3 questions to ask before growing the farm3 questions to ask before growing the farm

Why do we want to do this? This question is important to ask in two different ways. First, ask it about the drive or desire to expand the farm in general: Why do we want to make our operation bigger in some way? Many have found that growth for the sake of growth often becomes harder to sustain in the long-term. Knowing your “why” behind this can help especially when the going gets tough down the road. Also ask it in terms of the particular growth opportunity that you’re considering, for example: Why this particular opportunity (piece of land, side business, etc) and not something else?

Do we know and understand how this opportunity fits in financially with our current business? Answering this question involves first getting the numbers, projections and financial data to show how the growth opportunity will drive profit to the bottom line of your operation – since that’s what business is all about. Will this new business opportunity stand on its own from the beginning? If you’re buying new ground, will the number of acres add in new efficiencies to the operation with regard to current equipment – or will it require new machinery purchases, which requires additional capital? A feasibility study looking at the new ground in light of your current operation can be helpful and give you more data for decision-making. Be sure to consider whether new efficiencies will be added or current ones taken away – and quantify it for better decision-making.

Have we considered ways to diversify our operation? Not all farm growth has to involve adding acres. Sometimes, adding a side business – whether ag-related or not – can be a good way to diversify and reduce the risk associated with being involved in just one business sector. Your operation might have opportunities to grow specialty crops or to contract with buyers to grow to their specifications for a premium. Sometimes these growth opportunities can involve moving away from familiar facets of grain farming – and your operation’s current zone of expertise – so consider that carefully before deciding whether that’s something your operation can take on.