I’m working to track and use my farm’s numbers more consistently. When I meet with my banker, he looks at so many different numbers and ratios. What are a few to keep in mind? — L.H., Iowa

Great question! Wouldn’t it be amazing to pinpoint a couple key numbers to track and impress your banker with? Depending on your farm’s current financial situation and where your operation is in its life cycle, different numbers and ratios will be important to evaluate:

The best numbers for you to watch depend on where you’re at now, and your goals for the future. Ask your banker’s opinion on targets to consider.

What will have the biggest, most incredible impact on your operation this year? You’ll probably come up with one key number, but you can also develop some operational benchmarks — areas or aspects that contribute to the larger goal.

Commit to tracking just a handful of these. The simplicity of that approach may help you stick with it for the long term. Trying to watch too many different numbers may mean you end up not looking at any.

Use your farm’s financials as a “scorecard.” First, identify an area where the farm encounters challenges and how your approach can change. Think about the activities you’ll need to engage in.

Consider the decisions that must be made toward an outcome that will move the numbers.

The numbers on your farm’s financial statements are the outcome of past decisions. Future results won’t move in your desired direction unless you take action.

Taking planning for the future and monitoring numbers should “wow” bankers. They’ll respect your commitment to tracking that information and acting on the results. 

Frye is president and CEO of Water Street Solutions. Email questions to [email protected]. All questions and responses will be printed or published online as anonymous