Difference Makers: How to Run Your Farm Like a Business
By: Laura Hahn
The first week of the Agribusiness Management Program (AMP) Summer Webinar Series featured Jackson Takach and Zack Carpenter from Farmer Mac. Farmer Mac is a mission-based organization committed to building a vital rural America by providing credit and other financial services. In their roles at the organization over the years, Takach and Carpenter have identified six common threads that are the difference makers in creating successful farm businesses.
Common thread #1: Discipline makes the business.
When you think about your business, where are you spending most of your time? Carpenter suggests that good leaders spend much of their time in execution, but great leaders will spend most of their time in analytics and developing a strategy for their business. A strategic plan will help you identify where your business has been and where you want it to go. Asking yourself the tough questions and being realistic in moving forward can help shape the strategic vision for your farm. When appropriate analytics and a solid strategy are in place, the preparation and execution will more easily follow.
Common thread #2: Grow what you know. But know what to grow.
Within this common thread are four dimensions that can help you find your sweet spot in ensuring a marketable return on investment. Finding your core strength – what you can be the best at – is the first dimension. Additionally, watching demand for the product you’re ultimately selling. Finally, being passionate about what you do each day. Your time is the fourth element and the one that will be most flexible. As things change, your time will shift to where it is needed the most and will intersect with each of the other elements differently.
Common thread #3: Cash is still king, but it’s not the whole story.
Cashflow is important for a business and a large consideration in the underwriting process, but not the only consideration. The 5 C’s of credit should be used as a guide and communicated with your business partners, family members and lender to give the full picture of your business. This is a mix of qualitative and quantitative information that helps underwriters understand your business. Farms with the biggest profits are not always seen as most favorable. It’s those with consistent profits that are the healthiest from a financial perspective.
Common thread #4: Be a (right) tech adopter.
Farmers know better than most that the only constant is change, and technology can help us adapt to those changes to increase production and outputs. The ag tech space is increasingly crowded and it’s not always easy to determine the right fit for your business. What can you do to make a good decision where technology is concerned? Use outside resources, such as tech companies’ sales teams, to help you determine a good fit, or assign the task of researching different innovations to another person on your team. As the leader of the business you don’t necessarily have to understand how the technology works. You just need to understand how it helps your business.
Common thread #5: Bigger can be better. Or it can be worse.
There are certainly some advantages to having a large farm operation, but there are also financial implications and other limitations that should be considered. The right size operation will follow the strategic plan that you put in place for your business. The acquisition of acres should never take over the strategic focus. Instead, focusing on the right kind of growth and being able to support whatever size your farm is will ensure you stay nimble to the needs of your business.
Common thread #6: Find your people.
Great businesses have great teams with a high level of engagement. Family should come first, but that does not mean they’re the only ones you need on your team. If a team or family member is not in a position that aligns with their strengths, either reassigning or removing them is a decision that needs to be made. Ultimately, farms with dedicated teams and family members will outlast temporary market factors and be more sustainable.
View the full webinar here: https://www.youtube.com/watch?v=5xpT9T36v08&feature=youtu.be
For additional AMP information, visit the program webpage at https://www.ilsoyadvisor.com/on-farm/ilsoyadvisor/amp-agribusiness-management.
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