Running a farm comes with many risks beyond a producer’s control. But when business literacy is firmly planted in the operation, you can better manage it and make informed decisions.
Business literacy includes understanding and applying key pillars like business strategy, finance, marketing, and managing people and technology, says Larry Martin, a principal in Agri-Food Management Excellence.
It also considers the creation of a strategic and operating plan to manage a successful for-profit business, as well as withstand its risks, he says.
“The importance to farmers is that it gives them a framework with goals and measures to use to gauge their management performance, identify problems and take action to improve them,” Martin says.
Getting started
Producer Heather Broughton of SWG Farms says business literacy begins with understanding key indicators in your financial statements by using ratios to identify where there are problems or successes within the business.
These ratios can be measured against benchmarks of other farms and the historical trends of a producer’s farm.
“Understanding financial fundamentals and true financial position provides much greater clarity and confidence in strategy and decision making,” Broughton says. “Financial analysis and understanding are key when you’re developing a business strategy as it significantly impacts what you can do.”
Source : FCC