10 Financial Tips for America’s Young & Beginning Farmers
March 26, 2019
- Sweat the small stuff. Keeping accurate and detailed records encourages both short-term and long-term financial planning. Not only does it help you stay organized and make better management decisions, it makes it easier for your lender to assess your financial situation.
- Develop a business and marketing plan. You will work smarter and improve your odds when you focus and organize your goals.
- Evaluate your capital investments for profitability and payback. Keeping track of how long it will take to generate enough cash flows from a capital investment to justify the investment will help you make better financial decisions for the future.
- Know your costs. When you consider your cost of living and expenditures – including depreciation and family living – you’ll have a better understanding of your overall financial situation. Your local banker can provide guidelines to monitor your financial ratios.
- Decide on what type of operation you want to run. New farmers and ranchers should either be very efficient, low-cost producers or should add value that someone else will pay for.
- Consider supplementing your operation with off-farm income until your operation is large enough to employ you profitably full time.
- Consider renting farm equipment or custom hiring instead of purchasing.
- Shop around. Getting price quotes on supplies such as feed, fertilizer, and fuel can uncover lower-cost sources. Your research might get you a discount from a local, preferred supplier that gives excellent service. Make sure product quality is part of your evaluation.
- Ask your banker about how to get access to state and federal credit enhancement programs. Some banks also offer special benefits for first-time Schedule F tax filers.
- When in doubt, ask for help and guidance from someone you trust – an experienced farmer or rancher, a trusted adviser or your local banker. You don’t have to make these important financial decisions alone.
- For help assessing your current situation and determining ways to grow your farm’s profitability and revenue, contact an ENB Agricultural Banking Relationship Manager at (717) 733-4181 or firstname.lastname@example.org.
© 2019 American Bankers Association. Reprinted with Permission. All Rights Reserved.