Business efficiency – What is it? What does it mean?
Business efficiency is making the best use of what you have. Your key resources are land, buildings, machinery, labour (employed and your own), livestock, cash, knowledge and skills.
For farming businesses, January is the perfect opportunity to look to the future with renewed optimism and make important changes to improve the overall efficiency of the business. Here are a few top tips on how to improve the efficiency of your agricultural business in 2014.
1. How is your financial health? Review last year’s cash flow budget against the actual cash flow. Use this information as the basis for this year’s cash flow. Identifying periods of cash flow surplus or deficit can help determine when sales have to take place and if timings for purchases can be altered. Understanding where your cash flow will be allows you to take advantage of opportunities as they arise.
2. How is the health of your animals? Review your herd / flock health plan and talk to your vet. Discuss protocols for lambing, calving, farrowing etc. Discuss current protocols for mastitis pneumonia – write them down so everyone involved knows what steps to take and treatments are required. Note down key dates for the animals, such as vaccinations, in your calendar.
3. What is your energy, fuel & water usage costing you? While it makes good sense to have reliable suppliers you should review electric and fuel bills from last year. Contact an energy broker as they will not only review your contract they may assist in obtaining money back from historical overcharges you have paid due to incorrect billing. Knowing your annual energy usage allows you to evaluate how new technologies could assist in reducing energy usage – timers for lights, smart meters, solar panels or biomass boilers for larger scale projects such as – AD waste, wind power. See the WRAP website for details of grants for farms. Utility Auditors determine opportunities on how best to use utilities more effectively and make recommendations on how efficiencies can be achieved.
4. Get organised!
A. Can you make better use of your resources? Consider what machinery and equipment you have and if it is as well utilised as it could be. Does any of it need replacing? Look at your resources – buildings, manures and woodland – all of which can either save money or help generate additional income.
B. Sort out the office – Store all documents safely in the one place. If things have got a bit hectic recently and you can’t find those passports take the time to sort it out. Being organised and taking time to sort through the paperwork can prove less of a headache later on. Some businesses find it useful to free up time by asking someone else to do the book-keeping or monitoring the business review.
5. What takes place and when? Note down key dates in your calendar for various schemes that you are involved in. Check that all farm workers know how to manage grass margins or cross compliance boundaries of each field, when to top, how much fertiliser can be spread and if fields are under an environmental option. Make a note of when you should carry out annual inventories, water abstraction readings, soil protection review, post-harvest management, manure management plan and associated maps. If dates are noted electronically make sure to sync the calendar on all your devices and share relevant calendars – click here to find out how to do this on an ipad.
6. Be SMART = specific, measurable, attainable, realistic, timely goals. Where do you want your business to be and how will you get there? What are the aims of the business for the next 12 months? Write down the aims and have regular targets so you are prepared for any challenges during the year.
For example, if you are a livestock producer have a target number of X animals that you aim to sell each month or season; if you are an arable producer have a target yield of X tonnes per hectare.
Being able to monitor and evaluate your aims and targets will help you move on to the next with more confidence knowing you can achieve them.
7. Become more knowledgeable. Social media offers a powerful and cost effective tool for promoting your business brand but are you doing it efficiently? Identify and target platforms and networks where your customers and potential customers are to be found. Find useful forums that generate discussion about your business. Take care not be too social with social media from a business perspective! The agricultural community are now embracing twitter for support and advice from peers. Follow hashtags like #Agrichatuk on Twitter each Thursday 8pm-10pm to see what is being discussed. Follow me on twitter @abafoodchain –feel free to retweet or start a discussion.
Lastly, plan a time to celebrate how efficient you have been! In farming, there are many challenges as well as joys so pick a date next year to review your success and how you’ve made the best use of what you have. Best wishes for 2014!