Ten years ago, I took a bold leap and became part-owner of a small hazelnut farm.
Before I took that leap, my perception of farming revolved around working hard: show up, get your hands dirty, and get it done.
But since becoming a farmer, my perception has widened. I now see the significant complexity of running a farm. Although farming has never been my full-time job, this small business has taught me some mighty lessons that other businesses, big and small, can learn from.
Let’s take a tractor ride through the four biggest success factors farming has shown me – and help you plant some seeds of your own success!
1. Managing your money and planning for the harvest
Our annual harvest is responsible for the entire year’s income, which means managing cash flow – how we accrue expenses and pay our bills – has to be done properly or the business will fail.
We have to plan and spend wisely on maintenance, labor, chemicals, and other operating expenses – all within a small margin of error. If we don’t, we may not be able to harvest our crop, which could put us in a poor position the following year.
Technology startups face a similar challenge. If you mismanage your funding and don’t get your product to market, you won't make a successful exit or secure that next crucial round of funding.
Retailers, like farmers, often have one main selling “season,” usually the holidays. How you plan for that season by managing stock, staffing, marketing, and other resources is crucial if you want to stick around for the following season.
When your entire operation revolves around a harvest, there’s value in every operational efficiency you create and every dollar you save. That means finding ways to do things smarter, not harder – something any business owner can appreciate.
TIP: Prioritize your budget in advance. Identify how much time, money, or inventory are needed for critical activities (such as harvest or a peak selling season) and make sure they are protected and kept front and center at every meeting.
2. Navigating the landscape of risk
Farming is an inherently risky operation, so risk mitigation is a constant. When China introduced tariffs on US goods in 2019, one of those products was hazelnuts. Those tariffs compromised our selling price, reducing our profits.
Navigating the landscape of risk starts with looking at internal data from past growing seasons to anticipate this year’s crop yield and quality. Is it a dry or wet season? How has that impacted the crop’s growth rate and yield size in the past?
Then we train our lens on the external factors that can affect prices. For instance, Turkey is the global leader in hazelnut production, so we have to understand how politics in Turkey may impact our prices.
Likewise, any business owner needs to understand the internal, local, and global factors that can put their margin – and even their business – at risk. Build discussions of these factors into your monthly and quarterly meetings to evaluate if you need to make changes.
TIP: Incorporate risk management into your team planning. Set aside time at the beginning of the year with your team to identify and address potential risk factors that could affect your business that year.
3. Using technology to create collaboration and visibility
As the current vice president of SAP Business Exchange and a finance industry veteran, I wear the hat of financial and technology specialist for the farm, running and implementing systems for tracking, collaborating, and simplifying farm operations.
Our business has multiple stakeholders, each of whom spends money on various areas. We use SAP Concur to track and manage expenses across budget categories. Previously, we might have come to the end of the year and realized we’d overspent on maintenance. Now, we can see that spending as it happens and make necessary adjustments.
We also use technology to facilitate and simplify stakeholder communication and maintain a record of communications for accountability. And we use other tools to track labor, crop production, and progress toward our goals.
By taking advantage of technological resources, there are fewer surprises – and that’s a good thing.
TIP: Identify areas of your business that could be simplified or made more efficient. If need be, hire a consultant to help you find these areas of potential improvement.
4. Cultivating relationships and community
Community is also central in the farming world. When you’re trying to grow your business from 50 to 200 acres, as we did, seeking guidance from other farmers who have achieved similar growth is incredibly helpful.
Where there’s even more value for farming businesses – and businesses of all types – is in cultivating communities that step beyond education and support and create value through collective strength.
Businesses can work together and leverage the group’s buying power, negotiating with suppliers to secure larger credit lines or more favorable payment terms. SMBs spend more than a trillion dollars a year collectively, so there’s immense untapped potential to drive value by joining forces.
TIP: Find ways to grow community. This could be through monthly meetups with other owners in your industry, joining online forums dedicated to your area of business, or forming a collective bargaining group.
Finding community on the SAP Business Exchange
The core of SAP’s mission is helping businesses become best run. One key way we do that is by facilitating learning and community.
The SAP Business Exchange (where you’re reading this article), allows business owners to connect, share, and engage with one another to accelerate their growth. You can hear from subject matter experts across six key domains through articles, ebooks, and videos; learn SMB best practices through webinars and on-demand virtual trainings; and engage in an active, supportive community of SAP Concur users. It’s a resource that will open your eyes to tools and strategies you didn’t know existed.
It’s one I sure wish I’d had when I put on my farmer’s hat 10 years ago.
Listen to my recent interview on the Small Business Radio Show podcast with Barry Moltz.
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