I've been hearing more questions lately from farmers about metrics and measurements for the farm – what types of metrics farms should be tracking, how often, and so on.
The key to farm metrics, even more than what to track or how often, is what you can do with the information you gain. Insight from a handful of well-selected farm metrics can help you make the best decisions for your operation, in the best possible time frame.
Imagine you've been riding an exercise bike to increase your fitness and improve your health. You set a goal to ride faster and farther within a set amount of time each day. But there's one problem: There's no speedometer or odometer on the bike showing you how fast you're pedaling or how many miles you're racking up.
Without that type of feedback, it would be tough to know if you're reaching your goals, or if you're continuing to challenge yourself and improve. Real-time feedback is really helpful. Otherwise, you could start thinking you're doing really well, but maybe you haven't made much progress.
When it comes to metrics, it's like this on the farm, too. Maybe you have the goal of increasing your operation's revenue, becoming more efficient with assets, or paying down debt. But without a way to visually track and make sure efforts are heading in the right direction, it can be tough to know the speed of your progress.
I've written here before about some of the key metrics farms can track, like working capital, equity to asset ratio, and term debt coverage ratio. The key is to consistently track the metrics that make the most sense and tell you the most about how your operation is doing. You'll want to choose a time interval to regularly take these measurements, and then track progress.
Even more importantly, use the trends you're seeing as a way to make management decisions and adjustments. Making these changes as you go helps you adjust more quickly. You're getting real-time (or nearly real-time) feedback from tracking chosen metrics.
This summer, there's an opportunity to work one-on-one in discussing your farm's challenges and opportunities and getting personalized advice from ag financial experts including Dr. David Kohl, Dr. Mike Boehlje and Dr. Danny Klinefelter, and learning in hands-on workshops with family business experts like Jolene Brown.
This unique experience will happen in August in Peoria, Ill. It's limited to 15 farm operations, to make the one-on-one time possible with these educators. Farms that are interested in an experience like this can watch a video here, learn more and apply.
The opinions of Darren Frye are not necessarily those of Farm Futures or the Penton Farm Progress Group.