How Healthy is Your Farm?

It is easy to get so caught up in the day-to-day challenges and opportunities of running a farm that you forget to step back and ask yourself, “How healthy is this business? Is this business still making me happy?”
There are seven broad management functions–planning; personnel; production; sales and marketing; advertising and promotion; bookkeeping and accounting; and financial planning–that can help you track how well your business is doing. If you monitor your business over time you will begin to observe those areas of your business that are strong and robust. You will also observe areas where your business is lagging behind your expectations and areas where your business could be strengthened with some effort.
A full business audit is a long and detailed process but you can get started with the following questions. Use your answers to get started thinking about areas of your business that you need to know more about. Then select 1-2 areas to work on and develop an action plan including when your work will be completed.
___Can you describe in 3 sentences or less what business you are in?
___Would everyone involved in your business agree with that description?
___Do you develop an annual budget?
___Do you have current enterprise budgets for each of your products?
___Do you compare your actual expenditures against your budgeted expenditures on a regular basis?
___Can you identify your target customer?
___Do you know whether your sales are increasing, flat or decreasing?
___Do you have cash flow shortages more than 2-3 months of the year?
___Have you re-evaluated your pricing strategy within the past 12 months?
___Does every individual working for the business have a job description?
___Is there an employee training and orientation program?
___Do you have regular staff meetings?
___Do you have written production standards that are readily available to all staff?
___Do you have clear policies regarding payment and credit terms for both customers and suppliers?
___Do you keep equipment logs to monitor use and maintenance for all major equipment?
___Do you have a safety program in place?
___Are work areas clean, well-maintained and free of unnecessary clutter?
___Do you have an advertising and promotion plan?
___Do you reconcile your bank statements monthly?
___Do you regularly compare financial statements to identify trends?
___Do you know the current financial status of your business?
___Are your tax returns filed on time?
___Is there money set aside for emergencies?
___Do you have a good relationship with your lender?