If you’re the head of your farming operation, you’re making a lot of decisions every day. They range from very small to those with a larger impact.
The decisions with the biggest impact are the ones setting the overall direction for the operation. These often require a great deal of thought and reflection beforehand – about what you want for your operation, for your farming career and for other family members involved in the operation.
It can be tough to make these decisions, though, if you don’t have the right data and information about your operation. It all starts with measuring the right things – setting up metrics for your operation – and then tracking them over time so you can better understand what’s going on and can start to make changes based on what you’re finding out.
I think getting the right metrics in place for your farm can help you answer a ‘big’ question: How do I know? How do I know that is so?
Asking yourself this question leads you to make decisions that are backed by good data and information. Developing your answer gives you the opportunity to build a business case for what you’re considering, as you take a look at your assumptions.
Here are a couple major areas where tracking the right metrics and examining your assumptions can help you make decisions.
1. How many acres should I farm/how large should my herd be? This question looms large in the mind of any growth-oriented farm leader – and the answer will be different for each operation. Your answer allows you to set farm goals and milestones for the future. On the other hand, if you want to retire in a certain number of years, you may need to create an estate plan to address the size of your operation. It all depends on where the farm is headed.
2. How much equipment do I need and what size should it be? Answers here will be connected to your answer to the previous question. Get insight from financial metrics around how much you’re spending on equipment per acre that you’re farming. You can start to get an idea of what you really require, and where you might be able to make changes, if needed.
3. Where should I be spending the majority of my time? In general, the more acres you farm, the less time you should be spending in the tractor, and devoting more time to the management of your operation. Also, the closer you are to retiring or transitioning the farm, the more you will want to work on building the skills of the next generation.
Another way to think about this is: where do I bring the most value to the operation? That is likely where you need to be spending the majority of your time. You can hire others to handle aspects where you feel you don’t bring as much to the table. Then you are freed up to focus on areas where you bring high value.
Ask these questions and get the metrics and information you need to drive your decision-making. If you could use some help developing metrics for your farm, consider working with a financial consultant to get the data you need.
The views expressed by Darren Frye are not necessarily those of the Penton Farm Progress Group.