Harvest is nearly finished. It’s time to start prepping your combines for the winter months and make that transition from the combine seat to office chair. We know there is a lot going on at the end of the year (holidays aside!) and a lot of planning is needed to prepare for the upcoming year. Our latest webinar outlines three steps to set your operation up for success.
Map Out Capital Expenditures
The first step David Widmar and Dr. Brent Gloy of Agricultural Economic Insights suggests planning for any funds that you will use to upgrade physical assets such as equipment. Ask yourself: what have those expenditures looked like in the past? How will I finance—with cash or through a loan? Make a list of the pros and cons of cash vs. other types of financing. Additionally, be mindful of how the tax decisions you make now regarding physical assets can impact your bottom line in the future. Consider looping your financial officer in before or after conversations with your accountant or tax professional.
2023: A Year in Review
While all producers have to perform year-end financial activities, not all take the opportunity to think strategically about the implications of this data. Take time to analyze your income statements and cash flow position for any worrisome financial metrics or ratios. Additionally, take the time to go over the successes and opportunities from the past 12 months. Would you do anything differently? You have a team of people to help you do this, take the time to sit down with trusted advisors and look at what happened over the past year.
Complete Our Three-Risk Exercise
To ensure you have a successful 2024—which, let’s face it, will be here before you know it—list the possible risks to your operation for the next year. Maybe you need a succession plan, or market prices are in flux. Look at everything that could impact your operation. Once you have that list, prioritize the top three and rank them in accordance with importance. Draft a summary for each risk, listing out why you think it could be a concern and write out possible ideas for navigating. Remember that trusted team of advisors you met with? Share this exercise with them to help further guide you. You might be surprised how this exercise could change the strategic operation of your farm.
After you’ve completed your three-risk exercise, it’s time to have some benchmark discussions to review the financial health of your operation. Farm Credit Mid-America offers AgCompare, a comprehensive tool for visualizing and delivering peer and benchmark comparison data to customers and prospects. This proprietary tool was created for our customers so you can benchmark your operation against peers of your size. The data AgCompare offers creates a real benefit for any end of the year or future state planning. AgCompare can compare gross income, breakdown by state/region/county and more.
Making your plan work for youNow is the time to proactively plan for next year and set up a clear path for success. If you have any questions or aren’t sure how to get started, reach out to your local office to talk to one of our financial officers.
To learn more, watch the recording of our webinar below.