[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/isu/genstf/201601010800006095.html
   My bibliography  Save this paper

Ratios and benchmarks as tools for local food hub decision-making: a comparative case study

Author

Listed:
  • Lyons, Savanna May
Abstract
Food hubs, or local food aggregation and distribution businesses, are triple-bottom-line firms that play an increasingly important role in connecting small and mid-sized farmers to wholesale and retail markets. This paper explores how food hubs can use their financial data to identify and address strengths and challenges in their operations. We propose a “dashboard” of key metrics and benchmarks for food hub managers, and apply it a comparative case study of four food hubs over three years of operations. We compare and contrast the liquidity, cash flow, efficiency, solvency and repayment capacity of the four cases, and analyze cross-cutting themes.We find that although the food hubs varied in their business structure and composition of sales outlets, they all faced the challenges of limited working capital, labor inefficiencies, high debt-asset ratios, and limited profitability. Some firms were able to break even below the $1 million sales level typically cited as a food hub breakeven point, but still struggled to maintain positive profits, suggesting that they remained in a “breakeven” phase even as they grew. All of the food hubs owned relatively few fixed assets and used relatively little term debt from outside sources. Modest net worth and small total asset size left each firm vulnerable to insolvency in years of negative profit. However, with bootstrapping techniques such as renting or sharing equipment and collecting payments quickly, in general they used their assets efficiently.We evaluate the usefulness of our metrics and benchmarks in analyzing food hubs, and offer suggestions on how recordkeeping could be improved to make financial analysis easier. Finally, we return to the literature to make recommendations for managers on resolving challenges seen in the metrics, including problems with cash flow, solvency, labor efficiency and turnover, inventory management, and pricing.

Suggested Citation

  • Lyons, Savanna May, 2016. "Ratios and benchmarks as tools for local food hub decision-making: a comparative case study," ISU General Staff Papers 201601010800006095, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:201601010800006095
    as

    Download full text from publisher

    File URL: https://dr.lib.iastate.edu/server/api/core/bitstreams/0b941f07-e1b3-4dad-b0cd-01c9a12b5c03/content
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Garvin, W J, 1971. "The Small Business Capital Gap: The Special Case of Minority Enterprise," Journal of Finance, American Finance Association, vol. 26(2), pages 445-457, May.
    2. Kenneth G. Elzinga & David E. Mills, 2011. "The Lerner Index of Monopoly Power: Origins and Uses," American Economic Review, American Economic Association, vol. 101(3), pages 558-564, May.
    3. Scott Holmes & Pam Kent, 1991. "An Empirical Analysis of the Financial Structure of Small and Large Australian Manufacturing Enterprises," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 1(2), pages 141-154, Winter.
    4. Barham, James & Tropp, Debra & Enterline, Kathleen & Farbman, Jeff & Fisk, John & Kiraly, Stacia, 2012. "Regional Food Hub Resource Guide," Research Reports 145227, United States Department of Agriculture, Agricultural Marketing Service, Transportation and Marketing Program.
    5. James S. Ang, 1991. "Small Business Uniqueness and the Theory of Financial Management," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 1(1), pages 1-13, Spring.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lyons, Savanna May, 2016. "Ratios and benchmarks as tools for local food hub decision-making: a comparative case study," ISU General Staff Papers 3546, Iowa State University, Department of Economics.
    2. Nikolaos Daskalakis & Eleni Tsota, 2023. "Reintroducing Industry Effects in Capital Structure Determination of SMEs," Business & Entrepreneurship Journal, SCIENPRESS Ltd, vol. 12(2), pages 1-4.
    3. Bruder, Jana & Neuberger, Doris & Räthke-Döppner, Solvig, 2008. "Financial constraints of ethnic entrepreneurship: Evidence from Germany," Thuenen-Series of Applied Economic Theory 84, University of Rostock, Institute of Economics.
    4. Francisco Sogorb- Mira, 2002. "How Sme Uniqueness Affects Capital Structure: Evidence From A 1994-1998 Spanish Data Panel," Working Papers. Serie EC 2002-18, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    5. Jun Du & Alessandra Guariglia & Alexander Newman, 2010. "Does social capital affect the financing decisions of Chinese small and medium-sized enterprises?," Discussion Papers 10/13, University of Nottingham, GEP.
    6. Philippe Adair & Mohamed Adaskou & David McMillan, 2015. "Trade-off-theory vs. pecking order theory and the determinants of corporate leverage: Evidence from a panel data analysis upon French SMEs (2002–2010)," Cogent Economics & Finance, Taylor & Francis Journals, vol. 3(1), pages 1006477-100, December.
    7. Kijkasiwat, Ploypailin, 2021. "The influence of behavioral factors on SMES’ owners intention to adopt private finance," Journal of Behavioral and Experimental Finance, Elsevier, vol. 30(C).
    8. Zélia Serrasqueiro & Manuel Armada & Paulo Nunes, 2011. "Pecking Order Theory versus Trade-Off Theory: are service SMEs’ capital structure decisions different?," Service Business, Springer;Pan-Pacific Business Association, vol. 5(4), pages 381-409, December.
    9. Geert Campenhout & Tom Caneghem, 2013. "How did the notional interest deduction affect Belgian SMEs’ capital structure?," Small Business Economics, Springer, vol. 40(2), pages 351-373, February.
    10. Maria Psillaki & Nikolaos Daskalakis, 2009. "Are the determinants of capital structure country or firm specific?," Small Business Economics, Springer, vol. 33(3), pages 319-333, October.
    11. Matias, Fernanda & Serrasqueiro, Zélia, 2017. "Are there reliable determinant factors of capital structure decisions? Empirical study of SMEs in different regions of Portugal," Research in International Business and Finance, Elsevier, vol. 40(C), pages 19-33.
    12. Rossi, Emanuele & Bongini, Paola & Ferrando, Annalisa & Rossolini, Monica, 2017. "Suitable or non-suitable? An investigation of Eurozone SME access to market-based finance," CEPR Discussion Papers 12006, C.E.P.R. Discussion Papers.
    13. Zélia Serrasqueiro & Paulo Maçãs Nunes, 2012. "Is Age a Determinant of SMEs’ Financing Decisions? Empirical Evidence Using Panel Data Models," Entrepreneurship Theory and Practice, , vol. 36(4), pages 627-654, July.
    14. Scott Holmes & Ian Zimmer, 1994. "The Nature of the Small Firm: Understanding the Motivations of Growth and Non-Growth Oriented Owners," Australian Journal of Management, Australian School of Business, vol. 19(1), pages 97-120, June.
    15. Ciarán mac an Bhaird & Brian Lucey, 2010. "Determinants of capital structure in Irish SMEs," Small Business Economics, Springer, vol. 35(3), pages 357-375, October.
    16. SylvieCieply & Bernard Paranque & ., 1997. "French manufacturing firms and the capital gap since1985 - a credit rationing approach," Finance 9708002, University Library of Munich, Germany, revised 29 Oct 2000.
    17. Dominique Dufour & Eric Molay, 2010. "La Structure Financiere Des Pme Françaises : Une Analyse Sectorielle Sur Donnees De Panel," Post-Print hal-00479529, HAL.
    18. Graham C. Hall & Patrick J. Hutchinson & Nicos Michaelas, 2004. "Determinants of the Capital Structures of European SMEs," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 31(5‐6), pages 711-728, June.
    19. D. Balios & N. Daskalakis & N. Eriotis & D. Vasiliou, 2016. "SMEs capital structure determinants during severe economic crisis: The case of Greece," Cogent Economics & Finance, Taylor & Francis Journals, vol. 4(1), pages 1145535-114, December.
    20. Philippe Adair & Mohamed Adaskou, 2017. "The capital structure of French SMEs and impact of the financial crisis: A dynamic panel data analysis (2002-2010)," Working Papers hal-01667313, HAL.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:isu:genstf:201601010800006095. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Curtis Balmer (email available below). General contact details of provider: https://edirc.repec.org/data/deiasus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.