Never forget that a farm is a business. That means, among other things, keeping good records might make the difference between a farm that stays in the red or gains profit. Use the winter season, when there isn’t much else to do, to incorporate record-keeping into your habits. Use these tips to make things profitable long-term.
1. Set. Goals.
“Goal-setting is one of the first things you should look at,” Adam Barr of Barr Farms said. Barr is the seventh generation to run his Kentucky farm in Rhodelia. He hasn’t studied business, and confessed that he made the mistake of biting off more than he could chew when he first started. He came home to help run the farm and immediately joined a community operation and then quickly got into raising chickens and pigs. Then he went to a Wholesale Success Workshop which completely shifted his paradigm of running a farm. Barr learned some easy tricks for keeping records. After this, he got a Seed Capital Kentucky grant so he could employ Ellen McGeeney, a financial consultant. McGeeney, who works for Ale 8-One, also advises family-run farms.
“Farmers only have the winter to think,” McGeeney said. “It’s critical over the winter to set a few goals and set up your systems to answer some questions.”
These questions include, but are not limited to: Will farming be your only income? How much profit do you hope for year one?
2. Record Income AND Expenditures
It’s important to know where your money is going and where it’s coming from to figure your profit. In Barr’s case, he does this by always having his toolbox with him. It contains the tools he needs most often, including tools for record keeping: one market-inventory slip, order forms, a file folder containing all his receipts, a journal to record his own time, a calculator and a laptop.
“Keep a system for your expenses that is very simple,” Barr said.
Barr has one bank card for things for the farm and puts the related receipts into his wallet. Since his farm involves five separate businesses, he jots down the name of the enterprise on each receipt. Later, he organizes the receipts in the file, ordered monthly. Every month he looks at the bank record to total the farm’s profit.
3. Make Appropriate Changes
Recording all expense and income will make it so you can see what is working in your favor and when your farm gets a big influx of income.
“Be open-minded when you’re going into this process,” Barr said.
You may passionately desire for a certain crop to perform, but it may prove to not be a good value, like you hoped. With a record of the past, make changes and plans to improve your farm.
“The hardest part for the farmer is collecting data,” Barr said. “But don’t be afraid to get help with that. A farmer can’t do everything.”
Though it was money from a grant that paid for McGeeney, Barr stated that he will budget for future consultants.
4. Keep a Time Journal
Tracking your labor will show you how valuable it is (or is not) for you to do a certain task. It is important to judge if it better to do a task yourself or employ someone else to do it.
“Most farmers think their own labor is worth zero,” Barr said.
However, Barr tracks how he spends his time so that he can best decide what to do with his own time in the future in order to have a more successful farm.
5. Use Tools that Are Available.
Being an accountant isn’t necessary to keep good business record. There are a variety of tools you can utilize. Use your own records from the past, take advantage of grants and information that national or state organizations offer (like Sustainable Agriculture Research and Education), and look into online programs (like AgSquared and HanDBase).
6. Make Good Habits.
The secret to success in tracking data is to create a method that fit you. It doesn’t matter if you sit down quarterly, monthly or weekly, just make it work for you.
“Keep a system in place so when you’re hard at work, you can come back to it when you have time in the winter,” Barr says. With your data already collected and organized, making your farm-production plan for the new year will be easy.