Kohl's Notes
Year-end is just around the corner. Which issues should be considered as part of a farm’s annual business review?
I encourage people to view their year-end review as an opportunity to assess the present and plan for the future.
First, compare the year’s projected financial results to the actual results. If your actual fell short of projection, you need to know why. Was it the result of some macro-event beyond your control – currency fluctuations, world and domestic markets or weather – or was it caused by some management issue within your control, like delays in vaccinating and worming cattle?
If there’s a variance, take an honest look in the mirror and assess which management changes you need to make to close the gap in 2007. From the income statement, observe specifically any change in farm input costs from previous years. If your input costs are rising faster than your revenue, this can be a cause for concern, as it indicates the compression of your margins.
Good management is not about doing one thing 1,000 per cent better but doing 1,000 little things one per cent better. Soil and feed testing, developing and executing a marketing plan, or finding a niche market can place you ahead of budget.
Finally, the end of the year is a great time to assess both personal and business goals. We’ve been going through this exercise on my own family’s farm recently, and it’s been very valuable. Ask everyone to independently write down their short- and long-term goals. Find commonalities and then negotiate the differences.
In my experience, one of the most accurate predictors of future problems is when farm partners are not aligned around common goals for the future. As part of your annual review, spend some time thinking about where the business is going and where you and your partners want to go personally.
Determine what you want to accomplish, how you’ll do it and put it in writing. Write key interim goals on the calendar and include deadlines so you’ll be sure to revisit them during the course of the year. Accomplishing mini-goals along the way builds momentum, and remember to have fun on the way to the goal with mini-celebrations!
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