Your Reading List

How farmers can up their game

10 ways to run your farm more like a professional business

Farming is often described as both a lifestyle and a living. And and although not every farm is a small business, even a small farm is a business.

That concept of running a business like a business, though, can often get lost in the day to day management of a farm operation, especially if there are few or no employees to help share the workload.

To help farmers up their game in the professionalism department, Business Management Specialist Nick Betts with the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) has 10 tips that can make a farm more like a professional business.

If time or resources are limited, even just concentrating on one or two can make a difference — in particular, goal setting to give you an idea of where your focus should be, and time management so that you can devote time to the things that are important before the things that are urgent, advises Betts.

1. Find and adopt innovation

Staying on top of technology and innovation trends is key in the business world, and can be anything from trying out new equipment to implementing new accounting software or coming up with new ways to compensate employees.

“I challenge farmers to try something on their farm every year. It doesn’t have to be a multimillion dollar innovation, but even just something new to you that you’ve never tried. It’s not just about apps,” explains Betts.

He advises farmers to look outside of their own sector for innovations that can be adapted for use in agriculture. Air BnB, for example, is now the biggest bed and breakfast provider in the world without owning a single property. What’s important though, is evaluating all the costs and benefits while trying out something new in order to make an informed decision about its successful use in the operation.

2. Develop a capital asset and investment strategy

Sometimes it is beneficial to buy equipment and other times it makes more sense not to. Set emotion aside when it comes to investments, says Betts, and instead, focus on the cost and benefit. Establish a “return on assets” goal and monitor it annually, and think about the impact an increase in interest rates might have on your finances.

3. Plan and hold regular farm meetings

“It can be hard to separate family from farm and business, especially when the farm house is on the farm and your labour is related to you,” says Betts, adding that divorce rates are up to five times higher for owners of failing small businesses.

Just as organizations and corporations have board or staff meetings, regular and business-focused communication is important in farm businesses too. Having a regularly scheduled meeting outside of breakfast or dinner hour allows family members to have input into the goals and plans of the farm.

4. Take some time for self-reflection

This means considering what your strengths are and what you like to do. Perhaps your true love lies in working with livestock instead of field work, so finding someone to do things you don’t enjoy or don’t have particular expertise in will not only make your life easier, it will also benefit the farm as a whole.

5. Implement transition planning steps

A transition planning process requires investigating and analyzing the farm business, understanding the goals of all family members, and balancing needs against business, legal and tax considerations. And transition doesn’t just have to mean a change in generation, it can also involve diversifying into new ventures — perhaps you’re adding an on-farm market or bakery, for example — or simply planning for emergencies that will bring change.

“It’s always important to have a plan. Anyone can die tomorrow, for example, so it’s always a good idea to know what the next step would be in a situation like that,” Betts says.

6. Customer communication and marketing

Markets demands and needs can change; to keep your customers satisfied, take the time to listen to what they need and want. Are there opportunities with your elevator to produce a different quality of grain, for example? Are you interested in growing a different crop that might appeal to a new buyer or to a new group of customers?

7. Borrow from others

The lean business principle is widely used in the manufacturing sector, and involves the five Ss:

Sort (remove unnecessary tasks and processes); Set (arrange items so they can be used easily); Shine (use cleaning as an inspection activity to keep your equipment up to date); Standardize (ensure your business is up to current industry standards); and Sustain (perform regular audits).

“These principles help you organize yourself to make your operation more efficient, and if you can follow this for everything from the workshop to the finances, it will make your life a lot easier as a business owner,” Betts says.

8. Manage your time

According to Betts, the golden rule of time management for full time business owners is the 3,000/500 rule — spend no more than 3,000 hours per year working and 500 hours on community and other activities. If you do, your family life and health will suffer. And although farming doesn’t follow the nine to five schedule of an office job, Betts advises loosely tracking hours over the course of a year to see where your time is being spent.

“In our society, we glorify the busy and how much we work, but you also need down time and your family needs to see you,” he says. “There are some things you’ll never get back no matter how much canola you grow.”

Three strategies that can help make time management easier: set aside 20 minutes to plan for the next day; focus on $10,000 decisions and not the $10 ones; and delegate work to others where you can.

9. Set goals

Think about where you’d like to be six months, a year or even three years from now and put those goals on paper. Not only will that help these goals be achieved more quickly, but it will also help measure your progress.

10. Beware of killer toys and side-shows

Although there may be enough resources to support them when times are good, hobbies and toys can be a drain on the business when markets aren’t as strong or other problems arise. Stay true to your original goals, advises Betts, so that success and enjoyment won’t impact the future fruits of your labour.

About the author



Stories from our other publications