Enterprise Budget and Cash Flow for Greenhouse Tomato Production
Growing crops in a greenhouse environment requires a substantial investment in capital and management resources. The two financial considerations regarding any such enterprise are profitability and cash flow. Profitability potential can be addressed through an enterprise budget, which is an itemization of costs incurred over a typical production cycle. The second consideration is addressed by analyzing cash flows in and out of the enterprise for a fixed interval of time, that is, through a cash-flow budget.
Greenhouse enterprise budgets contain two types of costs -- variable and fixed.
Variable costs are those costs incurred only if the production cycle is started. Seeds, fertilizer and perlite bags are examples of such costs.
Fixed costs occur regardless of production. Some examples of fixed costs that must be accounted for even if there is no production include the following: property taxes, insurance, depreciation and interest on investment such as buildings and equipment.