The well-known RCS Profit Probe benchmarking system now sits within a fully redeveloped platform called FarmEye®. FarmEye® is a comprehensive, internet-based business analysis and benchmarking platform that offers significant advances in agribusiness management, accounting, and decision-making support. One of these key benefits is to analyse your business on a rolling 12-month basis instead of being stuck in a financial year paradigm. So, each quarter you can look back on the past 12 months and analyse your performance and trends.
We commonly hear people dismiss this metric and say it doesn’t apply to them. During my recent trip to the US, I presented this data to hundreds of ranchers, and each group queried how useful it was with changing markets, different businesses, different countries, etc. My opinion is that if you want to optimise profit, the data tells us this is a useful number to consider when looking for deadwood in the business. I’ll say again, the most profitable businesses consistently achieved a better GP $/FTE. Now, if your result is much lower than these numbers, don’t just dismiss them; ask yourself which way you’re trending. Any business can analyse their data in FarmEye®, and you can see what your trends are for the last 12 months at the end of each quarter. This is a game-changer in keeping your finger on the pulse of your business. If you were achieving a GP of $200,000/FTE and are now getting $300,000/FTE, that’s great! You’re going the right way. Alternatively, if you’re only achieving $150,000/FTE year on year with no upward trend, and you’re not achieving the profit you need to fulfil your goals, maybe reviewing your strategy might help. Posing this question to your ExecutiveLink® board is a great way to do this.
As with any metric, please remember that no ‘one number’ means everything. It takes a dashboard of metrics to accompany your observations, and experience to support good decisions.
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