Amanda Smith writes in Southern Ag Today: Imagine you scouted one of your fields yesterday and an insect pest reached the threshold number for spraying. Today, you bring the tractor and sprayer to the field to minimize the potential damage to yield that could occur from the insect pest if it was left untreated. This is just one of dozens of operational management decisions and activities you do each day.
Obviously, these operational management decisions are critical for keeping your farm running as efficiently as possible. However, it is just as important for you, as a farm or ranch business manager, to spend time thinking beyond the current growing season and focus on management decisions that may affect your farm in the future. These long-term management decisions are considered strategic management.
Both operational and strategic management are necessary for the success of the farm or ranch business. Operational management is straight forward. If it hasn’t rained, you decide to irrigate. If it is time to apply a mid-season fertilizer, you apply fertilizer. If one of your calves gets sick, you quarantine her from the herd and treat her symptoms. Strategic management involves planning and making decisions for the farm or ranch business that will impact it in the next five years or longer. Strategic management answers the questions: “Where do I want to be?” and “What do I need to do to get there?”
Strategic management is identifying the vision and purpose of your farm or ranch business, setting goals for the near- and long-term, analyzing your farm’s strengths and weaknesses, evaluating opportunities and threats outside of the farm, and making decisions that steer you toward a desired goal or outcome. Those might include: goals for net worth or profit, goals for your operation to reach a certain size, a vision for your ideal way of life, or plans for retirement. The path to those outcomes may include decisions such as expanding the operation by acquiring more land or breeding livestock, adopting new technology, diversifying enterprises, entering new markets, hiring employees, or positioning the farm and the next generation for a successful transition.
In addition to your day-to-day operational management, you should set aside time to think strategically about the future. However, setting aside time when you are busy with operational management is easier said than done. Scheduling a set time to plan strategically is necessary. It will require you to block out several hours of your day a couple of times a month or more depending upon your goals. It may be easier for you to prioritize strategic management if you get away from the farm or ranch. A couple days away will enable you to focus entirely on planning for the future. It would be most beneficial if this occurs after you have compiled your financial data from the most recent year. Be sure to include any important partners or family members who are instrumental to the future of your farm.
There are many resources available to help you with this process. Several Land Grant Universities offer programs in strategic management through their Cooperative Extension Service. There are also numerous podcasts, case studies, and textbooks written on strategic management. Building a Sustainable Business, is a useful guide to business planning and strategic management from Sustainable Agriculture Research and Education. It is downloadable for free online or available for purchase in print.
Strategic management is critical to the long-term success of your farm or ranch business. It is easy to get caught up in the daily operational management decisions, but when you incorporate strategic management, you will be better prepared for opportunities and challenges that may arise.
Recommended citation format: Smith, Amanda R. “Operational and Strategic Management for Your Farm or Ranch Business.” Southern Ag Today
