How often do you stop and take time to evaluate how well your farm business is performing? And how do you determine whether an area of the business is performing well or needing improvement?
The first step in benchmarking a farm’s financial performance is to compare it to itself, to understand historical performance. From there, you need to find broader, aggregate data — financial ratios or other metrics — that reflect comparable farms or businesses, explains Terry Betker, president and CEO of Backswath Management.
“I don’t think the purpose of the benchmark is for a farmer to say ‘I have to be exactly like that.’ It’s just context. ‘What are other farms doing and how does it compare to what we’re doing? How might we use that information to improve or get our own operation to a different place?'”
Together with Heather Watson of Farm Management Canada, Betker will be leading a session on benchmarking at the upcoming Agricultural Excellence Conference in Ottawa November 21-23.
Betker joined Kelvin Heppner to discuss the process of benchmarking, as well as what to do with this information in a family business. (Terry will also lead a workshop at the AgEx Conference on how and when to discuss farm finances within a family setting.) Listen below: