As many farms take a close look at how they're spending money, how they're utilizing assets, and how they might bring in additional revenue, it's all about building a more efficient operation.
Making the farm more efficient starts with figuring out where the operation is least efficient right now. That means analyzing the farm's numbers, assets and spending within different categories. To really dig down deep and pinpoint areas to become more efficient, analyze at the field by field level.
Maybe you find a couple areas where a change will make a big impact on your costs – or a change that impacts your farm's revenue in a positive way. That could mean starting a side business to better utilize the farm's assets, such as available machinery or additional labor, when the farm isn't using those assets or the employees' time at full capacity. (See Farm Futures editor Mike Wilson's recent article on this, A quick guide to asset utilization, that includes thoughts from one of our ag finance specialists.)
If you're thinking about starting a new side business, you'll want to see the numbers first. Have an analysis done that shows current use of your equipment line throughout each season on your farm. Get a clear idea of how you're currently utilizing your employees' labor throughout a full calendar year, as well.
If you find that there's quite a bit of underutilized time for both your machinery and your employees, maybe you decide to diversify your farm a bit by adding a side business, if that makes sense for your overall operation.
Look at all areas of your operation for ways your farm might become more efficient. That includes financial aspects, of course, but also things that might not be traditionally thought of where you can boost your operation's advantage – like positive relationships with landlords, and the amount and level of innovation in your operation.
There are always opportunities when it comes to increasing efficiency on the farm. Some of the ideas with the biggest impact can come simply from taking a closer look at the numbers, or putting some new ideas into practice in your operation.
Before you get started on your efficiency plans, read Farm Futures editor Mike Wilson's recent post on asset utilization, where you'll find ideas from one of our ag finance specialists.
Also, check out a recent article in our Smart Series publication with additional ideas on improving your operation through efficiency, from a few more of our financial specialists.