- Live below your means. Way below. Build up equity. Don’t buy equipment you don’t need just to avoid paying taxes. Do you need all that rented land? Revise your family living expenses. Downsize. Sell equipment assets you no longer use or need.
- Get along with your family. There’s nothing worse for a farm than a family that doesn’t speak to each other. Communicate about finances with your spouse and other business partners before there is a problem. Keep everyone informed of major business decisions.
- Know your breakeven. Get accurate, factual data about your production costs. Design a marketing plan with price and date targets and stick to it. Lock in margins whenever possible. Seek professional financial advice, this can be a good investment.
- Cut costs. Revise your scale of operation and fixed costs. Visit with your agronomist, lender, tax advisor, and crop insurance agent. Be very careful with new capital expenditures. Landlords will hate this but renegotiate land rent, with an agreement that when farm economics improve so will land rents. Seek volume and early order discounts in seeds and chemicals. Offload unproductive assets. Extend repayment schedules on equipment and real estate loans when it makes good business sense.
- Diversify your income. If you do have an off-farm job, this is not the time to lose it. Consider alternative sources of revenue with your assets, such as custom farm work snow removal, truck driving. Put your assets to work.
- Write a business plan. Create a formal statement of your business goals. Include the reasons they are attainable and your plans for reaching them. (A budget is not the same thing as a business plan.) Know and respect your customers and your competition. Prepare for the worst. If you partner with your brother and something happens to him, could your farm business survive? Make sure insurance policies reflect business needs.
- Don’t try to do it all. Focus on your top strengths and skills; hire the rest our or partner with someone who has skills you lack. Trading farm tasks works. Don’t forget what makes you unique. Take time to assess potential business partners and service providers to make sure they are the right fit.
- Persevere. Economic turbulence brings opportunity.
Source: Betsy Freese, Successful Farming
Submitted to Barn Media by:
CSU Golden Plains Area Extension, Ron Meyer, Area Extension Agent (Agronomy),
(719) 346-5571 x 305, email@example.com
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