A recent article from the Farm Owners Academy really got me thinking about diversification.

Their benchmarking had shown those farmers with fewer enterprises were, on average, generating a better return on assets managed than farming businesses that were highly diversified.

We have all heard the maxim from many sources throughout the years about putting your eggs in one basket and then watching that basket closely.

This dovetails into what I have observed about many successful farming businesses I know – they love what they do and are relentless in the pursuit of doing what they do, to the absolute best of their ability.

The one percenter’s count in farming. Getting the basics right is a prerequisite to success. Knowing the drivers of your profitability is really important.

Just as crucial is taking action to make the necessary improvements and monitoring the outcomes to ensure the business is indeed moving forward.

The measurement of progress can be a tedious task, but it’s a crucial step that can’t be overlooked.

Once you have the systems and structures to monitor progress, it will be much easier to maintain momentum.

Sometimes, it’s easy to get distracted by the shiny new toy or enterprise. The grass may not be greener on the other side – or it may well be. This is where considered enterprise analysis is a must.

All progressive farming businesses plan extensively, and this would probably include exploring new enterprise opportunities. The key is to sort out the wheat from the chaff quickly.

If there is a structured framework for analysing business opportunities, then a quick decision can be made – this is particularly so for a ‘no’ case. In banking parlance, a quick no is a good no.

A slow no wastes a lot of time and effort that could be better spent getting on with core business. As humans, most of us are easily distracted.

This also applies to spending too much time thinking about how great a new enterprise would be.

The sooner a structured assessment starts, the better. Therefore, any ideas that don’t meet the benchmarks, can be discarded quickly.

When undertaking any new enterprise analysis, it’s imperative to know the end game.

An important question to ask is whether what you’re contemplating will fit into the long-term strategic goals of the business.

Not enough agribusiness owners really know what their end game is, and what steps they need to take, to achieve the overall goal. 

Strategic planning is the way to solve this problem. This can be undertaken within the family business or with the assistance of an outside party to guide the process.

Having broad agreement of what the road looks like, from all family members, will make a good outcome much more likely.

Not everyone needs to agree with every single aspect of the plan but if all parties are going in the same direction, it’s much easier.

Farming can be extremely rewarding for those that are passionate and do things well.

Part of the makeup of a successful farmer is someone that does due diligence on their enterprise mix and, once this choice is made, has a laser-like focus on the controllables.