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Hone Your Farm Business Management Skills

Hone Your Farm Business Management Skills

Follow checklist of skills to improve your farm business' bottom line in times of lower grain prices

Slipping crop prices trim margins. This intensifies the challenge of farming.

"My first thought when people say they are 'only' getting $9 and $10 for soybeans is that those prices are still double levels of most of the last 35 years," says Dave Baker, Iowa State University farm transition specialist.

"That suggests some farmers have been lulled into thinking recent crop prices are normal. Both beginning farmers and existing farmers should recognize margins will be tighter for the foreseeable future."

Related: 4 Bookkeeping Tips: Key to the Farm's Financials

Follow checklist of skills to improve your farm business' bottom line in times of lower grain prices

During good times, even top managers get a bit lax. Baker's recipe for tightening management includes:
• Be a good recordkeeper.
• Keep educating yourself. When you graduate from college, you will not know it all.
• Continuously seek out information about farm management, recordkeeping and how to run a business.
• Keep and use the same type of information on your business that "big data" gathers on you.
• Seek out successful existing farmers and approach them for management advice as mentors.
• Lock in interest rates. Variable-rate loans have nowhere to go but up.

Beginning farmer help
Beginning farmer management assistance and loan programs have been around for years. Historically, some farmers have been reluctant to tackle the complexity of such programs. "Younger farmers can take advantage of them," says Baker. "That's part of the continuing education they should be doing."

Beginning farmer loan programs are good sources of credit. "But it's still debt, and it still has to be repaid," he notes. "Farmers need to consider their entire debt, equity, income, expense picture, and factor all debt payments into their cash flows."

Build relationships
Good communication skills can help you get, and keep, land. Ten percent of all Iowa farmland is owned by women over age 75, predominantly farm widows. The next generation to own land will be in their 50s and 60s, as they inherit land from their parents. Some retired farmers and many widows move into town.

"Get involved in community activities. Develop a reputation as a leader and for honesty," says Baker. "Those actions and traits will get noticed in the community and get your foot in the door.

"Network with other ag business leaders in the community. Networking contacts are more likely to mention names of their network contacts when opportunities arise.

"Study programs that benefit the older generation," urges Baker. "Being able to explain those programs to landowners can both attract and keep land."

Think outside of the box. Don't just copy what everyone else is doing. Be innovative. Be creative. Strive to determine what other people want in service. For example, some farmers have developed solid sideline businesses, such as crop scouting, or tax or insurance services.

Expand your farm business skills at the Farm Futures Ag Finance Boot Camp, Jan. 6, 2015, and the Farm Futures Farm Business Summit , Jan. 7-8, 2015, in St. Louis. Click for more details!

TAGS: Soybean
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