There is no substitute for the basics. No matter how sophisticated we become or how much technology we employ, we must have a foundation where we know what we have and what we want. Farm businesses must continually examine two basic questions. These sound simple enough, but they are difficult questions and ones that are not frequently asked. This is the basic level of analysis that we cannot escape if we want to have a successful farm business.
Economists divide resources into four basic categories of land, labor, capital, and management.
There are many variations around the same theme but, in general, this is the easiest way to think about the resources that the farmer has to manipulate. The question of resource availability is really one of acquiring the use of the resource. There are many examples of this distinction. We can rely on our own or our families' labor or we can hire labor. We can use our own equity or we can borrow money.