Making it happen: Profitability and success

Final report for ONE15-248

Project Type: Partnership
Funds awarded in 2015: $14,973.00
Projected End Date: 12/31/2017
Region: Northeast
State: Massachusetts
Project Leader:
Dorothy Suput
The Carrot Project
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Project Information

Summary:

Making It Happen: Profitability and Success is a training and set of resources designed to help farmers understand and strategically implement a variety of financial management tools in order to increase the financial strength of their operations. The resources include case studies, hands-on activities, and learning aids, such as a financial management calendar and webinar, and learning tips.

In early 2016, 89 participants participated in six trainings in Massachusetts, New York, and Vermont. The trainings were hosted by: the Beginning Farmer Network of MA, Berkshire Grown, Central MA Grown, Community Involved in Sustaining Agriculture (CISA), Glynwood, the Intervale Center, New Entry Sustainable Farming Project, Stone Barns Center for Food and Agriculture, and the Young Farmer Network. Participants were assessed on their financial management skills before and after the training. 

The final part of the project was to evaluate how many participants were able to incorporate what they learned into their farm business in preparation for and during the 2016 season. We found that a year later, participants more frequently tracked their income and expenses, revised their financial projections, and consulted their business plans but that future trainings should go into greater depth about applying theoretical concepts to participants’ own farms.

Findings were promoted on Facebook and Twitter and was presented at the National Farm Viability Conference in Albany, NY in May 2017 and to a USDA NERMEP Project Director’s meeting in April 2017 in Cincinnati, Ohio.

Introduction:

Making It Happen: Profitability and Success is the result of the gathering and analysis of data from “Measuring Profitability and Success (Northeast SARE LNE11-310),” a three-year research project that collected financial data and pre- and post-project survey information from 23 farms, as well as feedback from the technical service providers who worked with these farmers for the duration of the project. It involved 89 participants in six trainings in Massachusetts, New York, and Vermont.

Project Objectives:

This project had two steps to achieve the proposed goals: (1) conduct an in-depth analysis of an existing data set, which was gathered over three years from 30 farms and four technical assistance providers, as well as from additional surveying of service providers, and (2) develop and implement a seminar, and evaluate changes in participants’ understanding and use of financial management practices and decision making. We have completed both objectives.

We have analyzed the data set from “Measuring Profitability and Success” (MPS, LNE11-310) and it is described in detail in the Final Report (Northeast SARE LNE11-310). The data set was synthesized, resulting in an understanding of factors and conditions that were important to a farm meeting or moving towards its business goals.

To make this information useful for Making It Happen, the training team met with a Work Learning expert, Will Thalheimer of Work Learning Research, to develop a learning development process to complete the second objective: design and implement a seminar series. The learning development process (Attachment A) outlined the steps necessary to integrate, successfully and succinctly, the data and experiences from MPS into a curriculum. One of the first steps, that serves as the core of the curriculum, was to develop the “Learning Matrix” (Attachment B) that lists common mistakes, common success strategies, specific actions farmers should engage in to be successful, situations in which farmers would take these actions, and the habits that will enable farmers to be consistently successful in these situations. This document organizes the information into learning groups: 1) Planning, 2) Due Diligence, and 3) Proactive Management, which was the primary focus of Making It Happen.

Following the learning development process, the matrix was then used to craft: 1) evaluation objectives (how we will measure success in terms of learning and implementation); 2) instructional objectives (what do we want the learner to do and in what situations, which distinguishes between knowledge and performance); 3) development of evaluation instruments (which are important for results verification); and 4) creation of the training.

The materials created for the training included:

  • Case Studies: Individual farm analyses that provided real-world examples of various learning points (Attachment C).
  • Scenario-Based Questions: Hypothetical scenarios that farmers could use to understand the various situations in which using financial management tools and strategies would be helpful.
  • Hands-On Activities: To practice using the concepts and skills taught.
  • Learning and Instructional Aids (Attachment D):
    • A Financial Management Calendar designed to help participants organize and plan for their financial management activities;
    • A Financial “Toolbox” as an instructional aid, which could be further modified to be used by participants, describing the primary financial management tools used in the training and financial management calendar; and
    • Learning Tips: To reinforce concepts or answer questions raised, but not fully addressed, in the training.
  • Evaluation Surveys: Crafted to measure learning achieved during the training, including behavioral changes that may occur within a year after farmers participate in the seminar (Attachment E, Attachment F, and Attachment G).

During the first few months of 2016, the training was offered at six different sites. Ten participants received subsequent coaching, for 1-2 hours, or longer-term business assistance. The latter occurred outside of this grant. We also offered the Financial Management Calendar as a webinar in partnership with the New Entry Sustainable Farming Project. The evaluations of the training follow and show that participants’ understanding of the material increased.

  • RELEVANCE OF TRAINING DESIGN TO PURPOSE: A large majority, 87%, expressed confidence in their preparedness because the training provided them with practice on job-related tasks. A much smaller percentage, 8%, thought the training did not provide sufficient training but were confident that they could use the skills and tools, and 5% had no confidence in their ability to use the skills or tools after the training.
  • UNDERSTANDING MATERIAL: A majority of participants, almost two-thirds, indicated they had a solid or better understanding of the concepts taught. About one-third, or 36%, had a basic familiarity, and 4% had significant blind spots or confusion.
  • MOTIVATION TO ACT: A large majority, 95%, of participants indicated that they would use their financial statements to make decisions in their work. Two-thirds, 67%, indicated that they would use their financial statements monthly or weekly, 56% and 11%, respectively; 28% indicated that they would do so every couple of months. Motivation combined with understanding of materials is critical to being in a position to act on learning.
  • READINESS TO USE SKILLS: A majority of participants, 86%, indicated they needed more practice or guidance to do actual job tasks using the tools or to be fully competent. 14% of participants indicated being competent or an expert at using the tools taught.

The response to question #4 is interesting because when participants were asked about the exercises used in the class to practice skills (#1), a majority were confident that they could use what they learned. When the question was asked differently, to emphasize using the skills on the farm, their readiness dropped. Future trainings will double the number of training hours, from 5 to 10, to allow for more hands-on activities that clarify the application of theoretical concepts to real-world farm management. One-on-one technical assistance with a business advisor provides another opportunity for applying classroom learning to farmers’ own financials.

In the first quarter of 2017, participants were asked to complete a final survey (Attachment G) to evaluate whether they were able to incorporate what they learned into their business practices. This survey’s questions corresponded to a pre-workshop survey (Attachment E) conducted before the trainings in 2016, to enable direct comparison of financial management habits and business practices before and after the trainings. We found that a year later, participants more frequently tracked their income and expenses, revised their financial projections, and consulted their business plans but that future trainings should go into greater depth about applying theoretical concepts to participants’ own farms. Results are discussed in detail below (see “Impacts and Contributions/Outcomes”).

Cooperators

Click linked name(s) to expand
  • Christopher Lindgren
  • Benneth Phelps
  • Rachel Schattman
  • Julia Shanks
  • Jonathan Stoddard

Research

Materials and methods:

March–April 2015

  • Analyze survey information, determine best way to present pre- and post-MPS farmer survey information, and create draft to convey most meaningful results.

Determining what data from MPS (Measuring Profitability and Success) were most helpful was more difficult than originally anticipated. In the end, it was decided that the most meaningful information to collect and track from MPS are changes in net and gross sales, changes in owners’ salary or owners’ draw, number of employees, and progress toward reaching stated business goals. However, this information was only useful if tracked for at least two seasons, as yearly fluctuations were too great to understand general trends after only one year. The latter was probably true due to the early stages of the businesses and the changes made from year to year in the business. If subsequent MIH sessions are combined with 1:1 assistance or other support and offered over at least two seasons, collecting this type of information will become more useful.

  • Develop seminar outline, goals, and objectives: Completed.
  • Identify (using MPS information) five farms, facing representative situations, to develop into case studies: Completed.
  • Outline resources necessary to support learnings for each case study: Completed.

May–June 2015

  • Training team receives instruction on seminar design: Completed.
  • Gather reflections from MPS service providers on what worked, when, and why: Completed.
  • Design and implement a survey to elicit feedback from service providers, not on what happened (already recorded), but on what factors led to specific results: Completed.
  • Draft memo describing results, for later incorporation into overall analysis: Completed.
  • Document learnings, insights, and highlights in Initial Report from the different activities, described above, in March–April: Completed.

July 2015

  • Integrate information from MPS and In-Depth Aggregate Analysis: Completed.
  • Plan for integration into seminar, based on seminar outline, by Training Team: Completed.
  • Review and modify materials, as needed: Completed, but was ongoing.

August–October 2015

  • Develop five case studies to address key questions: Completed 8 case studies.
  • Identify five farms for development into case studies: Completed.
  • Create rubric for case studies and gather input from Training Team: Completed.
  • Complete in-depth analysis of five farms: Completed.
  • Draft case studies: Completed.
  • Develop resources to support case studies: Completed.
  • With collaborators, decide which financial management tool(s) to focus on (e.g., “Why Do Enterprise Planning”): Completed.
  • Develop relevant training modules: Completed.
  • Conduct review by Farm Advisors and Training Team: Completed.

October–November 2015

  • Review resources to support case studies: Completed.
  • Finalize case studies by making language and layout more reader-friendly: Completed.
  • Finalize resources to support case studies: Completed.

The support materials for instructors explaining the purpose and use of the materials is complete, but rudimentary.  There were inadequate resources to make the instructional guides useful for new instructors without additional work. A goal of developing materials for the 2018 workshops will be to make the curriculum more accessible to new instructors. 

November–December 2015

  • Develop detailed seminar agenda and learning aids such as slides, instructor guidelines, etc.: Completed.
  • Publicize Making It Happen with collaborating organizations: Completed.

January–March 2016

  • Publicize and continue registration: Completed.
  • Deliver five seminars, including pre- and post-evaluations: Completed six seminars.

After a first pilot seminar, the Making It Happen materials were reviewed and modified to reflect feedback. One lesson learned is that a training is never really complete. After each instruction session, based on feedback from participants and instructors, there were continual improvements to the materials and the lessons.

July 2016

  • Produce webinar in collaboration with New Entry Sustainable Farming Project: Completed in April 2016.

February–March 2017

  • Solicit final evaluations on use of financial management tools and changes in financial decision making: Completed.

All farmers who participated in MIH workshops were contacted with follow-up surveys to measure changes in their financial management practices. After several rounds of follow-up e-mails and phone calls, responses were received from 54% of farmer participants overall and 78% of farmers who also received follow-up business coaching or technical assistance.  

April 2017

  • The Project Director, in coordination with the Training Team and Farm Advisors, will draft the final report: Complete.
Research results and discussion:

The proposal stated that Making It Happen will: (1) determine what financial management tools are most effective under what circumstances and at which stage(s) of business development; (2) pinpoint when and how such tools are most readily integrated into a farm’s operation; and (3) develop a seminar— within the context of ongoing education, required prerequisites, and follow-up support— to contribute to improved financial management and decision making on 50–75 farms. The following describes the anticipated impacts of the project.

Determine what financial management tools are most effective under what circumstances and at which stage(s) of business development

The analysis of the MPS data showed that the most important financial management tools are those that allow farmers to make strategic decisions about their farm, i.e. answer questions such as: Is this the right price? Is a capital investment worth it? Should I add a new product line to my business? Can I pay my bills? This involves using scenario planning and sensitivity analysis, competitive analysis, enterprise budgeting, and cash flow budgeting. However, the findings also showed that these skills were most useful when realistic and well-vetted business planning had occurred and financial tracking systems were in place and used regularly. In practice, this meant that many farmers in their first few years of business were not ready to use financial management tools, if they were still refining their business models or setting up or learning to use financial tracking systems. This would imply that MIH is most useful for farms that have already met these conditions.

Pinpoint when and how such tools are most readily integrated into a farm’s operation

The question of “when” is addressed above. Qualitative farmer feedback demonstrated that such tools are most effectively integrated into a farm’s operation with either more training time to practice the new skills, including practicing with ones’ own financials, and/or 1:1 business assistance, as occurred for participants in MPS.

The Financial Management Calendar resource and webinar was one way to extend the training.  It was designed in response to questions from participants about how to implement what they learned. It was pulled together at the end of the training period, in April, and its lessons will be better integrated into any future seminars.

Ten MIH participants received follow up coaching and 1:1 business assistance. As we plan for subsequent MIH trainings, we are doubling the 4-5 hour training period to allow for more hands-on activity and work with real numbers and making greater amounts of 1:1 assistance available. In one instance, we may be in a position to include peer-to-peer support as well to further reinforce training and expand the options for additional support.

It should also be noted that farmers that indicated an interest in longer trainings that incorporated working on their numbers tended to be, at least, several years into running their business. For businesses in their first few years, an introduction to the concepts may have been enough.  

Develop a seminar — within the context of ongoing education, required prerequisites, and follow-up support — to contribute to improved financial management and decision making on 50–75 farms

When designing MIH, the goal was to train participants that were already part of a cohort of farmers receiving business education. This happened in most instances, but the type of training was so different for each group of farmers from host organizations that it is difficult to show how this was important to their ability to develop and use their business skills. On reflection, it would be ideal if MIH were integrated into the different hosts’ trainings so that there was some control over the readiness of a participants and so that remedial trainings on, for example, financial statements, were available for those who needed it.

Also, hosts were reluctant to screen out participants who were not ready for the more advanced material in MIH.  Most organizations are in the habit of having a completely open registration process. This makes it difficult to have an in depth training, as participants have such varied understanding of the basic material that is foundational to getting the most out of a program like MIH.

Research conclusions:

A final survey was conducted in February–March 2017 to evaluate whether farmers were able to incorporate lessons from the seminar into their business practices.

Quantitative Results

  1. Use of accounting software. On average, participants reported entering sales and expenses into their accounting software more frequently than before (see table 1). The number of participants who used their accounting software at least quarterly increased from 64% to 81%. More than half of all participants, 54%, reported entering sales and expenses more than once a month, compared to 44% before the workshop.

Table 1.  "How often do you enter sales and expenses into your accounting software?"

 

Less than quarterly

At least quarterly

More than once a month

Before training

36%

64%

44%

After training

19%

81%

54%

Percent change

-89%

+21%

+19%

 

  1. Adjustments to financials. Participants reported reviewing and adjusting their financial projections, targets, and cash needs more frequently than before (see table 2). In the pre-workshop survey, just 30% of participants reviewed their financials at least four times a year; after the training, 52% reviewed them at least quarterly. Almost a quarter of all participants, 24%, reviewed their finances more than once a month after the workshop, compared to 11% before the workshop.

Table 2. “How often are you reviewing and making adjustments to your financial projections, targets and cash needs?”

 

Less than quarterly

At least quarterly

More than once a month

Before training

70%

30%

11%

After training

48%

52%

24%

Percent change

-44%

+41%

+56%

 

  1. Seeking business advice. Seeking outside advice to support their farm business was something that the most successful MPS participants did and was stressed during MIH.  Participants reported seeking business advice from outside sources slightly more frequently after the workshop. Before the training began, 55% sought outside advice at least four times a year and 33% at least seven times a year. After MIH, 60% sought outside advice at least four times a year and 47% at least seven times a year.
  2. Revisiting business plan. The more successful MPS participants used a well-developed business plan as the foundation for management decisions and reflections on farm goals, so the effective use of a business plan was also stressed during MIH. After MIH, 66% of participants reported using their business plans actively, to plan ahead for coming seasons or continually throughout the year, versus 40% before the workshop began. This difference may be mainly attributable to farmers being at a later stage in their business planning, as before the workshop 22% reported that they were writing or rewriting their plan and none reported doing so in 2017. Nonetheless, this demonstrates the successful integration of a business management skill.
  3. Access to financing. Before the workshop, 76% of participants said they were unaware of appropriate financing options, versus 13% who were confident they could find appropriate financing sources if needed. After MIH, 59% remained unaware of appropriate funding sources, but 24% were confident in their ability to find appropriate financing sources. Interestingly, 17% of final survey participants reported that they would never use financing because they did not believe in using debt to grow their businesses, versus 11% before MIH began. Additionally, 61% had reported confidence in their ability to access financing immediately after the trainings ended, suggesting that this confidence deteriorates over time or that participants no longer consider their information up to date. During the training, we discussed how to prepare for financing but did not discuss sources of capital.

 

Qualitative Results

In the final 2017 survey as well as the evaluations conducted immediately after the workshops ended in 2016, three major themes emerged.

  1. Effectiveness of information sharing among farmers. Many participants identified group discussions as a highlight of the workshops. As one said, “Real life scenarios were great.  Group work as well. Always a joy to converse in groups as you learn.” Several indicated that the post-workshop training materials were useful because they furthered group discussions. This suggests that peer sharing and group discussions should be prioritized in future workshops and in post-workshop communications and followup.
  2. Desire for real-world examples. One participant suggested that we “Include an activity that is more directly related to their own farm business--force us to consider our own business strategy and choices.” Another pointed out, “I think it would be helpful to explore scenarios where more went wrong so we can explore analysis on the negative side as well as positive.” Future workshops will be longer to enable more of this hands-on, reality-grounded work.
  3. Need for concrete implementation strategies. As discussed above, a number of participants expressed confidence in their theoretical knowledge of the concepts introduced but were uncertain about how to apply them in practice. At the end of the workshop series, we developed a Financial Management Calendar tool to provide concrete suggestions of how frequently to conduct various financial management tasks, when each needs to occur, and which can wait until after the busy growing season ends. Integrating this more fully into the curriculum of future workshops should address this need.

Limitations of Data Set

54% of farmer participants responded to our final survey. However, 38% did so anonymously and only 50% disclosed their gross and net income for 2016, making it difficult to track changes for individuals or identify trends, such as different outcomes for beginning versus more experienced farmers.

Effectiveness of 1:1 Training

In general, workshop participants who also received 1:1 coaching or business assistance (outside the scope of this grant) showed similar outcomes to general participants in terms of financial management practices, contrary to our expectations. However, the sample size of surveys from TA/Coaching recipients was small (7 responses from 9 participants), and it is possible that participants who sought out one-on-one assistance in the first place had lower (or higher) financial management skills to begin with. Comparing results from future workshops will enable better evaluation of 1:1 training. The 1:1 coaching can also be a means of addressing farmer requests for more hands-on learning with real numbers.

Participation Summary

Education & Outreach Activities and Participation Summary

5 Curricula, factsheets or educational tools
1 Webinars / talks / presentations

Participation Summary:

89 Farmers
Education/outreach description:

After the workshops concluded, we sent participants two learning management tips and a financial management calendar intended to aid in applying workshop concepts to real-world situations (Attachment D). The calendar taught as a webinar can be found at:  https://www.youtube.com/watch?v=aKptahZT7jA&feature=youtu.be

Final survey results indicated that most participants did not read or receive the e-mailed learning tips (61%) and did not participate in the webinar (83%). However, those who did review the learning tips and attend the webinar generally evaluated them as helpful and expressed at least some degree of confidence in their capacity to apply the tools to their business practices. One participant said the webinar was useful because it promoted “open discussion with other farmers.” Another said the learning tips were helpful for “keeping the idea of looking at cash and analysis fresh in our minds.”

This suggests that the learning tips and financial management calendar are valuable tools. Future MIH trainings will integrate them into the curriculum from the outset, so that post-workshop communications can reinforce tools and strategies learned in person rather than introducing new information. Post-workshop communications could then remind students of the curriculum, support them in implementing it regularly during the busy growing season, and offer a forum for ongoing discussions among farmers about business management strategies.

Outreach beyond the participants was in the form of our newsletter (included in our June 2017 edition to be sent June 6) reaching 1500 readers and a social media audience of 1450.

Learning Outcomes

51 Farmers reported changes in knowledge, attitudes, skills and/or awareness as a result of their participation
Key areas in which farmers reported changes in knowledge, attitude, skills and/or awareness:

From trainings of 89 farmers, 54 responded and 95% said they were confident in the financial and business planning skills they learned and 89% said they would incorporate them into their farm planning.

Project Outcomes

15 Farmers changed or adopted a practice
Project outcomes:

The results of our followup study (see “Impact of Results/Outcomes”) demonstrated that participants use their accounting software and reflect on their financials more frequently than before the training, which may be linked with eventual increases in farm income. However, the data we collected tracked farm income anonymously and only in broad brackets ($10,000 to $25,000, etc.), which made it difficult to assess economic impact. Future workshops will be designed to track income and revenue more effectively. However, if the results from MPS are valid, for early-stage farms, it may take at least two years to fully understand changes in a farm’s financial position because their operation--in terms of products, markets, and the use of labor--are far from consistent from year to year as they hone their business model.

Information Products

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.