Financial Tips for Growing Your Agricultural Business
Given the success many ranchers and farmers have experienced over the past few years, we often hear of families or organizations looking to expand their agricultural business.
Many factors go into making sound financial decisions about your farm or other operation, which today include concerns like: increasing land values, higher interest rates on equipment and property, and fluctuating crop and livestock prices. Those in the industry know that the concerns don’t stop there.
Plus, expanding an agricultural business can be very capital intensive, requiring significant financial resources. Any mistake along the way could end up becoming a large barrier to success. It could even wipe out years of other smart decisions… and profits, too.
So, perhaps you are one of these hard-working folks. You’ve had success with your farm or other operation, and you’re looking to grow. This means you most likely know your market very well! However, it is crucial to seek the advice of other trusted farmers, bankers, tax advisors, attorneys, financial planners and real estate advisors. This will help increase your odds of building a profitable farming operation in the long run.
All in all, the journey is long. But your budding agricultural expansion can start with these 4 steps:
- Are you looking to buy additional agricultural land to add to your portfolio? It is helpful to enlist the help of a qualified attorney to make sure you title your new land acquisition properly. This will minimize the negative effect of any potential lawsuits.
- In addition, consult a tax advisor to see if buying said land is more advantageous to you in the first place, versus the beneficial deductibility of lease payments.
- Work with a financial advisor to “crunch the numbers.” This will help you see how financially viable your project is, plus give you an outside perspective on your planned project. Another consideration: accurately estimate the additional capital outlays that would be involved in buying or renting farm equipment, additional labor, and supplies.
- Talk with your banker and real estate professional well in advance. You’ll need this to secure your lending amounts. This way, you’ll know that the funding required is attainable, and what it will cost.
We wish you, your family, and your farm a healthy, successful 2018!