Positive cash flow is a good performance metric but the most successful farmers and ranchers know that effective business management requires incorporating these seven habits. Doing so can increase revenues, improve production, reduce stress and ensure the long-term viability of the farm.
1. Analyze the business:
Most of your time is spent on day-to-day operations like harvesting row crops and feeding livestock. Focusing on chores is essential, but so is farm management. Review your business plan and adjust it annually; perform monthly reviews of projections against cash flow and adjust expenditures as needed. Staying on top of the business will allow you to make smart, timely decisions before revenues or production dip.
2. Manage risk:
Farming and ranching are risky businesses. However, managing risks with strategies ranging from diversification and vertical integration to crop insurance and off-farm employment can help protect the farm. The risk management software you choose will depend on the specifics of your operation but all farmers or ranchers need to think about reducing their risks.
3. Assemble a team of advisers:
Your team of advisers —which can include lenders, veterinarians, agronomists, insurance agents, extension agents and equipment dealers — should all be on speed dial.
4. Evaluate technology:
Conduct regular technology reviews to ensure you’re using the right farm management software. A USDA survey found that using yield mapping saved corn farmers $25 per acre; soil mapping with GPS saved $13 per acre. Adopting new technology — and phasing out ineffective technology — can help improve productivity and profitability.
Connecting with other farmers and ranchers is essential. Join national and regional farm or commodities associations to stay abreast of issues in the industry. Your network could lead to new business opportunities, help on the farm or equipment sharing arrangements that offer social and economic benefits.
6. Engage in continuing education:
The most successful farmers and ranchers are always learning. Look for training sessions, webinars, social media groups, seminars and conferences to improve your operations.
7. Create a succession plan:
A succession plan not only preserves your agricultural legacy, it protects the heirs who will inherit the farm. The USDA reports 10 percent of all farmland would change owners between 2015-2019 through gifts, trusts or wills — mostly to family members. Successful farmers have succession plans in place long before retirement and take steps to ensure a successful transition from one generation to the next.
Adopting these seven habits of highly effective farmers and ranchers may improve your operation and provide you with tools to ensure the success of your farm/ranch. And connect with your Farm Bureau agent to schedule a SuperCheck® to ensure your insurance is keeping up.