Better Decisions: Running your farm business from the ground up

Thursday, April 2, 2009

Whether you view your business from a strategic point of view or from ground level, planning from both levels will promote good farm management practices

by DORENE COLLINS

For those of you who have had a window seat on a commercial aircraft on a clear day, the vastness of the countryside is both striking and thought-provoking. On a recent trip
I had such an opportunity and it made me realize the importance of agriculture and the miles of productive farmland across this nation.

From 15,000 feet, one can pick out prominent farm buildings such as barns, silos, manure storage, corn fields and irrigation ponds. This view tells a story of what types of farms populate the landscape, but it does not provide a clear picture of what is happening at ground level. 

Examining your farm business from 15,000 feet (or taking the big picture) is as necessary as managing the day-to-day operation on the ground. What types of questions can you ask yourself to address both ends of the management continuum? Here are a few.

The big picture
Do you have an overall business plan for your farm operation that includes the following components? 

• What is your business all about, your mission and vision?

• How will you get things done on your farm? Do you have well-developed production, marketing, human resources and financial plans?

• Do you have a risk management plan for the above components in the event that things do not go as expected (for example, a crop failure, labour problems, lack of market access for your product)?

• Do you have a plan for where you would like to see your farm operation in five, 10 or 25 years?

• What expansion or downsizing plans do you have, going forward?

• Do you have a comprehensive succession plan setting out who will take over the business or partner with you in the future?

• Are you aware of local and regional developments which may affect your farm business over the long and short term?

• Are your personal goals in line with your professional goals? Does your farm business allow you and your family to engage in recreational and community events or activities? Can you keep your off-farm job and still run your farm business?

The ground view
The day-to-day operation of your farm business is what takes the bulk of your time. Whether you are operating a market garden, dairy or grain operation, the physical, mental and financial resources required are important in keeping the farm viable and profitable.

Here are a few suggestions from a business management perspective to help you keep your day-to-day operation running smoothly.

Time. Ensure your paper or electronic calendar is your main reference for projects and planning. Place reminders on key dates each month for bill payments, orders and production plans. 

Money. Keep good financial records on a daily basis, whether on paper or on a computer. Set aside five minutes to enter all transactions conducted during the day (invoices and payments).

Work Schedule. Because farming requires long hours of physical labour on a daily basis (feeding and cleaning livestock, along with planting and harvesting), be sure to plan for preventive maintenance and upkeep on your land, buildings and equipment during the off season.

Invest in yourself. Running your own business gives you the freedom to invest in yourself. Be sure to sign up for training and workshops which will help grow your business.

Whether you view your business from a strategic point of view (from 15,000 feet) or from ground level, planning from both levels will promote good farm management practices.

For more help in this area, visit the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) Business Management Unit website at: http://www.omafra.gov.on.ca/english/busdev/agbusdev.html BF

Dorene Collins is Marketing and Customer Service Program Lead with the Ontario Ministry of Agriculture, Food and Rural Affairs. Email:dorene.collins@ontario.ca