Photography by Hillary Ehlen
What started out as a side project has turned into a full-time job for Harvest Profit Founder Nick Horob. The idea behind Harvest Profit, a tool to help farmers track and manage their profitability, began when Horob worked for a private equity firm doing finance work and started diving deep into the farm economy. It was eye-opening for him seeing the opportunities and risks on the farm.
Horob recognized an opportunity and started doing consulting work for a handful of farms in Minnesota and the Dakotas. During this consulting, he noticed a lack of tools focused on the business side of farming, so he hired two “cheap” overseas firms in 2012-13 to build a program; it crashed and burned each time, costing him $30,000. After teaching himself how to program, he eventually realized the number of years it would take to build a quality product on his own, so in 2015, he hired Codelation, a Fargo-based software-development company, to help him create a minimum viable product.
Harvest Profit was launched in December 2016, and within months, more than 100 farms from all over the country signed up. A year later, Horob faced a decision about whether to keep it as a side project or make it a full-time gig. The revenue was built up, and now, with a staff of three others, the Williston native and University of Minnesota graduate pulled away from his consulting work to focus his days on the software without taking a huge risk.
With the assistance of two State of North Dakota grants totaling $45,000, Harvest Profit is 100 percent employee-owned and profitable in the midst of a growth phase.
What is Harvest Profit?
Nick Horob: “We have approximately 250 customers in 26 states and four (Canadian) provinces. Our goal is to help farmers make more-profitable long-term business decisions by making it easier for them to track their numbers.
“For the 2018 crop, for instance, a farm likely bought a fair amount of their input expenses in 2017, they’re going to raise the crop in 2018, and a lot of them will sell big chunks of it in 2019. So you have three years of financial transactions that all go into that crop. Due to how most farmers do their taxes, they do it on a cash basis. So the profitability for that 2018 crop is spread out over three different years. Historically, there hasn’t been a lot of visibility into what made (them) money and what didn’t make (them)money. This tool makes that easier.”
What does the software tool do?
Horob: “It’s a tool to help users manage their crop-year profitability — taking that three years of financial transactions and bringing it all into that one year. The heart of it is a profitability-tracking tool. On top of it, they can view profitability by crop, per field and per landowner. Farmers can slice and dice their profitability in a bunch of different ways. Then, we’ve added on top of that different “what-if” analysis tools. What if I sell grain at these four prices? What will it do for my bottom line? What if I decide to take out a different insurance level? What will that do?”
What are some common business mistakes you’ve found farmers make?
Horob: “There’s a couple:
1. They tend to be fairly good at financial-planning in the winter. But as soon as the snow melts and they’re busy in the field, that tracking of the numbers goes to the wayside. We want to help them throughout the year.
2. There’s a lot focus on hindsight. ‘I sold some corn for $3.50, and now it’s $4. What was I thinking? We try to minimize the focus on hindsight and minimize the focus on crystal ball predictions. What can we do today to make the farm better? Maybe it looks like we need to plant more of this profitable crop or reduce our land expenses.”
How important is a tool like this for farmers to ensure they’re running a smooth operation on the business side of things?
Horob: “Let’s say the average farm in North Dakota or Minnesota has a million dollars in revenue. These are million-dollar businesses and usually, there is one decision maker. And that decision maker is also in charge of labor, agronomy, has to be an economist and a bookkeeper. Farmers wear so many different hats and they’re running a big business. We want to make that financial analysis part a lot easier for them.”