Comparing your business figures with another business, or indeed an entire group of businesses can be an extremely daunting experience. Yet we know from what producers tell us, the experience can be highly rewarding and in many cases will lead to significant impacts on a business.
Meridian Agriculture are currently involved with three farm business benchmarking groups. Perhaps surprisingly, each of these groups have been running for over 20 years. Some of the original members are still active, while other members have joined along the way. Naturally you might wonder what has been the attraction for those businesses who have shared their production and financial data annually for over two decades. Why do they do it? What do they get out of it? And why do they keep coming back?
We do not know the exact answers to those questions for every participant, but Iâ€™ll share the following three reflections based on five plus years of direct involvement with these businesses:
- Businesses that benchmark are attracted to and motivated by the challenge of continual improvement. The challenge of asking themselves how does my business stack-up. The challenge of learning from what other businesses are doing.
- Businesses that benchmark assess and implement new knowledge or ideas gained from others to improve their own business. They understand what others do, take the time to assess whether itâ€™s right for their business or not, and act accordingly. Andâ€¦
- Businesses that benchmark enjoy working within an encouraging group environment. A common attitude amongst these businesses is a positive outlook on what is or might be possible, as well as a general interest in generally doing things better.
When you think about it, our farming businesses witness many changes over a period spanning 20 years. Vastly different commodity prices, periodic leaps in land value and the impact of seasonal condition extremes. Overlay this with production system changes such as the large swing towards self-replacing composite sheep in some districts, high rainfall cropping, stock containment areas and lamb feed lotting to name a few. Itâ€™s probably fair to say the diversity amongst livestock businesses in southern Australia has never been greater.
Interestingly, the returns generated from these businesses also look vastly different. In the early years of Farm Management 500, benchmarking group facilitator John Marriott reminds us that the target FOS (Farm Operating Surplus) for participating businesses was $200/ha. In recent times, FOS in excess of $600/ha is being achieved by a proportion of businesses. So the farming landscape is different and not surprisingly the goal posts have moved too! Being an active member of a farm benchmarking group is a great way of keeping up with these developments.
Iâ€™ve heard people say that benchmarking groups arenâ€™t for everyone. This is possibly true. But if youâ€™re looking for a single activity that can assist your business to measure itself, identifying strengths, weaknesses and areas of focus to improve outcomes in the future, then business benchmarking would be hard to beat!
If youâ€™d like to discuss the potential benefits of business benchmarking as either an individual or at group level, please contact James Whale or Paul Blackshaw.
Article by James Whale