Yeah that's right, isn't it? Well not really, the factory was so busy and the sales were coming in. We went from $5.6 million to $24 million in a hurry. No capital involved, which made me think, hmmm, maybe we are really not very proficient. But I would come back off the road and there would be 10 more employees on the production floor, and then I would go back out and they'd be 15! What is going on, we had the capacity, we had the resources, what we didn't have was someone that wanted to invest in the future. AAAAARGH. You know what that feels like for a 35 year old, with his whole life ahead of him? Death. But hey I got it and you can only pick so many fights. So, what I did was try to reduce costs everywhere else. I looked at insurance, health insurance, any out sourcing we did to cut the crap out of all these costs we were incurring. Then I found it the magic bullet, let's invest in futures and options!! Calls, Puts, market positioning let's go! So that's what we did for 95, we changed our philosophy in seconds, which was cool. God knows where it is going to lead us, but I felt strongly about the new way. Even though I had little knowledge in the trading side of it, I kind of knew, it was the only way we would survive. Soooo, I was bumbling and grumbling for quite some time, I made a little bit of money but nothing to speak of. One Friday afternoon, I put a call into our broker and bought 4 contracts for September, it is now early July. I go home and say hey, at least we covered some of the business. I basically locked in our margin where we were going to make money. So that weekend was good. Played with the kids, had a couple of beers, you know everyday life. Then Monday hit ! There was a frost in Brazil!!!! WHAAAAAT! I was running with somebody else's legs on Monday... Stay tuned............
How To Successfully Run A Commodity Based Business I have over 26 years of experience in a commodity based business. As a matter of fact, it wasn't just commodities, it was the number 2 traded commodity on the planet, coffee. Although I will be referring to coffee in this article, this information will translate into any commodity based business. One thing I do want to point out, that perhaps many haven't considered. Almost every business, if not every single business is affected in some way by commodities. Whether it is a meat packer buying boxes(by the way beef is a commodity), or a bakery packaging mini muffins in portion controlled lots. Yes, board to make boxes is a commodity, and many of the packaging materials a manufacturing facility uses is petroleum based. I could go on and on, but I just wanted to point out that understanding commodities and how to manage and minimize your exposure to wild price swings is an extremely important skill. So I'd lik...
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