Don’t ever forget that your farm is a business, and any self-respecting business needs to keep good records. Noting expenditures and income could be what helps your farm survive. Take the opportunity of your spare time through the winter to start on these six ways to make sure your farm stays profitable long term.
1. Make Goals
“Goal-setting is one of the first things you should look at,” seventh-generation farmer Adam Barr said. When he came back home to help on the farm he admitted to being overly ambitious. He started out on a community-supported operation and then quickly got into broiler chickens and pork.
Later, he went to a workshop that gave him easy tools for record keeping which changed his paradigm of farming. From there he got a grant to pay for a consultant, Ellen McGeeney, to help get the farm’s finances on track.
“Farmers only have the winter to think,” businessman and consultant McGeeney said. “It’s critical over the winter to set a few goals and set up your systems to answer some questions.”
Winter planning could be as simple as deciding on crops, profit expectations or deciding if the farm will be your sole income.
2. Record Expenses AND Income
Money in and money out are all part of the profit equation. When Barr goes around, his toolbox has both his tools and what he needs for record keeping on the go: a calculator, his laptop, a labor journal, a file folder for receipts, sales order forms, and an inventory sheet.
“Keep a system for your expenses that is very simple,” Barr suggested.
Barr had a debit card that is only for farm purchases. The receipts from those purchases go in his wallet. Since his farm has five enterprises, he writes down which enterprise the purchase is for on each receipt. Later, he puts those receipts in a file folder organized monthly. Each month, he has a time every month to look at bank records and figure the profit.
3. Learn From the Past
Record keeping will allow you to see what equipment is helping you most financially and what months you’re rolling in the dough.
“Be open-minded when you’re going into this process,” Barr said.
Some crops that you got excited about could prove to be more work than value. Other crops may be surprisingly better than expected. With your financial data, you can stop repeating mistakes and start building on success.
“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.”
Barr spent a grant to get consultation from McGeeney, but he plans to invest some farm money into further consulting.
4. Re-Evaluate Where You and Your Labor Force Spend Time
When you record how you spend your own time, you cans see if it would be more valuable to hire another person to do that task.
“Most farmers think their own labor is worth zero,” Barr said, but he keeps track of all wis work hours. That way he can look at where he is most valuable and make changes in his time management to maximize profits. Paying someone to do a simple job so that you are freed up to do a profit-making task is very valuable.
5. Look for Helpful Resources
Don’t be afraid of record-keeping if you’re not a genius at accounting. Look for help from fellow farmers, the county extension office, your own records, grants, educational resources from national or state organizations (like Sustainable Agriculture Research and Eduation), and online software (like HanDBase and AgSquared).
6. Make Good Habits
The secret to keeping track of your expenses well is to do it the way that fits you. It could be every week, every month or every quarter.
“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 said.
If all your finances are organized, planning for spring and the next year won’t be difficult.