These are the top five things young and beginning farmers should think about when it comes to their farm finances, according to Dianne Shoemaker, assistant professor and field specialist in dairy production economics at Ohio State University.
Do a farm business and personal balance sheet every year. The balance sheet gives you a snapshot of your farm’s current standings.
Make record keeping a priority on your farm and do it well. Knowing exactly what state your farm is in from a financial and production standpoint is beneficial in making sure you are on the right track for a successful farm business.
Farm business analysis
Doing an annual farm business analysis forces you to do a balance and will help you to understand your costs of production. This will allow you to benchmark your business against other top producers in the area. A business analysis is also an excellent tool to monitor progress, set goals and monitor progress on those goals.
Know what it really costs you for family living — People tend to underestimate this. Plan and grow your business to meet realistic family living needs that will increase over time. A personal balance sheet can help you identify what those needs are.
More Farming 101 columns:
- The farm balance sheet
- 5 items for your farm’s cash flow statement
- Personal and business records: Keep them separate
- What to include in your farm business plan
- How to approach a lender: Tips for getting a farm loan
- How to use microloans to get your farm started
- Saving for the future: 6 tips for young farmers
- How to create a farm safety kit
- 5 tips for child safety on the farm
- 6 tips for livestock safety
- 4 tips for transporting livestock
- 5 ways to better understand tractor stability
- 6 farm equipment hacks
(Farm and Dairy is featuring a series of “101” columns throughout the year to help young and beginning farmers master farm living. From finances to management to machinery repair and animal care, farmers do it all.)
Source: Dianne Shoemaker, Ohio State Extension
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