Elliot Taylor looks into the characteristics of top performing farms in the UK, giving advice on how you can improve your business performance and future proof your business.
If I were to ask you what are the characteristics of top performing farms; what would you say? Would it be high yields, the best soils or perhaps the size of the farm, or is it down to selling price, the type of machinery or system? These factors are without doubt, important, but the management practices you adopt are the key to becoming a top performer. How can two identical farms, with the same size, soil type and systems be so different in terms of profitability?
Characteristics of top performing farms is the first topic on the agenda for our seminar series across the North. Why? Because Brexit is likely to cause the biggest shake up within the agricultural industry for a generation and everyone wants to know how best to weather any potential storm ahead.
Interestingly, The Agriculture and Horticulture Development Board (AHDB) released a report looking at the key characteristics of the top performing 25% of farms in the UK. The report identified several areas that can improve performance; things in your control, and if adopted will make you more likely to be a top performer and help you to future proof your business going forward. My brief thoughts on some of these areas are below.
Focus on minimising overheads, in particular power, machinery and labour. For example, with machinery ask yourself, can I keep machinery for longer? Is my machinery well maintained? Can I share machinery with a neighbouring farm? Also look at how you buy you machinery, should you consider restructuring existing finance.
Aim and Objectives
How often do you really talk about moving your business forward? Make time, sit down and talk about your aims and objectives, but don’t just focus on the business, discuss your personal wish list too.
You’re more likely to be a top performer if you prepare budgets. Budgeting will help you forward plan and understand what effect a price change or a fall in subsidies will have. Budgets will help you understand your future profitability and, most importantly, the cash you have available during the year.
Compare your Business
Whether it be an internal comparison with your own business year on year, or, using external data, the more information you have at your fingertips the more successful you’ll be. Top performing farms benchmark, attend discussion groups and look closely at key performance indicators. My advice is to do the same.
Know your Market
Speak to your buyers, ask them what they want and determine if you can deliver it? Work out the cost to your business if you don’t meet the grade and work out the advantage if you do.
Attention to Detail
It’s impossible to focus on every little thing but try and focus on the things that are important. Making a number of small changes can have a major impact on the bottom line. Identify say ten things that you can change and work through them one by one. Consider the positive cumulative effect these change will have on your business.
Be Prepared to Change
If you identify a problem or see an opportunity be prepared to change. Don’t just prepare budgets or analyse your business, make the changes too.
It’s no secret that focusing on technology and productivity will drive you forward. It’s likely that the push to improve farm productivity will continue supported by grant funding, so make use of them. If you innovate you will make your business more sustainable, resilient and productive.
It goes without saying, look after your team. Explain your aims and objectives; get your staff to buy into what you want to do and train them well. Not all farms have employees but remember to look after family labour as well.
The farms that specialise are more likely to be in the top 25%. Focus on what you’re good at and what suits your farm. You may be more profitable if you have one system but do you want all your eggs in one basket?
As I mentioned, all these are things are practises you can do something about and those looking to be one step ahead of Brexit must consider the depth they know their business, how it will react to change, and finally, be prepared to make the changes necessary to remain profitable.
For further advice, please get in touch with our local team of dedicated Farm Business Consultants.