BUSINESS SUCCESS: WHAT FACTORS REALLY MATTER?



are more likely to be successful and/or that owning is preferred to leasing when it comes to ranch
land real estate. In all other groups the real estate investment per acre has an insignificant, but
negative correlation coefficient. Likewise the top ranking performers overall have the least
investment per acre of productive capacity. Though statistically insignificant, the factors of
family living expense and off-farm income rank unusually high for the diversified group relative
to all other operations.

A qualitative assessment of the factors critical to success can be evaluated from the
empirical experience of extension specialist working personally with subscribers to the FARM
Assistance analysis system. The FARM Assistance process requires an intensive interviewing
process to collect the necessary data to project the financial performance of a farm or ranch.
During the interview process, extension specialists collect production information such as yield
and weaning weights, as well as direct and indirect expense expectations and future production
plans. Another critical part of the process is defining alternative scenarios the producer would
like to analyze.

Through personal contact and intensive work with these producers, FARM Assistance
specialists have observed two key qualitative indicators of success. The first is the ability of the
producer to communicate the essence of his operation and how well he “knows” his own
operation. Included in this factor is the producer’s general ability to answer simple questions
like, “how much do you spend on seed/fertilizer per acre?” Experience seems to indicate that
adequate record keeping is important, but not absolutely essential. There are producers with
inadequate records that have a very good knowledge of their operation, as well as producers with
good records that really don’t understand their operation. The second qualitative factor has to do
with the identification and analysis of future alternative operating strategies. The ability of a
farm or ranch manager to be forward looking has been a flag for success. The forward-looking



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