Tips for young farmers on farm finances

As a young farmer, there are certain things you must equip yourself with in order to run a fruitful and successful farm business. Experts have recommended the following tips as blue print for any beginner with a dream to grow a farm business: Keep records Do not joke with records. It is the compass that […]

As a young farmer, there are certain things you must equip yourself with in order to run a fruitful and successful farm business. Experts have recommended the following tips as blue print for any beginner with a dream to grow a farm business:

Keep records

Do not joke with records. It is the compass that shows how well your farm fared. “Make record keeping a priority on your farm and do it well. Knowing exactly what state your farm is from a financial and production standpoint is beneficial in making sure you are on the right track for a successful farm business,” says an expert on Farm and Dairy.

What is your cost of production?

Understanding your cost of production is very critical to your farm’s success. “A cash flow statement can help you identify where money is coming in and how it is being spent on your farm,” the site reiterated.

Farm business analysis

The best way to understand your cost of production is to do an annual farm business analysis. This will help you to compare your business against other top producers in the area you operate. “A business analysis is also an excellent tool to monitor progress, set goals and monitor progress on those goals,” Farm and Dairy also said.

Do balance sheets annually

Every year, do a farm business and personal balance sheets (a statement of the assets, liabilities, and capital of your farm business). The balance sheet shows your farm’s current standing.

Your farm and family living

Finally, you must strike a balance between your farm finances and family living. “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,” the site also said.