Drive your farm's success with benchmarking and KPIs
08 June 2023
Benchmarking and utilising farm Key Performance Indicator (KPI) reports is an important part of year-on-year business management and enables business owners to create focus on how to monitor and improve their businesses.
Individual benchmarking results show the performance of your farm enterprise compared to averages from similar farm classes. It highlights the strengths and weaknesses of your business allowing for areas for improvement to be flagged. It also helps to focus on the main factors affecting profitability and the cost controls of your operation.
KPI reports are better utilised on a more regular basis to monitor performance. They need to have a strong link with the strategy of your farming operation, this aligns goals with the performance monitoring e.g. a goal of increased fawn numbers, monitor fawning %. KPI’s can be non-financial and financial in nature and it is important to have a balance, for example, live weight gain per head and total gross farm income.
The use of individual farm KPI’s compared against similar operations is the process of benchmarking. This provides an opportunity for farmers to learn and improve within their own operations, comparing your farm performance against those superior performers in the industry helps to lift performance. It is also important that the information used is unbiased; you are only interested in the 100% truth to ensure the conclusions will benefit your business.
The steps to develop and gain the most out of using the KPI and benchmarking tools are as follows.
Define what you want out of your business and set goals
Develop a strategy and tactics to reach these goals
Use performance indicators to measure progress
Benchmark against others in the industry
Include all information (100% truth) to get reliable information
Learn from monitoring!
If there is no learning and adaption as a result of comparing KPI’s and benchmarking against others, then there will be little benefit!
Benchmarking can uncover problems in production, management processes, and other factors that affect productivity cost of production and profitability. These insights and discoveries can be used to improve farm productivity.
Once performance gaps have been identified the next step is to devise plans that the farmer can use to improve performance. Plans should be realistic and may involve the use of other professionals such as your accountant or business advisor to utilise their expertise.