The Old Way to Make Money – Earn It!
I saw a great post by Chuck Schwartau from the University of Minnesota Extension deparment. The post was related
to the dairy industry, but is applies to all farming and any business. For the last twenty years or so, it seems that most people thought they could make easy money by borrowing more than they earned and putting it into stocks, bonds or even farm land.
These days, it looks like we will have to go back to making money the old way – Earn it with both hard work and smart work. Chuck has many ideas for the dairy industry. Chuck refers to taking shortcuts that are less productive than doing something exactly the way that it needs to be done.
Are you taking these shortcuts. If you are, review what the right way is and start implementing it. It may take more effort, time or capital, but in both the short-term and long-term, your bottom line will be much better.
Some areas to look at are:
- Budget – Is it up to date. Are you preparing the budget in conjunction with your accountant and banker. Is the budget both realistic and prudent to maximize the bottom line. Do you show one budget to your banker and then live by another easier budget. Your banker is your partner. You need to be honest with both him and you.
- Production – Are your production plans up to date for what the input costs are and related possible income returns. There are may sites out there that can help you with this process. One geat site is the Iowa State University extension department. Use them to maximize your potential return.
- Capital – Do you have adequate capital. If not, how can you get it. Look at a part-time job for you or your spouse. Many farmers have down time in the offseason. This may be a good time to earn some extra money from non-farming sources.
- Labor – Is your labor force at the correct size, knowledge, pay scale, etc. for your operation. At you maximizing your return on your labor. Do you spend too much time on the tractor and not a enough on marketing and managing your crops.
These are just some of the areas you need to look at. Sit down with your team and brainstorm on what other areas you need to look at.
As Chuck says make sure you cut the right costs. “Do not cut off your foot just because it will save wear on one shoe!”
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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