6 minute read
FINANCIAL BENCHMARKING Using industry standards to track your progress
from FARM CREDIT EAST
by NDSACatalogs
Stephen McKnight, co-owner of River-Breeze Farms in Chase Mills, N.Y.
Learn more about Farm Credit East BENCHMARKING SERVICES at FarmCreditEast.com.
Some farm owners are often so busy working in their business that they can’t work on their business. Consequently, Northeast farmers leave tens of millions of dollars in profit on the table each year and fail to earn what they should for all of their hard work.
At Farm Credit East, we are passionate about providing Northeast farms of all sizes and types with the business tools required to become more profitable. One of our most powerful tools in this regard is our financial benchmarking program.
We offer three benchmarking programs:
• Dairy • Agricultural Retail • Winery
WHAT IS BENCHMARKING?
At Farm Credit East, benchmarking is a process that allows you to collaborate one-on-one with a Farm Credit East consultant. Working together, you will:
• identify areas of your business that are holding you back • compare your business to industry peers • develop an action plan based on your business’s data • identify ways to increase your profitability
A Farm Credit East benchmarking program is a unique way to evaluate and continually improve the operational and financial management of your business. You will gain access not only to invaluable information and insights, but to a business consultant who will help you use those insights to improve the profitability of your business.
Participation in a benchmarking program delivers an objective view of your operation by comparing your financial and operational data both to industry standards and to data supplied by other successful producers within your industry. The in-depth analysis of this data results in findings that are then personalized to your business.
One of the most important aspects of this process is the assistance you receive from a Farm Credit East consultant, who will visit your business, review the findings with you and offer constructive feedback and planning advice. Participants use the insights, examples and data they receive to continually improve their operations.
HOW BENCHMARKING WORKS
• Data collection. A Farm Credit East benchmark specialist will work with you to compile data that profiles many aspects of your business, including profitability, customer counts, employee compensation and benefits. • Data analysis. We will incorporate your results with data from other operations in your type of business to illustrate how your business compares to others of similar size, scope, profitability level and geographic area. • Benchmarks report. You will receive a customized, in-depth report that gives you a comparative snapshot of your business — a report card that details how your business differs from your competitors’ in profitability, sales per customer, net profit per days of operation, labor costs and more. With this report and insights from your consultant, your management team has the tools to determine how and why your business is different, and whether those differences are positive or need to be worked on. • Comprehensive seminar customized to your unique group. You’ll hear presentations on targeted management topics and get answers to your questions. You will also join forces with other business operators to gain a better understanding of your industry and explore practical solutions. • Gain focus, take action. Following the seminar, a Farm Credit East consultant will visit your business to review your personal benchmark results in detail with you. This is your opportunity to work on your objectives and pick up a personalized action plan on how improvements will impact your bottom line. • Program extras. You can also enjoy networking opportunities, small group meetings on special interests, webinars and access to a members-only community.
FREQUENTLY ASKED QUESTIONS
Who participates in the benchmarking programs?
The benchmarking programs are customized for successful and progressive owners of dairy, ag retail and winery businesses who are focused on achieving maximum results. Large and small operations are encouraged to participate.
How do I report data?
Before the seminar, you will complete a worksheet that profiles many aspects of your business, from income to production. Your Farm Credit East consultant, loan officer or records specialist will sit down with you to complete the worksheet in your office.
What reports will I receive?
At the seminar, you will receive copies of your personal benchmarks report that will focus on your business and offer a wide range of useful reports — from a comparative earnings statement to operations analysis.
• Balance Sheet • Cash Flow Summary • Comparative Detail Expense Analysis • Comparative Earnings Statement • Compensation and Benefits for Key Employees • Equipment Analysis • Financial Ratios Summary • Regional Benchmarks • Size and Efficiency Factors • Your Comparison to Other Businesses of Your Size
FREQUENTLY ASKED QUESTIONS
How would I use this program?
Business owners enter the program with lots of questions about improving their operation, including …
• How can I decrease labor expenses? • How does my business measure up against other top businesses? • How do I know when — or if — it is time to expand my operation? • Are my employees’ compensation packages competitive? • I had a large amount of shrink last year. Why?
… and they leave with answers.
Do you need to be a Farm Credit East member?
No. While many Farm Credit customers participate in our benchmarking programs, it is not necessary to have a Farm Credit East loan to participate in one.
A VIEW FROM THE FIELD
HOW CAN YOU BE SURE THAT YOUR DECISIONS ARE INFORMED?
Stephen and Mary Lou McKnight own and manage River-Breeze Farm in Chase Mills, N.Y., along with their son, Travis, his wife, Natalie, and their son-in-law, Steven Billing. As a strategic manager, Stephen believes in using more than his gut when it comes to making decisions for his business. For example, when faced with the choice of purchasing custom-raised heifers or raising their own, he would rather let the numbers do the talking. “Farm Credit East brings our business to the next level.”
HOW WE HELPED
For several years, Stephen and his family have worked closely with Farm Credit East consultant Mark Mapstone as part of the Dairy Benchmarks program. Not only does benchmarking allow Stephen to chart his business’s strengths and weaknesses from year to year, it also shows him where he stands in relation to the competition. “We base many of our decisions on where we stand in the industry,” he explained. “For example, we recently started raising our own heifers, based on our benchmarks report. We compared our profitability with those in the industry and worked with Mark to make a decision that was right for us.”
“We don’t hire Mark to be our cheerleader. We want him to dig in to find our weaknesses and point out where we can advance our business. The benchmarking program is invaluable in doing this analysis.” – Stephen McKnight
Stephen McKnight, of River-Breeze Farms in Chase Mills, N.Y. When Stephen and his family are faced with difficult management decisions regarding their dairy farm, they turn to their benchmarks report for good strategy.
