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Dr. Kohl provides advice for many business issues. But what is the least listened to advice?

David Kohl, Contributing Writer, Corn+Soybean Digest

September 15, 2021

3 Min Read
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Let's trek to Coleridge, Nebraska, to the Community Building on a cold winter’s day for a large audience of producers, students, lenders, and agribusiness people. Sharing the program with Dr. Ron Hanson, Professor Emeritus at the University Nebraska and now a California resident, was a treat.The question of the day, or perhaps of the past year, was quite simple, “What advice do you as professors give out the most that is least listened to?” Wow, I am not sure I can pick just one piece of advice!

First on my list is the advice to do a cash flow statement. There are producers and professionals in the agriculture field that think this piece of advice is a farce.Comments that I often hear are that the environment is too unpredictable, a plan on paper never works, a cash flow statement is a total waste of time, or it is only for the lender.While these points need to be considered, let's venture to the high road.

A cash flow statement provides a mindset and a process that requires critical thinking about where you are going in the near future and beyond. The cash flow statement, prepared on a monthly or quarterly basis, is a schedule of the production and marketing plans and the timing of income, expenses, debt service payments, income tax requirements, and family living costs.

Related:Divide farm business income equitably

Next, the cash flow statement requires critical assumptions of prices, expenses, and capital expenditures.The power of the cash flow statement is amplified by using a spreadsheet that can stress test assumptions that provide the pathway of possibilities as one explores business outcomes. When considering their utility, spreadsheet skills should be a required part of the curriculum for high schools, technical schools, and colleges. 

Reluctance to commit to and execute a projected cash flow may be a result of concerns about the outcomes.Some alpha personalities are hesitant to develop a cash flow because they might be called out if they miss the projections.On the other end of the spectrum, the analytical personalities want their projections to be perfect.However, it is rare to be exactly on target. The movement of prices, expenses, and inflation in this type of environment will affect specific outcomes, but a well-thought-out cash flow will keep you in the zone of variance.

Dr. Ron Hanson's frustration was the lack of heeding his advice and expertise related to family business transitions and communication during the process.Oftentimes, getting the process started can be the hardest part.Whether it is the older generation stonewalling because of the loss of control, the younger generation wanting too much power too quickly, or the family shark that tries to derail the process, these factors end up costing everyone money and emotion in the end.

Related:Make a farm business plan before death or illness strikes

Wow, these two items are probably going to lead to more articles and advice not taken in the future!

Source: Dr. David Kohlwhich is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset. 

About the Author(s)

David Kohl

Contributing Writer, Corn+Soybean Digest

Dr. Dave Kohl is an academic Hall of Famer in the College of Agriculture at Virginia Tech, Blacksburg, Va. Dr. Kohl has keen insight into the agriculture industry gained through extensive travel, research, and involvement in ag businesses. He has traveled over 10 million miles; conducted more than 7,000 presentations; and published more than 2,500 articles in his career. Dr. Kohl’s wisdom and engagement with all levels of the industry provide a unique perspective into future trends.

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