Where are you in your plans for 2014? This is going to be an especially important year for financial planning on your farm.
Taking action is difficult when you don't have the information you need. In the face of uncertainty, most people tend to do…nothing. Moving closer to some picture of certainty can help you put the pieces together. Gradually, the full portrait starts to take shape.
One way to put the big picture together for 2014 is to go through a financial analysis of your operation. Having that information can help you make the best decisions for your operation in what could be a new economic cycle.
Here's one way an analysis may help. Many farmers consider making equipment upgrades at this time of year. That may be on your mind too. Maybe it's even become a habit. For many, that's worked out lately, but you need to ask yourself: will it always be the best thing to do – in the big picture of your operation?
This year, especially, you can't just keep doing the same thing you've always done. Sure, it could be fine, but do you really want to take a chance based solely on a gut feeling? Wouldn't you like to have your farm's numbers backing up the decisions you're making?
When your numbers and your choices are in alignment, you have the best chance of creating the success you want for your farm. Using the farm's finances to help make important decisions will set the best farm operations apart from the rest in the coming years.
As you're thinking about whether you'll make equipment upgrades this year, a financial analysis of your operation can show you equipment benchmarks – and how your operation stacks up. It also helps you make these decisions in light of tax planning choices you and your tax accountant will be working through in the coming months.
An analysis can confirm areas of your operation where you were pretty sure you're doing well. It also reveals areas where you might not have realized there could be a potential red flag or area of concern, allowing you to make better decisions in light of that information.
Having the data you need to make the best decisions possible will be key in light of how 2014 appears to be shaping up financially for farms. It's your tool to build that full portrait as you make year-end equipment and tax planning decisions for your operation.