Typically agricultural businesses operate in isolation with little outside input or direction.
Comparative analysis (ProfitProbe™) allows management to, firstly, recognize issues in their business and, secondly, focus on strategies to improve those issues. ProfitProbe™ remains a powerful tool for oversight management to measure business operational success by aligning Key Performance Indicators (KPI’s) with operational management.
Benchmarking and Business Analysis
The difference between cost of production and price received is profit. Therefore, to target business improvement we need to know both accurately.
Olympians do not focus on coming in the middle of the field, they focus on being the best. Sport is the most benchmarked industry in the world and success can be measured in milimetres or thousandths of a second.
If you want to be an Olympian in agriculture, it pays to benchmark yourself against the winners.
We need to know what the performance is of the top 20% in the industry, in terms of their return on assets, their turnover ratio, their overhead ratio, their cost of production, their price received, their expense ratio, their gross margins, their cost structures etc. relative to our own business. This information guides our focus on business improvement.
Lay your business bare. Accounts done for taxation purposes DO NOT TELL US ANYTHING about our business or how to improve it. The RCS business analysis and benchmarking tool, ProfitProbe™, uses sophisticated management accounting processes to expose all the strengths and issues within a business. That information can then be used to target two to three areas each year which will improve business performance.
Combined with skilled interpretation of the indicators provided, benchmarking your business will:
- Focus management on increasing profits
- Target where cost may be cut whilst increasing production
- Improve efficiency across your business and production system
- Allow you to make management decisions with confidence
- Keep your financial position in perspective
This example from a business illustrates the change that can be made in one year by knowing where to focus after completing ProfitProbe™.
Using the meaningful information from ProfitProbe™, this business made professional management decisions to change the aspects most limiting profit – which are quite often different to the ones we feel we should focus on. The result was they decreased their cost of production and increased return on assets by 3.6% in a poorer year.
|Year 1||Year 2|
|SR - SDH/100mm||11||24|
ProfitProbe™ is a very powerful business improvement tool used by RCS for benchmarking. With more than 20 years of benchmarking experience and industry leading technology the ProfitProbe™ dataset is recognised Australia wide as the leading dataset for benchmarking broad acre agricultural enterprises.
The dataset contains in excess of 5,000 business years of data across a range of agricultural industries including grazing, broadacre cropping, cotton and sugar.
ProfitProbe™ is an economic and business benchmarking tool developed in conjunction with Central Queensland University. It provides a unique set of business indicators covering profitability, production, people, pecuniary (finance) and property performance. ProfitProbe™ is used as a tool in the RCS suite of education and training programs, as well as being a stand-alone business tool.
A study by CQ University found that business production increased with multiple analyses via Profit Probe (CSIRO Publishing, 2010).
We commenced ProfitProbe™ when our business had just gone through the succession process. Completing ProfitProbe™ allowed us to isolate the performance of our core business from various other enterprises and one off costs. ProfitProbe™ gave us meaningful figures and immediately we could see we had a strong business, and what areas to pin point in our business that are not performing, and set very clear goals for current and future enterprises.
I started the ProfitProbe™ process feeling a little overwhelmed, as it was my first year keeping the books and I had no business accounting skills, however, with the consistent guidance of the RCS team we worked through it. To anyone wondering about using ProfitProbe™, you certainly get out what you put in. This tool has been a game changer for our business.Jos MacLean – QLD, Australia, 2015
ProfitProbe™ this year was so quick, clear and easy to fill out. We had started a new trading strategy last financial year and to get almost instant ProfitProbe™ results back before the start of the new buying season was excellent. To be able to put the results of the new strategy in front of the buying team to reinforce that they are on the right track has the strategy set. ProfitProbe™ is our tool for measuring the economics of our business.Inga Gibson – Central & Northern Grazing Company, Australia, 2011
To me it is a worthwhile project. It leads to other things: to set about qualifying where we are and where we want to go. Perhaps the greatest benefit was twisting our arm to look at figures.John Kirby – QLD, Australia
Jolts you into place and makes you take a look at reality. Can only help you improve.Andrew Spikes – NSW, Australia
It has given me a new view of how to focus my business.Francisco Villegas – Oriente S.A. Colombia (USA)
ProfitProbe™ has the advantage of gathering information from the whole industry further than just one area. Rating Traprock businesses alongside similar ones from other regions has created goals unachievable with our localised benchmarking of the part.Rick Goodrich – President Traprock Wool, Australia
The change to ProfitProbe™ for WRAS has been very worthwhile. A greater depth of analysis, combined with indications of where improvements can be made, has meant many in the group have a better understanding of how they are performing and what they need to do to improve profitability.Hugh Nivison – Walcha Rural Advisory Service, NSW, Australia
Absolutely essential to all cane growers. It is the improved performance of us as individual growers that has the greatest impact on the industry. This is the only opportunity I’ve had to measure cane farming as a business – and it is a business.Paul Coppo – QLD, Australia
|ProfitProbe™ + |
|ProfitProbe™ + |
Face to Face
|Phone support during data entry to answer queries as well as a Draft Report with corrections and edits to input data.|
|Final Report with detailed information on your turnover, gross margins, overheads and management accounting results.|
|Final Report with Key Performance Indicators (KPIs) for profitability, productivity, people, pecuniary and property.|
|Final Report with your historical data displayed to show trends and responses to your management decisions.|
|Final Report with your KPIs displayed against overall database benchmarks and landtype benchmarks (where applicable).|
|One hour phone consultation with senior RCS advisor to discuss your Final Report results.|
|Half day face to face consult with RCS advisor to discuss your results and develop strategies for improvement.|
|Investment costs per analysis (excluding GST)||$300||$700||$850||$1400*