Our life is often directed, in many ways, by what we choose to focus on. It’s no different in a farm operation. What we focus on can make a difference – good or bad – for our business.
With spring just around the corner, our tendency may be to focus on all the preparations for a successful busy season. That’s good – we need to be ready for the tasks that have to be done within a short window for our farm to be successful. But I’d challenge you to keep another aspect of your farm in view this spring – something that impacts the entire operation: your farm’s finances.
Here’s an analogy about this: Think about what it was like to work ground before auto-steer. As the older generation taught the younger farmers how to drive straight, they’d often tell them to pick something on the horizon that’s straight ahead, and to keep their eyes on it while making the first pass. That would help them strike out a straight first row, and then the rest of the field would be straight as well.
We can look at the farm’s finances in a similar way. Your farm’s financials are like the point straight ahead on the horizon. They’re the compass you watch for your operation, that tells you which way is true north.
Keeping your focus on the farm’s finances helps the operation stay on course. You can make decisions according to how your choices will impact the numbers – and ultimately, your goals. Then you can continue moving in the right direction.
Get them in view
When it comes to the farm’s financials, you aren’t just working with them for a single crop year or season. They continue on with you year after year. A hole that starts out small can become deeper, if not paid attention to and dealt with proactively.
We must keep the farm’s finances in focus. And not just at year-end, or tax time, or when the banker is calling. They are front and center in the farm CEO’s mind and need to be considered as part of every decision. I’m not saying they’re the only thing to consider when making decisions, but they need to be taken into consideration.
What numbers and ratios are you using to guide your operation in the direction you want it to go? How do you know those are the best metrics for your particular goals? How are you measuring your farm’s progress, and taking action to make a difference in your outcomes?
Answering these questions needs to be part of a focus on the farm’s finances this spring. Get metrics in place and know when and how you’ll measure them, and how you’ll act on what you find.
You might enlist the help of an ag finance advisor to get a clear picture of where your farm stands financially going into spring, and how you can select the best metrics to stay focused throughout the season.
The opinions of the author are not necessarily those of Farm Futures or Farm Progress.