# 198 - How Much Profit Should Your Farm Really Be Making? With your host, Jeremy Hutchings, Managing Director, Farm Owners Academy

There is a question every farming family should be able to answer with confidence:

How well is our farm business actually performing — and what is it truly capable of?

Not just whether there’s cash in the bank. Not whether we’ve had a good season. And not whether we’re doing things a bit better than they’ve always been done.

I mean really understanding the strength of the business model underneath it all.

Over the last few weeks, I’ve been lucky enough to spend time on-farm with a number of our members, sitting around kitchen tables, driving around properties and getting deep into the numbers behind their businesses. And one exercise in particular has created some incredibly valuable conversations.

It’s about reverse engineering the potential of the farm.

In this episode, I want to take you through that same exercise, and I unpack some of the key numbers I use to stress test a farm business:

• Return on assets managed
• Net Profit as a percentage of income
• Appropriate levels of gearing
• Labour investment
• Interest cover

I then use these to ask a much bigger question:

Given the assets you have access to today, what level of income and profit should your business be capable of producing?

Because for many farming families, the opportunity isn’t necessarily about buying the farm next door. It may be about getting far more from the farm you already have.

I uncover why scale should be measured in revenue, not hectares, and the three ways you can build it: through simplification, intensification and, only then, expansion.

I also consider the idea of getting a balance between business model, scale and gearing — and why getting those three things working together can completely change the financial strength of your farming business.

This isn’t about chasing numbers for the sake of numbers. And it certainly isn’t about suggesting there’s one perfect enterprise or one perfect way to farm.

It’s about knowing what good looks like.

It’s about giving yourself and your family a clear set of targets, understanding the gap between where you are today and where the business could be, and then asking better questions about how you close that gap.

So grab a pen and a piece of paper for this one.

Work through the numbers for your own farm as we go, challenge a few assumptions, and perhaps uncover some of the latent income and profit sitting inside the business you already have - and if you'd like to go a bit deeper with your numbers & analysis, head to our website and grab your free copy of "The Profitable Farming Playbook" which will help you track the key targets that lead to stronger decisions, better profit, and long-term success.

Because sometimes the greatest opportunity isn’t more land.

It’s a stronger business model on the land you’re already farming.

Keep winning!

Hutch & The FOA Team

P.S. Knowing your numbers gives you a much clearer picture of what your farm business is capable of. If you want to go deeper, you can access our CFO Program for just $97 using promotional code PODCFO97 at checkout (usually $197) or book a Complimentary Coaching Call with our team to talk through your business and where you can improve performance.