The cost of doing business.

It's a continuous challenge having your own business, what with keeping up with market changes for your product and ever changing input costs such as fuel, raw materials, labor and new regulations. You have to admit it is just like gambling in a number of ways. For one, you are not guaranteed the price you will get for your product, nor what the costs will be to make or produce it. Like gambling, there is that same feeling it gives you by sticking your neck out and waiting to see what happens, looking for the next day to be better than yesterday. While it is not as immediate as the slot machine or craps table, it involves the risk and the unknown to achieve the prize.

Of course, when the margins tighten up, it is not so much fun, and it no longer feels like much of a game. I am not making light of all the hard work and long hours put into your business. Nor am I insinuating that you are in business for a strange sort of "financial high" versus the reasons of earning a good living to support your families. I am pointing out that being in business has risks and to be successful in your business, you need to mitigate those risks and take advantage of the opportunities.

So here you are in business, wanting to make a decent living and more. It is pretty much a given that expenses and costs increase over time. Everyone in any business, your suppliers included, face the same struggles as you to make a profit and will raise their prices as they see their input costs increase. Some businesses can raise their prices, the farmer usually cannot. Farmers take what the demand will afford--it is the nature of the business. You knew that going in and have learned to deal with it throughout the years, the thick and thin ones.

However, when I refer to the cost of doing business, I am not referring to the normal input costs and expenses associated with producing your product. I am looking beyond the normal, routine costs and am looking at other costs that are not routine and may or may not be expected. These are the costs of doing business that we are usually aware of, but put on the back burner because the need is not imminent but are important to recognize for the long haul.

The costs I am referring to are government regulations, employee retention, effects of immigration laws, remodeling and maintenance of facilities, new technological changes, township regulations, neighbor complaints, food safety requirements, food security and many others. These are all potential and/or probable costs that will probably affect you someday in the future. Recognizing their potential impact is of utmost importance for remaining a viable business in this fast changing world. To ignore these costs, hoping they will go away, may put you in a position of not being prepared financially to do what needs to be done.

Food safety is an issue that has been talked about for many years now. It is not something anyone can say took them by surprise. Buyers are now performing inspections of not only the packing facilities, but also the growing facilities. They want to be sure the product they are buying and passing on to the public is safe. They are doing this because the public wants that assurance and, naturally so, after recent produce scares. If you are growing mushrooms in questionable facilities, there will be a cost to upgrade, remodel and repair beyond normal maintenance. You may not have had this cost yet, but if you want to sell your mushrooms at a good price, or at all, you will need to incur this cost of doing business.

Food security is another huge concern. Since 9/11, there has been a heightened concern for the food supply being safe. How do we insure the safety of food from the field to the store? What is the cost to do this? There is no immediate demand for any specific action yet, but it is coming.

Ever have an issue with neighbors concerning noise or odors that involved a legal battle? If you have or know anyone who has, it's not cheap but it is a cost of doing business in today's environment.

Your employees, being predominantly immigrant labor, face current immigration fears. How will changes to immigration laws affect your business? Will you lose good help as a result of this issue? Or will you lose good help to other businesses willing to pay as much for less laborious work? What will it cost to keep help on the farm? What will this cost of doing business do to your bottom line?

In conclusion, businesses that are aware of these costs are prepared for them at some point down the road. As a result, day-to-day decisions keep future costs in mind. This is totally different than those companies who ignore the issues and continue on doing business today as yesterday. When the time comes for action, there will be nothing but grumbling and complaining because they are not prepared in mind or wallet to effectively cope with the true cost of doing business.

Keith M. Silfee

Vice President

Relationship Manager

The Peoples Bank of Oxford

Div. of National Penn Bank

610/998-1552

kmsilfee@peoplesoxford.com

[ILLUSTRATION OMITTED]