Value Creation vs Value Transfer

Moving cash around is not value creation. Only when revenue exceeds true all-in costs are we creating value for the business.

When hauling grain, invoices may appear favorable on paper, with monthly accounts averaging $32,000 per client. However, once expenses such as diesel, wear insurance, driver wages, and repayments are considered, what is the actual value left? Chapter one’s focus on “value” provided a moment for pause and reflection, prompting reconsideration of what profit means. To truly profit, we mustn’t strive to survive month to month; we must strive to add value beyond inputs.

This reading allowed space to dig deeper into questions that my husband and I have pondered from time to time, whether some of our routes only lead to value transfer. If a run barely covers fuel and wages, it is not profitable, eroding equity. We now check our contract rates against both variable and capital costs, not just immediate cash flow. Accounting here becomes less about reporting and more about ensuring each kilometre driven adds equity.