Uncover opportunities for your business

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Too often, members of the farming community do not consider their operation to be a business. You need to remember - whether you raise animals, vegetables, or cash crops - you do own a business. It is, therefore, imperative that you surround yourself with the right set of professionals to help you meet some of the common obstacles that a growing business faces.

Use the following strategies to help you uncover opportunities for your business and obtain an even greater level of success.

1. Write a plan.

Whether starting a new farming operation, or seeking financing to expand, you need a well-thought-out and written business plan. The plan should include a description of your business, including products or services you produce, your marketing strategy, an operational analysis of your production, management and human resources, and financial projections.

2. Access capital.

One of the greatest challenges that every business owner faces is accessing the right amount of capital, at the right time, at the right price. Whether updating your facilities or buying more cows, it's important to have a reliable source of money that can be borrowed quickly.

Don't limit yourself to traditional ways of accessing capital, such as working capital and term loans. Consider the following as well:


  • Securities-based loans.
  • Home equity loans.
  • Letters of credit.
  • Small Business Administration loans.


3. Manage cash flow.

Keeping adequate funds on hand, while maximizing your return on "non-working" capital, can be difficult and time-consuming. One solution is a working capital account. This type of account combines cash management, investment and credit benefits, and includes such features such as check-writing, a daily sweep of cash balances into money-market accounts, and the ability to borrow against securities.

4. Plan for retirement.

In order to attract talented individuals and encourage loyalty and productivity, you may need to offer incentives, such as retirement plans. While employee retirement plans are great benefits, they also can generate substantial tax savings for both you and your employees. As a business owner, several options exist - IRAs, profit sharing plans, and 401(k) plans, to name a few. To determine which is best for your business, work with a qualified financial planner or accountant.

5. Develop a business succession plan.
If you want to pass your business on to a relative or partner - and have it remain intact - you will need to develop an estate plan to help ensure a smooth transition. By planning ahead of time, you can safeguard your business and reduce your estate tax and gift tax consequences. Here are a few tools that can help you do just that: life insurance, buy-sell agreements, family limited partnerships, limited liability companies, lifetime transfers of business interests, and even philanthropic gifting.

6. Invest your personal wealth.

Do not neglect your own financial future. Whether you're just starting out, or nearing retirement, it's important that your personal investment strategy not only generate additional wealth, but also preserve the assets that you've worked so hard to accumulate. Develop an investment strategy that covers all of your concerns, like educating your children, retiring comfortably, allocating your assets and devising a personal estate plan.

7. Forge alliances.

Successful entrepreneurs draw upon a wide circle of sources when seeking business advice and making decisions. Ask your neighboring farmers and business owners if they know of a great lawyer, financial consultant, CPA, insurance specialist, or technology expert.

David Chlus is a first vice president of investments with Smith Barney, Inc., in Utica, N.Y., and partner in a 90-cow dairy.


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