As you lead your farm, one aspect that might not immediately come to mind is what sets your operation apart. Many farms grow a commodity product, but in today’s farming environment, you can’t run your business with the assumption that you’re simply producing the same thing as everyone else.
Differentiating your farm means thinking about it as it is right now and then being able to highlight what makes it unique. One important way to differentiate your operation is through a farm culture that stands out as a positive example, both in your geographical area and beyond.
Your farm’s culture impacts everything from how you as the owner work with landlords and lenders to how everyone on your farm treats visitors and suppliers who come to the operation to how your employees interact with each other and with you as their leader.
Think through what currently sets your farm apart in these three areas and then create action steps to work on:
- Leading and managing employees: The way that you and anyone else who leads employees in your operation lead those employees is a major part of the culture that develops. A positive leadership culture can set your operation apart as a sought-after place to work, making it easier when it’s time to hire.
- Relationships with those outside of your operation: In today’s ag world, we must work with others from a variety of different backgrounds, organizations and perspectives to get the job done. Developing a set way that you and everyone else in your operation work with others from outside your operation is very important. A set standard helps others know exactly what they will be dealing with when they work with you or your employees.
- Running the operation by the numbers: Managing your farm business with a careful eye to the numbers in all decision-making is another way to differentiate your operation. Running the farm this way can help you make better business decisions on both sides of your farm’s equation: expenses and revenue.
All financial decisions first require careful analysis and a preview of how the potential decision will impact the business. Also, create flexible marketing plans based on your operation’s numbers and regularly update your farm’s financial information to help make good decisions.
A Word On Resilience
Another key fact to consider is that when it comes to being resilient and persevering in the face of obstacles, it’s no secret that farmers do both incredibly well.
The Merriam-Webster online dictionary defines resilience as “an ability to recover from or adjust easily to misfortune or change.” So, what happens when things get tough on the farm? The tough get going.
What about when things get really tough, as in dealing with almost every weather challenge in the books — hello, 2019? Well, then the tough really get going.
Here are three ways to apply principles of resilience:
- Consider diversifying: You won’t be as dependent on a single revenue stream. You won’t have to ensure everything goes perfectly with your primary crop. Being able to pay the bills doesn’t depend solely on one crop or business area. Diversifying may be able to help to lessen your overall risk, or at least place some of it in a different business that’s not as dependent on factors like weather and markets.
- Build strong working capital: This is one of the best ways you can protect your operation from financial issues and help it stay resilient. Most banks recommend a 25% to 30% working capital ratio, but we like our clients to shoot for a working capital ratio of 40%. Your operation will be far more resilient with a bigger “cushion” in place. If you need to work on building your working capital, it’s best to start with an in-depth financial analysis of your operation to see where you’re at and how you can make changes.
- Resilient market planning: Marketing and merchandising plans are critical for farms to thrive. Plans need to be tailored well to your operation’s needs and ready to pivot in the face of a variety of different scenarios. Are your marketing and merchandising plans truly resilient? Talk with a market adviser about your plans for this year and beyond.