8 Rules Every Young Farmer Should Follow

A panel of farm business and financial planning experts spoke to young farmers at the recent Farming for the Future Conference in Ames, Iowa. Condensed from the presentations, here are eight rules every young farmer should follow in 2017.

1. 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.

2. 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.

3. Know your breakeven. Get accurate, factual data about your costs. Design a marketing plan with price and date targets and stick to it. Lock in margins whenever possible.

4. 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. Renegotiate land rent. Seek volume discounts in seeds and chemicals. Offload unproductive assets. Extend repayment schedules on equipment and real estate loans.

5. 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 work, snow removal, truck driving.

6. 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?

7. Don’t try to do it all. Focus on your top strengths and skills; hire the rest out or partner with someone who has skills you lack. 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.

8. Persevere. Economic turbulence brings opportunity.

Learn more:
Donald Timmins, CPA, Timmins, Jacobsen & Strawhacker, LLP, Des Moines, Iowa,  http://www.tjscpas.com/
Tim Meyer, Producers Livestock Credit Corporation, Omaha, Nebraska,  www.producerslivestock.net, tmeyer@plmcoop.com
Alejandro Plastina, assistant professor, Iowa State University, Ag Decision Maker: www.extension.iastate.edu/agdm, plastina@iastate.edu

source: successful farming