At a very basic level, farming is a series of problems to solve. Detect the problem; find a solution. Lather, rinse and repeat. Yet what do you do when you don’t know what your problems are?
That’s the question Ohio producer Brian Watkins asked himself. Any time he made a change on his farm, whether renting new ground, changing management decisions or adding new technology or equipment, a single change cascaded and resulted in many small changes across the farm.
For example, purchasing a new combine affects labor management, employee training and total acres that can effectively be managed.
Watkins found it hard to mentally compute the potential outcomes of these changes. So he developed a software program to do it for him.
“A big challenge of farming is fitting changes into your operation, and I wanted to see at a whole enterprise level what those changes did,” Watkins says. “The real power is the ability to plug in changes and see how that affects cost and time.”
What developed is a software program Watkins is now selling to other farmers. Dubbed CropZilla and based in Columbus, Ohio, it allows producers to forecast the financial impact of changes they make. They can run multiple scenarios to test wholesale changes and minor tweaks alike. In this way, CropZilla is something of a virtual farm manager, accountant and human resources director rolled into one, Watkins says.
In fact, a variety of software solutions can fill middle-management roles on the farm, depending on an operation’s needs. The most common limiting factor is farmers themselves, says Sid Gorham, CEO and co-founder of Granular. The software platform collects and analyzes on-farm data, helping farmers and their employees collaborate on daily work assignments.
“Some people are just not ready,” says Gorham, who admits it takes money, time and effort to learn new software and get teams on board.
Two common triggers spark farmers’ interest in software platforms such as Granular, Gorham says. The first trigger is that an operation grows significantly, leaving the operator on unfamiliar ground. The second trigger is the process of succession planning or transitioning to a new management team.
“The next generation is saying they don’t want to inherit 15-year-old Excel files from Dad,” he says.
This approach also reduces office work. Yet the underlying aim isn’t smarter project tracking. Rather, the goal is improving accuracy and efficiency, Gorham says.
“How do you plan work that executes properly and avoids mistakes?” he says.
Software for on-farm management is a great way to institutionalize day-to-day business practices, says Peter Martin, manager at K∙Coe Isom. Treat it like a collection of standard operating procedures.
“What’s going to save us are the processes,” Martin says.
Gorham agrees. “In many ways, what they’re buying is a professionalization of their business,” he points out. “The software makes them more structured.”
8 Action Items For Your Virtual Checklist That Improve Farm Financial Health
- Develop a monthly budget.
- Produce financial statements within 20 days of month’s end.
- Develop a dashboard of key performance indicators (KPIs).
- Separate farm and non-farm expenses.
- Produce a monthly cash flow forecast.
- Create a schedule of all debt.
- Evaluate cost of financing arrangements.
- Evaluate non-cash costs of operations, such as retirement planning.