2016 business of farming conference: record keeping basics
TRANSCRIPT
Business Record Keeping BasicsBarry Gupton
Purposes of Record Keeping?
Information!
Purposes of Record Keeping?
Information! For Whom?
Purposes of Record Keeping?
Information! For Whom?• Government - Tax and Legal Compliance
Purposes of Record Keeping?
Information! For Whom?• Government - Tax and Legal Compliance• Stakeholders - Investors, Lenders, Crop Insurers, Certifiers
etc.
Purposes of Record Keeping?
Information! For Whom?• Government - Tax and Legal Compliance• Stakeholders - Investors, Lenders, Crop Insurers, Certifiers
etc.• Owners/Managers - Track Performance
Purposes of Record Keeping?
Information! For Whom?• Government - Tax and Legal Compliance• Stakeholders - Investors, Lenders, Crop Insurers, Certifiers
etc.• Owners/Managers - Track Performance • Why do we want to track performance?
Purposes of Record Keeping?
Information! For Whom?• Government - Tax and Legal Compliance• Stakeholders - Investors, Lenders, Crop Insurers, Certifiers
etc.• Owners/Managers - Track Performance • Why do we want to track performance? • To improve performance
Purposes of Record Keeping?
Accurate & organized records Good Information Informed decision making improved performance
Keep Records of what?
Keep Records of what?
How do we measure performance for a business?
Keep Records of what?
Business Inputs Outputs
Resources into business Products/Services Sold
Performance/Success = Difference between Outputs and Inputs
Keep Records of what?
Business Inputs Outputs
Resources into business Products/Services Sold
Financial:
Keep Records of what?
Business Inputs Outputs
Resources into business Products/Services Sold
Financial: $ Expenses/ Costs $ Sales
Profitability = Financial Performance
Profit Formula
Sales (aka Revenue or Income)- expense (aka costs)= Profit (aka Net Income, Earnings)
Keep Records of what?
Business Inputs Outputs
Resources into business Products/Services Sold
Financial: $ Expenses/ Costs $ SalesNon-Financial:
Keep Records of what?
Business Inputs Outputs
Resources into business Products/Services Sold
Financial: $ Expenses/ Costs $ SalesNon-Financial:
Owner Labor and time Non $ personal benefits “free food” Effort, personal risk Community impactLand, other assets Environmental impact
Keep Records of what else?
Business Inputs Outputs
Resources into business Products/Services Sold
Internal Processes that add ValueIn English: The unique way we combine inputs
Setting up Record Keeping/Accounting: Begin with the end in Mind!
Break down profitability in ways that will help you make decisions
Setting up Record Keeping/Accounting: Begin with the end in Mind!
Break down profitability in ways that will help you make decisions
• By product
• By Customer
• By Time period
• Gross Profit and Net Margin
• Cogs vs. Overhead / aka Variable Costs vs Fixed Costs – Very Important!
Automated Bookkeeping (Accounting Software)
• Advantages• Speed and accessibility:
Faster data entry, more accessible information (vs. paper or excel)
• Accuracy and organization: More reliable and useful information
• Initial Costs
Time more than Money
Get it right from the beginning, get help setting up!
Can I outsource it?
• You can try• You can never outsource everything• There’s more to consider than money
Record Keeping for Farming Businesses•My experience
• Importance of Good Record Keeping/ Accounting increases with:
• Tighter margin industries (more competitive)
• Complexity of business (number of inputs)
• Farming wins the prize in both!
