Farming is a costly industry to be a part of, much alone start. According to financial planning experts at Farm Credit Canada and some of the companies they partner with. Young and upcoming farmers should recognize the necessity of solid record-keeping practises as they progress toward ownership, as well as using innovation to generate value from the business.
Establish good record-keeping habits
According to Terry Betker, President and Chief Executive Officer of Backswath Management Inc., a prairie-based farm management consulting firm, strict record-keeping techniques are crucial to determining whether a business is successful and profitable. It makes managing a larger company easier over time. Furthermore, if you are actively participating in record-keeping, you are building a foundation of information and understanding for future decisions.
Yan Lafond, a Manitoba grain farmer, thinks that paying GST quarterly is particularly beneficial in keeping documents up to date. This forces him to think about money more frequently and stops him from deferring payments. His agricultural business advisers benefit as well.
Profitability through creativity
Building personal equity should be a focus from the start, according to Colin Sabourin, a Financial and Investment Advisor at Harbourfront Wealth Management in Winnipeg. As difficult as it may be, doing so provides additional long-term business management options.
“Try and put away $10 dollars per acre. Don’t just take the profits and buy a new truck,” he says. “If you’re struggling to get by the number one priority is trying to make the farm successful.”
The same opinion is expressed by Betker, who adds that buying land and paying off debt efficiently is one of the most effective solutions.
However, land might be excessively expensive in other regions. Land and equipment loan debt, which is a reality for many, must be leveraged in a way that supports company goals, such as whether the loan will be floated for short-term sales or as a long-term asset.
Betker urges young farmers to be creative in these situations. Purchasing specialized machinery, cost-sharing assets with peers in similar situations, fitting a small number of cattle into existing farm infrastructure, and just attempting to save money wherever feasible are all examples of inventive equity-building. Off-farm income might also assist in paying the expenses.