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Finance First: Planning for 2019

Ask yourself: What is our farm’s financial status, based on the information we have now?

I want to do a better job of business planning for my farm, but I’m not sure where to start for 2019. What are your suggestions? — H.B., Ohio

Winter is a prime time to plan for the upcoming growing season. The first step is to get a solid foundation by understanding your farm’s financials.

Next, look to the future. Planning is all about considering potential scenarios and asking, “What will this mean to us? What can we do to prepare for or take advantage of these potential scenarios?”

The process of planning gives us a window into what the future might look like. Even if it doesn’t necessarily look great, we can at least gain some peace of mind through knowing the range of possibilities. The key, though, isn’t just planning; it’s what the planning does for us, as our plans turn into action.

Ask yourself: What is our farm’s financial status, based on the information we have now? Where do we want our farm to be? What might the future look like? Once you dive into the answers, focus on any changes you’ll need.

Work to identify any threats to your plan. These might be inside of the business, or factors in the wider marketplace. Awareness of threats lets us be more prepared.

Also, when it comes to lenders, they’re not looking for perfect financials. They may prefer that, but they live in reality. What they really want to know is that their clients understand their own business.

The planning process forces us to understand our business better. Then when we meet with our banker, we can speak clearly and intelligently about what’s happening in our operation.

Bankers also seek clients who take action on tough decisions that must be made. They want to know if you’re willing to act in the best interest of the farm business.

The goal isn’t just creating the plan, but becoming more familiar with the business, looking into the future and identifying changes to move closer to objectives.

Frye is president and CEO of Water Street Solutions. waterstreet@waterstreet.org

 

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