As you’re reviewing your business and preparing for 2016, getting a close handle on your farm’s financials will be one of the smartest things you can do. Knowing those financials inside and out helps you make the best decisions as a farm business owner.
Where does all of that financial information come from? It all starts with your farm books. The books provide a wealth of data about your business that helps you make good decisions for your farm. But the quality and timeliness of that information really depends on the quality of your books.
That starts with the person who keeps the books on the farm. Is it you? Or someone else in your operation? Do they have a passion for numbers and detail – or does the thought of detailed record-keeping actually make them squirm?
Clearing the piles
In one operation, the books became a major source of friction. The farmer’s wife was responsible for keeping the books, as well as doing work in several other areas of the farm. However, she didn’t enjoy handling the books. She was more passionate about the other things she did on the farm, and devoted most of her time and attention to them.
Stacks of invoices and other papers would pile up on her desk. The books were always months behind. The farmer became more and more frustrated as he wasn’t able to get the information he wanted for decision-making.
When he asked his wife about it, she would become frustrated, too. She began to resent having to spend any time working on the books. The books fell further and further behind. Their marriage even began to suffer because of the tension between them.
The right stuff
The farmer and his wife talked with a firm that specializes in bookkeeping for farms and decided to work with them. The farmer’s wife was excited because she’d be able to devote more of her time to other areas of the farm that she was passionate about.
The farmer was thrilled because he’d be able to get the financial information he needed, in a timely manner. That would help him make informed decisions for his business. He could run the business by the numbers – the best possible way in what looked to be a tight year.
In your operation, who keeps the books? If they had a choice, would they want to handle the books? How much time must this person devote to bookkeeping? Where is their time best and most productively spent in the operation?
If you find that your operation doesn’t include someone who is passionate about keeping the books organized, detailed, and up to date, then you might consider freeing up more of their time by outsourcing your bookkeeping.
Get more farm business ideas in the new winter issue of the Smart Series publication. This issue features ideas on landlord negotiations, how to think about the farm’s future, and one family’s farm transition story.