When evaluating a farm’s strategic position, it is crucial to think about key resources, capabilities and processes.

Resources include physical resources, human resources and financial resources. Capabilities, sometimes referred to as intangible assets, refer to what the farm is good at or the unique skills of the operators and other employees. A bus analogy often is used when discussing this topic. Specifically, the following question is helpful: Does your farm have the right people in the right seats on the bus?

Processes connect resources and capabilities. Process can be evaluated using efficiency and effectiveness tests. Efficiency involves doing things right, while effectiveness involves doing the right things.

What are your resources?

Conducting a resource inventory is a key element of business and strategic planning. Physical resources include land, breeding livestock, machinery, buildings, grain storage and irrigation wells and pivots. Human resources are evaluated by thinking about the skills of each operator and employee. 

You also should think about skill gaps. Are there key activities, such as financial analysis, that are not being done because the farm does not have an individual with the necessary skills, knowledge or time? Does your farm need to encourage an employee to pursue training or hire someone outside the business to help with this activity? 

Financial resources include current and noncurrent net worth, which are computed by subtracting current liabilities and noncurrent liabilities from current and noncurrent assets. An evaluation of financial resources usually occurs after our assessment of physical and human resources. If you identify a key resource or skill that your farm is lacking, you will want to determine whether you should use a portion of your capital to obtain this resource or skill.

Identify unique resources

The resource inventory exercise should allow you to identify key resources and/or skills that give the farm a competitive advantage. This process is the identification of unique resources. For a resource or capability to be unique, it should be valuable, rare, costly to imitate by other farms and something that can be exploited by your organization. 

Ask yourself whether other farms possess similar resources and capabilities, and whether it would be possible for other farms to obtain these resources and capabilities. If the answer to either one of these questions is yes, your resource or capability is not unique and, thus, likely does not give you a competitive advantage. 

The next step is to examine your business environment. This process often is referred to as seeing your business through the eyes of the largest consumers or buyers of your products.