How to use digital tools for better business planning

Making a good business plan relies on having good data and the right data. From yield projections to input application rates and weather, the sheer volume of data available can make it hard to get started.

Management software and other digital tools can assist in making sense of it all. Whether enlisting help or working on your own, advisors from MNP and FCC say the right software can help farmers set better strategic goals, and sometimes, find new ways of improving their operations.

Tools with a proven ROI

“I used to do a lot of performance improvement work in manufacturing. They use data to drive decisions all the time. Agriculture is a lot harder because the data is often incomplete and the outcomes are tied to many different data sources, the weather being the trickiest,” says Andrew Van Os, Saskatchewan-based senior technology specialist with MNP.

In Van Os’ experience, many farm operators are already using digital tools to manage information such as financial data. There is opportunity to incorporate different data categories, however. MNP has developed an Ag Risk Management Projector tool to help farmers achieve a more comprehensive understanding of their farms’ many data streams. It can help determine the optimal level of crop insurance based on the cost of production, what the intended crop is, geographical location and other metrics.

“It helps them visualize what their return on investment would be if they’re hit with minor write-offs to a disaster scenario, for example, 90 per cent or 100 per cent damage to the crop,” Van Os says.

MNP also maintains a field optimization program – a service to help farmers collect, combine and analyze data to optimize inputs and compare to benchmarks. Van Os says this process is particularly valuable given how challenging it can be for farmers to find information on what their peers are doing and what’s worked. Any data stream being collected by the farmer can be incorporated into the analysis.

“Adding an analyst to your farm partner network can be hugely rewarding. You can avoid a lot of pitfalls the analyst has seen other farmers fall into,” Van Os says.

“A lot of farmers feel they need a perfect management system before any insight is achieved. But really, all they need is to find the right data points. Whatever information they have, we can find something.”

Be a good record keeper

Engaging third-party advisors to analyze and make recommendations is not always necessary, though. The business case can be lesser for some operations, such as those with a smaller land base. Regardless, Van Os says farmers can improve business planning by taking small steps, including consistently optimizing logbooks to capture specific data streams.

“This can be as simple as ensuring you’re entering something into an Excel sheet in the right format. If you’re not getting insights this year or even next year, if you keep doing this, when you’re ready, you can start pulling on that historical data,” he says. This could help with insurance claims, and even in succession where the incoming generation could better inform their own decisions.

“Validating crop insurance claims with historical yield data can help pull the conversation in your favour. In succession, you’re doing the next generation a huge favour by having historical data ready for them.”

Making data collection and business planning easier for farmers was a critical driver behind FCC’s AgExpert platform, according to Darcy Herauf, director of AgExpert. Like Van Os and his colleagues at MNP, Herauf says the idea was to create a product that went beyond the myriad of applications targeting accounting, crop production or other specific areas of business management.

“Anything any farmer needs to master finances of operation, from payroll, budgeting, cash flow management…we help farmers manage that in a digital cloud format,” Herauf says. “It gives you the foundation to build from and account for different things that can happen on your farm. It can help you think differently and lets you play with the numbers to create different scenarios.”

As with other digital technologies, adoption barriers do persist. In Herauf’s experience, two major issues are trust in the product and data transparency. But AgExpert is simple to use and data is never shared with third parties unless the farm operator requests it be shared.

Like Van Os, Herauf also emphasizes the value of engaging advisors.

“Having a second, third, or fourth set of eyes looking at the hard data and asking questions is important, especially in farming,” he says.

“The fun part is looking at your operation through a different lens. It’s really interesting when you plan something and see it take effect. Hopefully, it’s positive, but even if it didn’t work out, it can be done in a way that doesn’t have a huge effect on your operation.”

Read More