Timing of focus on farm business management evolving

The landscape of farm business management continues to evolve and I think for the right reasons. Years past, it was extremely rare to have a July meeting with families about managing their businesses. There was a pattern of the work we did with farm families:

  • November to mid-April — It was a busy time with lots of focus on business management.
  • Mid-April to mid-June — It was a time for spill-over work from business management issues not resolved or completed by the start of seeding.
  • Mid-June to mid-August — The only contact with families about management would be crisis related, usually financial.
  • Mid-August to mid to the end of September (end of harvest) — There was virtually no contact with families about management
  • Mid-September to end of October — The only contact with families about management would be crisis related, typically financial.

The evolution I mentioned is in the mid-June to mid-August and mid-September to end-of-October periods — basically, the whole summer.

That’s because farm families are increasingly less comfortable with a six-month gap in their attention to business management.

The management issues being addressed have evolved. A degree of change often is an outcome of management planning in the winter. The discussions are more broadly focused around their businesses and not so much on finance. Financial performance, though, is never too far removed from the discussions as it underpins virtually all management in a farm business due to the high capital requirements, often higher debt loads, narrow profitability and sometimes tenuous liquidity.

Any momentum gained through planning in the winter can be lost over a six-month hiatus in attention to business management.

Actions that may have been committed to through the winter planning will require mid-season review to ensure that the desired results are being accomplished.

This is all tricky because it’s easy to get absorbed in seasonal production pressures and to lose sight of perhaps more important concerns from a longer-term, business-management perspective. Thus, more business management meetings are happening in the summer.

A family meeting that I attended this summer included a mother, father and son. Typically, the son had been working on the farm because he was much younger and had some post-secondary education. He was in the early stages of formally starting his farming career.

The main focus of this meeting was on financial performance. The parents had purposefully included their son so he could begin to become more comfortable with the discussions around financial management and its correlation to business-management decisions. As the meeting started, I asked if there was anything in particular they wanted to know or were concerned about. The mother, half seriously, stated that, “maybe I don’t want to know.”

I often hear this type of comment. Most farm families don’t understand how the financial statements they get from their accountant connect with the decisions they’re making in their businesses. The purpose of the meeting we were going to have was for me to review their farm’s financial performance. From the mother’s perspective, what if I was going share bad news? (In this situation, I wasn’t because the farm is in pretty good shape.)

Not knowing is not necessarily a bad thing. The risky part in not knowing is that when a farm family doesn’t have a clear understanding of their financial performance, they do not act when they need to.

Most farm businesses are in pretty good, if not excellent, financial positions. But farm families need to know if there are serious issues or developing concerns. Farm financial challenges typically don’t fix themselves because families typically don’t make adjustments to how they manage their finances.

The family I met with had received their financial statements in April and had made a commitment at that time to do something about the not knowing aspect before next winter. They weren’t comfortable in going through another whole production season with the feeling that they were in a dire financial situation. So they did something about it, and that included focusing some precious time in the summer to their farm business management.

The evolution of farm business management is a good thing. Do what you can to be part of the evolution.

Terry Betker, P.Ag, is a farm management consultant based in Winnipeg. He can be reached at 204-782-8200 or terry.betker@backswath.com.

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