With the busy world we live in now, and the seemingly constant barrage of changes and challenges being thrown at us, it is often easy to deviate from the basic tactics of managing your farm financials.
But, cautions Thomas Eatherly, AgKnowledge financial consultant at KCoe Isom, making sound decisions on your farm remains essential to maintaining healthy operations and maximizing your financial management strategy.
Don’t Forget the Basics
“Farmers are accustomed to stressors and unanticipated events, and if anyone can push through and come out strong, it’s them,” says Eatherly. “It can’t be done by resting on your laurels though, or what has worked in the past. You’ll need to take proactive action with your financials to secure your farm’s future.”
Eatherly emphasizes three proactive actions to stay focused on:
- Push farm management and operations up a notch. It’s important to stay focused on the tasks you can control, versus the things you can’t – like market volatility, weather unpredictability, and unpreventable repair costs.
- KCoe Pro Tip: “Operate as a business that accidentally farms, not a farm that accidentally runs a business. Intentionally implement a professional work environment, follow best practices, encourage work-life balance, and develop standard operating procedures (SOPs).”
- Utilize dashboards to monitor performance. A business advisor is not the only person who can turn your numbers into strategic business power. With so much information readily available, you can alleviate risk and ease decision-making by tracking performance.
- KCoe Pro Tip: “Know your business’s business! Break evens, cash flow, capital expenditure budget – these are your crystal ball to provide business insights for effective decisions. Pick a couple of ratios to start watching. Surround yourself with professional advisors (not the local coffee shop advisors) who act like they are owners in your business.
- If cash is your king, then make data your queen. Critical to lowering risk and creating positive results, data provides the essential operational ‘tells’ for how to manage your financials and create advantages.
- KCoe Pro Tip: “Understand your production potential by farm. This is crucial to understand when the next rental agreement comes up for negotiations. Know when you walk away, and know when to say ok.”
If you need a proactive partner to evaluate and manage your financial and farm-operation options, maximize performance, or uncover threats to profitability, KCoe has the resources and expertise – we call it ‘AgKnowledge’ – that produce results. Contact a KCoe advisor to get started.