GROWER ADDS $43/ACRE BY
LEARNING IMPROVED APPROACH
TO FARM BUSINESS MANAGEMENT
COACHING SYSTEM ENSURES PROFITABLE RETURNS EVEN IN TOUGHEST OF TIMES
John had been struggling to make ends meet on his 2000-acre farm for a couple of years. He knew other farmers in the area were making money, but he was running short on paying his operating note. Something had to change, fast.
He figured out that if he could talk down his landlord, seed salesman, and chemical supplier by just 10% each, he would be back on track.
But, when he approached them, it was like hitting a brick wall.
Unsure what else to do, he turned to Growers Axis®’ Iowa farming business management and crop yield data analysts for advice. We compared his farm macro costs against standards for similar operations in his area and found a big problem. And it wasn’t his input costs or his rent.
He actually had a pretty good deal on his inputs, and his rate on the 1680 acres he rented was also on the low end.
The real problem was the other 320 acres, which he had purchased. It was eating up his profit and draining cash out of his operation.
The mortgage payment cost twice as much per acre as his rented land, and he had to pay it out of cash he didn’t have. He had seen it as a good long-term investment, but in the short term, it was putting him in the hole and undermining his whole operation!
We ran the numbers and found that if he would sell that land and add the same number of acres to what he rented, it would net him an additional $.37 per bushel, and $43 per acre!
This would put an extra $150,000 in John’s pocket per year – more than enough to put him back in the green.
Now, seeing these numbers, this might seem like an obvious solution, but for a lot of growers, these kinds of challenges can be confusing and stressful. Like John, they look for ways to cut costs without considering all the factors that are straining their cash flow.
Have you ever struggled with these kinds of questions?
- I don’t want to sell my grain now because prices are down, but I need cash. How do I avoid getting hammered on my grain sales?
- How do I make the best business decisions when I’m running out of cash and I’m already at my borrowing limit?
- How can I know if my equipment and land investments are helping or hurting?
- The banks just tell me what I already know – that my balance sheet’s off – but they won’t help me figure out what to do about it. How do I get out of this cycle of always being behind financially?
There is no single right answer. Each case is unique and requires careful analysis based in a thorough understanding of business principles as they pertain to ag operations.
And with rock bottom grain prices year after year, there has never been a better time for rethinking your Iowa farm’s business plan and budgeting strategy.
Farmers have traditionally attempted to wear every hat within their operation. From generation to generation, they’ve passed down great knowledge about agronomy and production ag.
But many farmers haven’t received the knowledge and tools to make the best Iowa farming business management decisions. And this has left them with few options when markets are down.
They’ve had to wait it out and hope prices rise in time to get them back to positive. This approach has often worked, but in many cases it hasn’t. And the longer the market stays down, the more dangerous things become for farmers.
There’s a built-in risk and uncertainty to this approach: you have no control.
But what if you could take control? What if you knew exactly how to structure your Iowa farm’s budget, working capital, loans, and investments to weather the longest and darkest of market storms?
How would it feel to know that no matter what life brings, you have the skills, knowledge, and support to keep your operation afloat and headed in the right direction?
WHAT MAKES US DIFFERENT
COMPREHENSIVE FARM FINANCE SYSTEM: We’ll help you get clear on exactly what your operation needs to be profitable. You’ll understand all your land and equipment costs, how to categorize them properly, and how every aspect of your operation is affecting your bottom line. And because we also advise on the agronomy side, we can coordinate a truly complete approach for your farm.
ADVANCED AG BUSINESS KNOWLEDGE: There are places for recent ag business college grads to work and develop their skills, but Growers Axis® is not one of them. Our team has decades of experience and in-depth knowledge of farm finance. We’ve seen the system from every angle, including personal farming operations, advising growers, and even servicing operating notes.
PERSONALIZED SERVICE: Your dedicated advisor will work closely with you to make sure you understand exactly how to make your operation the most profitable. We’ll coach you through everything you need to know and discuss key decisions and strategies for a unique business plan for your Iowa farm.
WORKING ONLY FOR YOU: We are not doing this to help vendors, banks, or any other outside entity. We work for you and you alone – your success is our success!
OPERATION PERFORMANCE ASSESSMENT
The first step is collecting and organizing all your farm financial and crop yield data so we can create a complete picture of your Iowa farming business.
Our Iowa farm business planning and budgeting experts will gather profit-and-loss statements, assets and liabilities, debt, income, working capital, operating costs, payroll, and more. This ensures we have all key information needed to analyze the financial health of your operation.
Once we have all the information, we start crunching the numbers to prepare you for your banking conversations and help you know which opportunities to look at.
We’ll evaluate your operation from a cash flow perspective, and we’ll examine all the key ratios and benchmarks banks will be looking for. Together, we’ll create a business plan for your Iowa farming operation, focusing on optimizing your assets, liabilities, and operating costs.
A plan only works when it’s implemented. So we’ll walk with you step-by-step to execute on the plan we’ve created together. We’ll help you prepare for key meetings with bankers by giving you a solid understanding of where your operation stands on all essential financial factors.
We’ll help you adjust your equipment investments to match your land capacity. We’ll coordinate with our agronomy team to help you get the best yield and ROI. And we’ll also help you evaluate your land investments, making sure that, both short-term and long-term, they’re working in your favor.
FREQUENTLY ASKED QUESTIONS
My family has been running our farm for generations, and we have set ways of doing things. Why would we want to change things now?
There’s so much you can’t control in a commodities business. On the other hand, there’s a lot more you can control than many farmers think… if you’re willing to consider different approaches. Things that work when prices are up can backfire in a long downcycle. So it’s important to regularly examine your cash flow and investment strategies and make sure they’re setting you up for profitability.
If I get rid of some of my assets, won’t I have to pay more in taxes?
Nobody likes to pay taxes. We get it. But it’s important to look at the numbers objectively so you understand the real cost of holding onto assets that aren’t giving you a profitable return. What you do with that information is always your choice to make.
My financial records are nobody’s business. Why should I trust you to look at them?
We know opening up your books can be uncomfortable. What clients tell us is that once they do, and we start to help them make better sense of their situation, they get a huge sense of relief.
As professional coaches, we’re bound to maintain confidentiality, so you can rest assured no one else with ever have access to your sensitive financial information. We’re not in your pocket to get you to buy products from particular suppliers. We’re 100% on your side of the table.
Don’t just take our word for it — we’re happy to put you in touch with other farmers we’ve partnered with so you can hear their experience straight from the horse’s mouth.
Our family doesn’t usually talk about money. And when we have, it hasn’t gone too well. How can we make sure everyone gets on board and feels like they’re getting a fair shake?
Farmers have told us that bringing in an outside, impartial advisor and focusing on the numbers has helped bring everyone together, working toward a common goal.
Times are tighter than they’ve ever been. Why would I want to add to my expenses by hiring a consultant?
We know that on the surface, it might seem like our services just add to your costs. But if you were being sued, would you invest in legal services to help protect your interests? And even though times are tough, are you still paying an accountant to lower your tax bill?
As dedicated business advisors, we provide another type of professional expertise to not only protect you and reduce your costs, but to help you make more money!
You can absolutely keep running your farm business just as you’ve been doing for years, but there’s a cost to that as well — both financial and psychological. As a business owner, it’s important that you consider not only your costs for any big decision, but your expected return. And our entire job is to maximize your ROI on everything you do in your operation.
You don’t have to go it alone anymore. We’re here to stand by you, making sure you have the knowledge, tools, and support on the business side of your operation to maximize your profit.