As producers work their way through 2006, David Kohl, professor emeritus of agricultural and applied economics at Virginia Tech, recommends that they place the following items on their watch list. (These are potential red flags that could signal problems for the business.)

  • High debt load with low working-capital reserve.
  • Good strategy, but poor execution.
  • Little profit with high capital appreciation.
  • “Bigness on the brain,” where all you want to do is grow, grow, grow.
  • Communication problems.
  • Natural resource and community challenges.
  • Negative net income and growth in eight of the last 10 years.
  • High-maintenance people who are not fully occupied while at work.