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How are you steering your operation?How are you steering your operation?

Financial tools help with ‘navigational duties’ of the farm leader.

Darren Frye

April 26, 2017

3 Min Read

During a busy season like planting, you’re involved in a great deal of day to day management as a farm leader. You’re the one ultimately responsible to ensure everything is getting done in the right timeframes, and for the success of that work.

But then there’s also managing the ‘bigger picture’ of where your farm operation is heading. This is about having a vision for the farm’s future – where it needs to be in five, ten, twenty years. It’s about a strong belief and commitment to that future direction, while working on any changes or tweaks in your business to more fully align with that direction.

Guiding the ship
The farm leader certainly has some unique responsibilities when it comes to where the farm is headed. I believe that guiding and steering the future direction of your farm operation is, in some ways, like navigating a ship’s course, or driving a tractor – before auto steer and guidance systems came on the scene.

First of all, you need to know where you’re trying to go and what your goals are. Otherwise, the ‘ship’ could drift just about anywhere. If that happens, it’s most likely that you’ll end up somewhere you’d rather not be – worst of all, into a situation where the farm’s legacy might not continue.

Solid navigational tools are the key that let you know whether you’re still on the correct course, moving toward your ultimate goals. Back in the day, captains of ships would use a compass, along with other navigational tools, to help chart their course through the seas and know whether they were still on the right path.

If the ship veered off course, whether due to wind, waves or other factors out of the crew’s control, the captain used the navigational tools for immediate feedback. Then, he could make adjustments right away based on what he discovered. By paying close, consistent attention to these navigational tools, the captain could make sure that the ship stayed on course as much as possible, making corrections as necessary.

The right tools
How are your steering your farm operation? How do you know the direction your farm is going? What tools do you use regularly to ensure that your operation is on the right track? Can you get immediate feedback – so, like the captain of a ship, you know when a ‘course correction’ is needed?

I believe that the farm’s financials – specifically, forward-looking accrual-based financial projections – are necessary for today’s farm ‘captain’ to steer the operation. These projections are updated as conditions and situations change. Guiding the farm by the numbers in this way, using them to make decisions for the operation, can be a way to keep the operation on track, moving toward the future you want to create.

Build it in
As the farm’s leader, you’re responsible to make sure your farm has the right financial tools and advice. You also need to fully implement and integrate those tools into your decision-making processes and how you run your farm. That’s when you’ll see the biggest impact on your operation and its success.

Do you have the right financial navigational tools in place for your farm? And more importantly, are you fully using them to run your business? Commit to getting the right tools in place and then build them into the way you steer your farm – both in the day to day and toward the long-term vision you have for your farm’s future.

If you’d like some help learning about financial tools or how to use them for greater impact on your farm and your decision-making, you can get in touch with our advisors.

Read the current issue of the Smart Series publication, bringing business ideas for today’s farm leader. This issue includes perspectives on what to do when a landlord asks for higher rent, how to find the right new employee, a farm business checklist for the spring season, and more. Get your free online issue here.

The opinions of the author are not necessarily those of Farm Futures or Penton Agriculture.

About the Author(s)

Darren Frye

CEO, Water Street Solutions

Darren Frye grew up on an innovative, integrated Illinois farm. He began trading commodities in 1982 and started his first business in 1987, specializing in fertilizer distribution and crop consulting. In 1994 he started a consulting business, Water Street Solutions to help Midwest farmers become more successful through financial analysis, crop insurance, marketing consulting and legacy planning. The mission of Finance First is to get you to look at spreadsheets and see opportunity, to see your business for what it can be, and to help you build your agricultural legacy.

Visit Water Street Solutions

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