We’ve built a diverse farming operation and now have eight different businesses. However, it’s tough for us to make decisions about which parts of the business to focus on and allocate resources toward. I want to be smart about this, but I also think we don’t always have all the information we need to truly know where we’re making money and where we aren’t. Our operation is doing well overall, but I think sometimes that can cover up areas where we aren’t doing as well. How can I make sure that doesn’t happen? — F.B., Indiana

Make smart decisions to grow your business. (Photo: Maxsattana/Thinkstock)

First of all, congratulations on building such a dynamic and diverse operation. There can be major advantages to diversifying your farm. Diversification creates multiple revenue streams — important during times of tight margins, especially for farms producing commodity crops or livestock. From your question, it appears you’ve seen these benefits.

It’s a smart move on your part to get a better understanding of the parts of your operation that are contributing the most to your business’ success, and those that aren’t contributing as much. The place to start? Your operation’s current bookkeeping practices.

Here’s why: Your farm books are the basis for all of your operation’s financial information. How is your operation currently keeping the books? Are separate books kept for each business within the operation? Is bookkeeping information readily available to you — whenever you want it — so you can make good decisions on how to allocate resources within your operation? Do the reports include the information you need to make decisions as the farm’s leader?

Also, who is keeping your books? Do they love crunching numbers and balancing everything to the penny? Is the bookkeeping information always prepared and ready for you because they enjoy creating those reports?

If not, you may want to consider finding someone who has a passion for numbers and details — or outsource your bookkeeping to a consultant who understands agriculture and is passionate about bookkeeping.

Getting the right people, processes and reports in place for your books gets you the right information — and helps you make smart business decisions about how to invest in your operation.

Frye is president and CEO of Water Street Solutions. Email [email protected].