Labor is normally listed as a cost of goods and services. It needs to be listed on your balance sheet as well. No, not your literal balance sheet, but listed as a current asset in your operation.
Small, medium, and very large farm businesses are all prone to look at labor and say “We need to be as efficient as possible,” or “We can’t afford the overhead.” Sometimes, this is certainly true. Other times, what an operation needs is another key operator, or an office person, or just some 15 to 20-year-old part-time help to take the operation to the next level.
How do you know when it’s time? Here are some signs:
- You’re burnt out
- The little things that make the business efficient and enjoyable aren’t getting done
- You have growth on the horizon
- You want to bring in the next generation
Labor is an investment that has ROL (Return on Life). What’s it worth to you to be able to work alongside your children for a few extra years? When the bolts in the bin run out, but you forgot to order them because you were too busy working on the corn head instead of someone else, what does that cost you long-term or down-time in-season? If someone offered you an opportunity to grow your business by 40% next year, do you have the trained personnel in place today to make that happen?
When you start to invest in your labor as if it is a current, mid-term, and long-term asset, your perspective changes, and so do the function and effectiveness of the business.
Open your Mindset
Where do we see people make big mistakes? It’s not hiring the frustrated mechanic from a nearby production facility, auto shop, or equipment dealer. Or it’s not bringing in kids who have decent other income into the business soon enough because “They are making really good money and have a good job,” or “Well, the healthcare package…” It’s time to think big enough and evaluate future business opportunities, areas of improvement, and long-term viability.
In 2015, a college-educated starting salary of $65,000 was a good spot to be in agronomy or other services with benefits on top. To help understand what this looked like over time, and where we are today, I pulled together an inflation-adjusted chart.
The dollars are real, and they get bigger every year. But, from decision-making to operations, investing in people is still one of the defining factors in the top producers we work with across the country.
Build your balance sheet, invest in people, and you’ll reap the rewards.
