“How do I make more money on my farm?”
That’s got to be the top question farmers ask us.
It’s up there with…
How do I get more time off?
How can I increase yields?
How can I strike a deal with the weather gods for great rainfall this season?
Whether you dream of buying more land, going on an extra holiday, or paying for a great boarding school for your kids, more money is definitely a good thing.
Here’s what I want you to know:
More profitability does NOT mean working more hours!
Most farmers think that making more money is impossible, because they’re already working as hard as they can. But the truth is, it’s not about how many hours you work — it’s about WHAT you’re working on during those hours. That determines how profitable you are.
Keep reading for 7 simple-but-powerful ways to make more profit on your farm…without working any more hours.
Stop working on the $25/hour jobs
It might sound counterintuitive…
But the fastest way to become more profitable on your farm is to stop doing the work.
Let me explain…
A mentor of mine once said, “You won’t get rich cleaning the house.”
Yes, the house needs to be cleaned. And yes, taking care of your home is an important job. But you’re not going to get rich doing it.
Here’s the reality:
80% of the work on a farm is technical work that’s valued between $20-$30/hour.
These are the jobs like fencing, driving the tractor, crutching and drenching, branding cattle, and cleaning.
These jobs are important and need to get done. But they’re never going to make you rich…no matter how great you are at them.
Related: Why doing the technical work on your farm is costing you a lot of profit
When you stop spending time on the low-income jobs, you free yourself up for the $500/hour work. (More on this in a minute.)
If you think you can’t afford to hire help or that you need to do it all yourself, I hear you. But stick with me. I think you’ll start to see why you can’t afford not to hire someone, if you want to run a highly profitable farm…
Make time for the big-money tasks
Most farmers are so busy with the low-level technical jobs on the farm, they simply have no time or energy for the high-level work, like:
- Strategic planning
- Creating systems for efficiency
- Looking for opportunities
- Creating new markets
- Marketing and direct selling
- Training your team
- Working on genetics
- Optimising your farm for efficiency
This is the $500/hour work.
Let’s look at a really simple example of how this plays out…
You could work 40 hours a week doing $25/hour tasks, to make $1000.
You could hire a farmhand to do those 40 hours of work for a cost of $1000.
You now have capacity to work on $500/hour tasks.
Imagine what would happen if you spend just a few hours every week moving from $25/hour to $500/hour work. You could easily make an extra $475 every week, just by trading ONE hour of $25/hour jobs for $500/hour work!
Top farm owners spend 80% of their time on $500/hour tasks.
Make that your goal and focus on small steps every week to get there.
Create a strategic business plan
Let’s pretend it’s your anniversary next month and you want to plan a surprise holiday for your wife.
You make a plan of everything that needs to be done, like:
- Pick dates for the trip
- Choose location
- Book flights
- Make hotel reservations
- Research great things to do and places to eat in the area
And because of that planning, you enjoy a lovely trip together, soaking up the sun and getting some much-needed relaxation.
Related: How Tim and Cheryl are working with Farm Owners Academy to create a freedom farm
When it comes to holidays, most of us are good at making plans. But very few farmers have strategic business plans for their farms.
The top 20% of farm owners plan their days, months, and years.
They decide on their goals — the BIG ones, like where they want the farm to be 10 years from now — and then work backwards to map out what they need to do to achieve them.
This process of starting with the end in mind and mapping everything back to today is called strategic planning.
Top farm owners create strategic business plans and update them every quarter, or 90 days. It’s a way to keep the forward momentum moving…and eliminate the daily decisions that waste so much time.
We created a strategic planning tool called the Farm Operating System (FOS). It helps you break down your 10-year goals and map them back to what you need to do in the next 90-days to keep you on track.
Click here to download your strategic planning template for free
Track your numbers
Peter Drucker, the founder of modern business management, said:
“If you can’t measure it, you can’t improve it.”
That’s why tracking your numbers is a key part of the Take Control Program… and all the growth work we do with farmers.
If you want to do things like:
- Make higher profit per item
- Reduce overhead costs
- Speed up growing cycles
- Increase crop yields
…You have to start by tracking your numbers.
A pilot uses a series of dials in their cockpit to help them make informed decisions. Tracking your farm’s numbers is like checking in with your dials to make profitable decisions.
If you don’t track your numbers, you could be wasting time and energy on an area on your farm that just isn’t profitable — instead of maximising the returns on a highly profitable area of the farm.
Profitable farmers make decisions based on data. Not gut feelings, not wild guesses, but tangible proof.
The latest numbers flying around the internet estimate that an adult makes about 35,000 decisions every day.
When you’re ineffective at making decisions, you waste time. You have too many things going on in your mind, which causes you to procrastinate, because you’re not sure what to do.
But not all decisions are created equal.
There are three main types of decisions:
- Major: life-changing decisions (e.g. marriage, buying a new farm)
- Medium: cost a bit of money and time (e.g. hiring a team member, buying a new tractor)
- Minor: largely irrelevant (e.g. what colour your logo should be)
Profitable farm owners only invest their time in the major and medium decisions. They do their research, they look at the data, they ask for advice from mentors and business leaders they respect. And then they make informed decisions.
For minor ones? They make fast decisions and stick with those decisions once made.
…Then they get back to working on the $500/hour tasks and making things happen.
Master negotiation skills
Profit = Revenue – Costs
One way to make higher profits is to increase revenue (or sales). Another is to reduce costs.
That’s where negotiation comes in.
Negotiating to reduce costs or increase margins is a very effective strategy to maximise profits. With just one phone call, you can add hundreds (or thousands) of dollars to your bottom line each month. But most farmers never even try!
Here are a few things you can negotiate:
- Better prices for goods you purchase
- Better prices for goods you sell
- Better margins if you use agents
- More hours or outputs out of your team members
- Better deals from your off farm investments
Don’t be afraid to start the negotiation conversation. There is almost always room for a better price, if you ask. But if you don’t ask, you’ll never get it.
Not comfortable negotiating? No problem. It’s a skill that can be learned. Click here for a great template and training on how to negotiate.
Operate like a business owner, NOT a farmer
Lindsay Fox (who runs Fox Trucks and has a personal net worth of $2.91 billion) got into the trucking business because his father was a truck driver.
When Lindsay was asked, “So, are you like your father?”
He replied, “No. Dad drove a truck. I owned my first one and got someone else to drive it.”
This sums up the difference between a farmer and a farm business owner.
Business owners act like the manager of a sports team — managing the players, developing the skills, and creating the strategies to win games.
A business owner operates at a different level, doing things like:
- Designing great systems to run their farms
- Hiring and training and leading great people
- Tracking the important numbers
- Creating a strategic business plan
- Making informed decisions to lead the farm forward
- Looking for new opportunities (buying land, negotiating better terms, leasing land, etc.)
The top 20% of farmers look at themselves as business owners. That mindset shift is what leads to such high levels of success for their farms.
Related: The 8 Mistakes that keep farmers broke
If this list of 7 things feels overwhelming, remember, you don’t have to tackle everything at once.
Pick just ONE of these strategies to test out on your farm and watch as your profits increase week by week.