I don’t know about you, but the New Year always stirs my aspirational side. I learned recently that marketing firms capitalize on this characteristic which must not be limited to me alone. They build what are called “aspirational brands.” These products are marketed to many, but only attainable by a few. Either because of limited supply or high price, the aspiration to own the product drives its popularity, keeping the brand in the must have category. Well, what I aspire to isn’t something that can be bought, and I think it is attainable by most, however it remains elusive to many. I want to become a supreme financial planner! I know, very exciting. But I have been working with farmers for the past few years and seen how the leap from operating without a plan, to working with a plan can make a huge impact on the sustainability of the farm operation.
How does having a financial plan help? Well most businesses, and individuals for that matter, take their income, subtract their expenses, and whatever is left over is their profit for the year. With a financial plan, you start the year with your expected income, plan the profit you want to earn, and create an expense budget with the remaining funds. Obviously, there is some give and take in the planning process. But most people find that planning for their profit puts a whole new spin on their finances. Also, when you have a plan, you can monitor as the year goes along. This allows you to make changes as you go if you see expenses rising or income dropping. The ability to make course corrections means you are likely to end up where you want to be at the end of the year, rather than scratching your head and wondering where all the money went.
Luckily, there are great resources out there to help with farm financial planning. To get the basics, UVM Extension offers Intro to Ag Financial Management. This class is being held in February, and can help you take the financial reins of your farm. If you’re ready to make some changes in your farm business, the Farm Viability program offers up to 18 months of technical assistance. This program helps farmers create a business plan and financial plan for their growing operation. The UVM Extension New Farmer project has recorded presentations on their website, covering several financial topics. You may even be interested in the online webinar offered on January 31 focusing on filing taxes as a farm business.
A whole slew of information about pricing farm products for a profitable farm is available at http://www.uvm.edu/farmpricing/. Intro to Pricing Workshops will be held at the NOFA-VT Winter Conference and online. Farmers who participate in these workshops will be eligible for intensive clinics that focus on creating strategic pricing plans and also individual mentoring.
As you dive into this new year, I hope you find ways to turn your aspirations into realities. If any of that has to do with creating a profitable farm business, get in touch with us and we’ll see how we can help.