How Is My Farm Business Performing?
How your farm is currently performing is very significant to your proposal to diversify. So before considering an additional enterprise that could stretch farm resources it's important to critically assess enterprise performance.
This involves reviewing its financial performance and use of resources such as land, machinery and labour. If you need help to carry out such a review, contact your locally based CAFRE Development Adviser
A review of your current financial performance will include analysing:
- Gross margins
- Direct costs
- Overheads
- Cashflow management
- Business structure
- Financing the business including loans and overdraft
- interest payments on loans
- How your capital is invested and managed
Reviewing your use of resources will include an analysis of:
- Working practices, processes and systems in use
- Use and maintenance of machinery and equipment
- Use of farm buildings
- Use of land
- Use and payment of casual labour
- Current employee contracts, hours worked, payment
After this assessment is completed you will have a clear picture of where you are and the options open to you. You may find that by making changes on the farm additional income could be generated through better working practices or improved use of resources. This may affect your decision to go down the road of diversification.