Why do an annual farm business review?
Busy seasons blur together. Without a review, you may keep doing things that do not pay or miss signs that something is working well. A regular look back shows what the numbers say, not what it felt like.
Michigan State University Extension, Virginia Cooperative Extension and Oklahoma State Extension all publish guidance on year-end financial review and evaluating financial performance, and the core idea is the same: gather records, summarize them and compare.
When is the best time to do it?
Choose a slower time, often after harvest or at year end, but after your records are up to date. Block a few hours on the calendar and treat it like an appointment. If you keep records through the year, the review is faster.
Consider doing a smaller check each quarter. It catches problems earlier and makes the annual one easier.
If you farm with a partner or family, do the review together so everyone sees the same numbers. Decisions made from shared facts cause fewer arguments than decisions made from memory or impressions.
What records should I gather?
Start with income and expenses by category, sales by product and outlet, loan balances and payments, inventory of animals, stored goods and supplies, and your own hours. Add insurance, permits and contracts to check renewal dates.
Do not worry if your records are rough. Notice where they are weak, and make a plan to improve them next year.
Round numbers are fine. The goal is a clear picture, not perfect accounting, and the numbers get easier to gather each year.
- Income and expenses by category
- Sales by product and by market
- Loans, leases and payments
- Inventory and equipment
- Hours worked by you and others
- Insurance, permits and renewal dates
What questions should I ask?
Ask what made money and what lost it. Ask which products or markets took the most time for the least return. Ask what costs rose, what surprised you and what you would change if you started over.
Look at your own pay. If the farm does not cover your costs and a fair return for your time, decide whether that is acceptable for now, and what would need to change.
- Which product or market earned the most per hour?
- Which costs grew the fastest?
- Where did I waste time, feed, seed or packaging?
- What does the farm pay me for my work?
How do I turn the review into a plan?
Pick a small number of changes, such as three. For each, write what you will do, when, and how you will measure whether it worked. A short, specific list is more useful than a long wish list.
Update your budget and calendar to match. Set dates for key tasks like renewing permits, ordering supplies and checking insurance.
Who can help with the review, and how do I share results?
Your county extension office, a farm business specialist, a tax professional or a local farm business program can walk you through the review and help interpret the numbers. Some programs offer worksheets or group sessions.
Another farmer you trust can also be a useful second set of eyes. Exchange reviews and ask each other honest questions. Keep any personal financial details private unless both sides agree.
If others work on the farm or share the finances, present the review calmly, with numbers on paper. Start with what went well, then discuss the problems and options. Invite each person to add their view. Agree on next steps and who will do each one. Write them down and revisit them at the next quarterly check.
What mistakes should I avoid in a review?
One is judging only by gross sales. A farm can sell a lot and still lose money after costs. Look at what is left after expenses, and at what is left per hour of work.
Another is leaving out your own time or the value of unpaid family help. If you ignore labor, every product looks more profitable than it is. Note the hours, even roughly.
A third is skipping the review when numbers look bad. That is when it matters most. Bad numbers point to the changes that can help, and a plain look at them is better than avoiding the page.
- Looking only at gross sales
- Leaving out your own labor
- Avoiding the review when results are poor
- Setting too many goals at once
Key takeaways
- Do the review at a quiet time with up-to-date records.
- Look at income, expenses, time and goals together, not just totals.
- Choose a few specific changes and write how you will measure them.
- Ask extension or a tax professional for help interpreting the numbers.
Sources and further reading
Last reviewed: November 12, 2026. Written by the Homestead & Small Farm Editorial Team. See our editorial policy.