When most farmers make decisions, they wing it.
They don’t have any tools or systems to help them decide whether something is a good financial decision or a bad one.
…Which leads to bad decisions that cause big problems like:
- Unnecessary spending
- Constrained progress (when it comes to profit)
- Major financial pressure
But here’s the good news:
All it takes to turn the tables and is a solid decision-making process. And that’s where the Objectively Measure step comes in.
This is step 4 of the TOP Producers Model, which helps farmers Transform, Optimise, and Propel their farms.
Really, in a nutshell, Objectively Measure is all about bringing reality to your decision-making in the best interest of the business.
When you use this 3-part decision-making system, you can confidently choose things that will truly help you achieve your financial goals. And with every new decision, you’ll become a much more intentional business owner.
Part 1: Choose your farm’s KPIs
To make smart business decisions, you first need to decide on your KPIs.
KPI stands for Key Performance Indicator, and it’s a figure used to evaluate the success of meeting a goal.
Let’s pretend you have a goal to become a professional golfer over the next 10 years. How could you measure whether you’re on track to achieve it?
Simply saying, “Yeah, I feel like I’m making progress,” isn’t a very effective strategy. You need objective data to PROVE it.
One KPI could be your average handicap. Every year, you’d need this to decrease to show improvement.
Another KPI could be your world ranking. Seeing an increase year on year would tell you that you’re moving towards your goal.
A third KPI could be how many yards you can hit a golf ball, and you’d hope that would increase over time.
See how all of those KPIs track objective data, rather than subjective feelings? That’s key!
It’s important to define your KPIs because “success” means different things to different people.
So what KPIs should you track on the farm?
We’ve got the answer inside the FREE Ultimate Farming Enterprise Cheat Sheet! Inside, we summarise the 10 KPIs and targets that will help you continually improve profits on your farm. Click here for your free download!
Part 2: Remove emotion and use LOGIC to make decisions
Many decisions in farming are based on emotion.
“This lease land feels right to lease!” or “This header seems awesome to help me get the job done!” or “Yes, I feel like I need this new $500,000 tractor today!”
Whilst emotional decisions might feel nice to make in the moment, they can cost you a lot of profit.
(I can practically hear Greg talking about this at the TOP Producers Event…“That one emotional decision to buy the $500,000 tractor just eroded your entire profit for the next three years!”)
RELATED PODCAST: Generate More Profit By Getting Your Financial Records in Order
It’s easy to get caught up and make emotional decisions. Natural, even! That’s why you need a set of tools to counteract that tendency and help you arrive at LOGICAL business decisions.
Always analyse your options from a logical point of view to make sure the numbers add up and are leading you towards improving your ROI. Don’t let feelings make decisions for you!
Our clients Cheryl and Tim are unbelievable at this. They’re so good at making decisions to maximise profitability and they never buy emotionally. That’s why they’ve been making 40% profit for 20 years…because they make such logical decisions!
It’s hard to explain it all inside one little blog post but if you want to go deeper on this, we teach a whole suite of decision-making tools inside the Platinum Mastermind program.
For now, remember this…
Before you make a big money decision (and I class anything over $10K as “big”) pause, take a breath, and look at the KPIs and your goals.
Will that new purchase help improve your KPIs? Do the financial figures make sense?
Then — and only then! — should you move forward with an investment.
Part 3: Continually monitor your KPIs with a benchmark
Don’t track one figure (like profit) and use that to generalise across the board. You want to track different KPIs to analyse from different angles.
Let’s use an example…
Pretend I have a goal of feeding my son Oscar healthy food on a budget. Let’s choose some KPIs to tell me whether I’m on track with that goal.
We’ll start with cost per meal — I want to keep each meal under $3.
Last week, the average cost per meal was $2.50. Am I successful?
Well, we don’t know yet! Because cost is only one factor — we need to weigh up the other KPIs…
I also want Oscar to have 5 servings of fruit and veggies per day. Last week, he only had an average of 3.5 servings. So even though the cost KPI was on track, the fruit and veggies KPI wasn’t.
That clearly tells me where I need to focus next: on finding low-cost ways to get more fruits and veggies into Oscar’s diet.
So the following week, I try adding in a few different foods. I have an average cost per meal of $2.75 and that Oscar’s up to 5 servings of fruit and veggies per day — which is great!
But then I notice another KPI (the grams of sugar Oscar eats per day) is way over target.
I realise that the applesauce I started feeding him, while it contains a serving of fruit, also has quite a bit of sugar in it.
So my next challenge is finding a low-sugar applesauce.
Now, I know this is a simplistic example. But do you see how that works?
Every decision affects your KPIs in different ways. That’s why you need to look at things from many different angles.
This is where benchmarking comes in…
A benchmark is a report that analyses your business’s performance in loads of different areas.
Here’s a sample page from one of our Platinum Mastermind member’s benchmark report, to give you an idea:
In this example, you can see we’re comparing the member’s actual KPIs with their target in a load of areas. This helps us see where they’re doing well (the dials in green) …and where they’re doing not-so-well (red and orange) and need to focus on improving.
The data inside the benchmark helps you answer two key questions:
- How is my business performing, compared to the KPIs of a successful farm business?
- What changes do I need to make, on reviewing this data, to improve my numbers?
That’s why tracking your individual KPIs through benchmarking is such a game-changer.
Just like with Oscar’s healthy eating example, it makes it clear and unemotional to decide where to focus your efforts to improve. It gives you hard data to create a strategic plan and work on improving year on year.
That’s how our client John Symons was able to grow his profit year in year out over a long period of time…
Watch his case study of how FOA helped him in our reviews – https://www.farmownersacademy.com/reviews/
As a business owner, you’ll need to make decisions all year long. There’s no denying that!
To make the smartest ones you can, you simply need to:
- Choose the KPIs to measure success
- Make decisions logically (not emotionally)
- Continually track your KPIs through a benchmark report
There’s no more emotion at play and you can now rely on actual data to improve and grow.
As I always say, what gets measured gets improved. And what’s objectively measured gets improved so much faster!
Get your own custom benchmark report
When you join the Platinum Mastermind program, you’ll not only get your own custom benchmark report to objectively break down your performance and compare it to a successful farm. You’ll also get personalised consulting to make a strategic plan to improve upon it.
When you’re part of the Platinum Mastermind, there’s no winging it. You’ll learn our suite of monitoring systems and tools that clearly tell you when you’re going off course.
You’ll get incredible insight and strategic planning PLUS a coach holding you accountable to making the changes you commit to. That’s why it’s such a game-changer…and why our members achieve such incredible success.