Author Ken Hilton, President, Red Wing Software
The Red Wing Software team works with farms around the U.S. every day. And the one conversation that often comes to surface during our conversations is about best management practices for growth on the farm. This is a very timely topic with the start of a new year approaching, as every farming operation should be considering how to make the new year more profitable than the last. While the conversation initially centers on farm accounting software, it quickly becomes clear that the focus really revolves around systems and processes.
Simply put, the best software in the world can’t fix broken processes. Farms need to identify what is important to them for analysis purposes, and then implement a system that provides that information. That may mean changing some internal processes, so data that is being collected is sufficient to get the results they’re after. Change in process is always a difficult thing to implement, but may be necessary to accomplish an ultimate goal. The way to make a change successful is to make the process as easy as possible for people to understand, inform them of the importance of the information, how it will be used (share results), and then enforce implementation. It normally takes sticking to a new daily routine for just a couple of weeks for it to become habit. Many people believe they have great systems in place already, and have coworkers that would argue that there is no better way to do things. I would argue that any time we start to believe that our business can’t improve each and every thing that it does, the business stops growing, and we all know that without growth the business will fade away. I challenge everyone to take a look at what you’re doing today, tweak something that will make your business better, and reap the rewards.
Other suggestions for adding profits in the next year:
- Control the expenses on your farm by strictly adhering to a budget.
- Work to understand the true cost of the items you produce, including indirect costs.
- Build processes that allow you to understand which of your items are most profitable, and which items are less profitable.
- Learn about key financial ratios, what they mean, where the danger levels are, and what that means to your farm.
- Analyze the return on new asset purchases, before the purchase has been made.
Understanding your own farm’s processes is the key to changing them for the better. Take a hard look at your farm’s situation, and you’ll be on your way to a more profitable 2017.
For more information please visit, redwingsoftware.com.