As the CEO of our farm, we want to know whether we’re making progress toward our business goals. We hope to love what we do in farming each day, but it’s also important to know whether our farm is moving toward the vision and the goals we’ve set forth.
It can be tough to figure out exactly how to measure and what to measure to gauge our farm operation’s progress. It’s best to look beyond only financial measurements and take the bigger picture into account.
There are certain basic financial metrics that every farm should have, but beyond that, metrics should be tailored to the specific operation. The farm needs a “dashboard” of metrics – a handful of metrics that the farm leader can use as a whole to get a sense of how the operation is doing at any given moment.
Metrics can help us “see” things about our farm business that might otherwise be difficult to observe as we’re leading our operations each day. Sometimes they can springboard a solution or a new way of thinking about what’s going on.
Staying close to the farm’s metrics gives the farm leader a clearer pulse on the business, what’s impacting it and how that impact is manifesting within the business.
The big picture
How can a farm leader determine the right metrics for their operation? We often spend time focusing on metrics that are easy to measure – like the number of acres we’re farming or how many side businesses we’re running. The problem is that these metrics may not tell us what’s most important to know about our businesses.
Discouragement can come if we’re not seeing the kind of progress we want. That can happen when we’re looking only at certain metrics that don’t provide a full picture of what’s going on in our operation. We can mistakenly form an overly negative view of our farm business.
Part of the responsibility of the farm CEO is to set up the right metrics for the operation and to monitor those metrics regularly. The most powerful way to incorporate metrics into your business is in using them to make real-time adjustments to decisions you’re making for the operation.
Working with metrics
The first step is to get the right metrics for your operation in place – and the right ones depend greatly on your unique operation. Then, it’s time to monitor your chosen metrics regularly, and make adjustments based on any patterns or new data that emerge.
You might work with an ag finance advisor who is experienced in helping farm operations dig into their financials. They can provide insight around what the numbers are revealing.
Our advisors offer farm leaders the data and insights to help them run their operations more efficiently. You can work with an advisor to discover the right metrics for your operation and plan for how to incorporate them as you manage your operation.
The opinions of the author are not necessarily those of Farm Futures or Farm Progress.