Key management proficiencies are the focus of an annual survey of attendees at The Executive Program for Agricultural Producers (TEPAP). The survey, conducted by faculty instructor Dick Wittman, is based on data averages over a 13-year period. Recent classes appear to be even further behind these averages. To the right, I’ve identified management proficiencies with the highest adoption among participants.
One area where Wittman sees room for improvement, for example, is in the cash method of accounting. Few prepare financial statements using the accrual method of accounting, yet it’s impossible to know a farm’s profitability without accrual-prepared statements.
If your operation is deficient in several of these areas, get the next generation involved. Areas in which you are weak might be areas in which younger producers have a unique skill set. A team approach is always best.
Even among TEPAP enrollees, whose businesses are likely more progressive than many, few proficiencies have participation exceeding 50%. As a top producer, how does your farm stack up in these areas? What are you doing to make improvements?
Top Proficiency Areas
Adoption rate among TEPAP participants
Use Technology to Access Management Information: Are accounting records computerized and updated in real time? Do you use this data as a management tool or simply as a way to complete your tax return to provide information to a banker?
Document Your History: Do you have a written document that shows the history of your farm operation? Have you recorded a video including photos of your business and a narrative describing when the farm started and how it has evolved? Among my most valued possessions are photos of my parents on their farm. The images were saved from our house, which burned down in 1968.
Compile an Annual Operating Plan and Cash Flow Budget: Is this something you actively work on, or is it simply a document a banker requires to get financing? Is the budget updated throughout the year to reflect major changes in the farm operation?
Hold Regular Meetings: Do you include investors, owners and spouses in business conversations? Do you share annual financial statements with these stakeholders? Are you updating your buy-sell values on an annual basis so the owners know their value and how they might obtain value in the future?
Define Your Mission, Vision and Values: Assuming you have defined these three key management metrics, are they in writing? If not, it is likely that different members of your business team are guided by different core principles.
Match Compensation Program to Market Rates: Do you document your compensation program for employees on an annual basis, including all non-taxable fringe benefits such as housing, meals and health insurance? Such benefits make farms very competitive, a fact sometimes overlooked.
Put Critical Agreements in Writing: Have you documented plans, policies, buy-sell agreements and other critical information? Even more importantly, are these documents signed and stored in a secure place? Can someone on your team find them if something happens to you?
Write and Distribute Policies for Personnel and Operations: Once policies are shared, do you take time to review them with employees and make sure they have read them and understand them? Failure to create a safety manual that is followed closely can cost you thousands of dollars in fines.