Learning financial concepts is critical to success

Running a dairy farm means making decisions every day. Some are the fundamentals — those involving cows, employees and equipment. Others involve the larger-picture decisions regarding budgets, debt, cash flow and the future of the farm. Handling the daily tasks can make it difficult to step back and focus on the bigger picture and long-term planning we all know is important.

One of the biggest lessons I’ve learned from attending financial and management training programs presented by Professional Dairy Producers is the importance of doing both.

I’m a fourth-generation dairy farmer and own Sheridan Flats Dairy LLC in Waupaca, Wisconsin, with my husband, Josh, and my parents. We have five employees: four full time and one part time. About two years ago, we completed a new freestall barn and expanded our milking herd from 200 to 400 cows.

As we prepared for that expansion, I knew I needed to strengthen my financial knowledge. I returned to the farm after completing a veterinary technology program because I wanted to work with animals, but as I started doing more management and financial work for the dairy, I saw the importance of understanding the numbers behind our business decisions.

My banker encouraged me to participate in PDP’s Financial Literacy for Dairy program, even providing a scholarship through the organization’s “Count on Us” program. I completed both levels of the program and later attended the Business Management & Advanced Finance Workshop to build on what I learned.

Attending the programs didn’t eliminate our desire to work with our financial consultant and accountant, but the concepts I learned definitely made working with those professionals more productive. I can look at our numbers, ask better questions and even run financial scenarios on my own before we meet with our advisors.

That puts us on a more level playing field and gives me more confidence when we make decisions. The spreadsheets and workbooks we received during the programs are also valuable. I continue to reference them to make sure I ran a scenario correctly and am still understanding concepts accurately.

The dairy industry can change so quickly, and I believe that sound financial knowledge is important for farms of every size. You don’t have to be expanding or investing in new equipment to benefit from knowing your financial position. Whether you manage 400 cows or 4,000, you need to be aware of where your business stands and have a clear path of where you want to go next.

One practice I’ve worked hard to maintain is completing our profit and loss information by the end of every month. When something unexpected comes up, having that information helps our entire team make decisions with more confidence.

A quote from Dick Wittman, the facilitator of the Business Management & Advanced Finance Workshop, has stayed with me: “Work ON the business, not just IN the business.” That’s especially important in a family operation. We see each other every day and are always talking about what needs to be done — and now we’re intentionally taking time for meetings for planning and discussing big-picture topics like herd production, financials and the future.

Another idea that stood out to me was a “no-decision meeting.” Not every meeting needs to end with a decision. Sometimes we merely need an opportunity to talk through ideas or possible solutions to a challenge, then take time to research or think about it further before coming back to the table.

I’ve also had the opportunity to participate in a PDP peer group with several other dairy producers. It is a great way to meet other farmers and build a network of people I can reach out to with questions and share experiences. We tour each other’s farms and take a deep dive into why they decided to implement management practices or invest in equipment or technologies.

For me, continued learning is key to staying competitive and preparing for whatever comes next. Whether it is a training program, conference or meeting with other producers, there is always an idea or insight that can bring value to your operation.

Amy Karpinski owns Sheridan Flats Dairy LLC in Waupaca, Wisconsin, with her husband, Josh, and her parents, Mark and Dawn Anderson. They currently milk 400 cows.