giftedness, but we must take time to prioritize appropriately for the good of our family.
We are called to be good stewards of our resources and of our time. Some things we do out of generosity toward others. These are always worth the time and effort spent.
Stephanie Oaks lives in Ashland City, Tennessee, where she and her husband own and operate No. 9 Farms, an organic farm that specializes in berries, herbs, fruits and vegetables, and Christmas trees. Stephanie spends the remainder of her time homeschooling their two teenage children and teaching classes on organic gardening and healthy cooking.
1 thought on “Counting the Costs”
As a CPA and former cost accountant, I agree that record keeping, if done well, can help make financial decisions. The point of keeping records is to help you determine if your business is healthy, profitable and successful; it’s for more than just preparing a tax return.
Excellent article and good advice.