This time of year, farmers start spending a good chunk of their day in the seat of a tractor or combine. As the harvest season continues, ‘windshield time’ provides a great opportunity to start thinking ahead for the next year. Producers who begin planning for 2025 early will have a competitive advantage over those who don’t. Now is the time to learn the financial pulse of how your operation is performing.
Independent financial consultant, Gary Sipiorski understands it is tough to ask a farmer to stop working and turn their attention to numbers, especially this time of year. He recommends farmers to:
Set aside time. Two hours a week to strictly focus on financial planning. “When you are fresh, in the early mornings is best and before the to-do list is delegated out,” he says.
Focus without interruptions. “These four hours a week may be the most profitable hours for understanding where the money is coming from and going,” he notes. “You don’t have to do it all in one sitting. Nights are difficult when the mind is tired. “
Making time to carve out conversations. “Even if they are just being planned from a tractor seat. It will put you ahead of the curve when it comes to initiating your business plans for the upcoming year,” he shares.
Two Things to Do Right Now for Solid Plans in 2025
Start implementing quarterly reviews.
According to Sipiorski now is a good time to touch base with the person responsible for the financial records of your operation. “Quarterly reviews are best for Cost of Production (COP), along with Profit and Loss (P&L) projections,” he says, noting that it would be nice to have had an end of the second quarter tea meeting with your lender, accountant, veterinarian, nutritionist, etc. “If not then, by the end of the third quarter. There should be some serious evaluation. I understand how busy cropping gets in October, but a November meeting should be set to talk with your accountant to help you with year-end taxes.”
Projections need to be finalized in December.
“Balance sheets should be started in December with an accurate completion in January,” Sipiorski suggests.
Four things to help maximize a margin in 2025.
- Put extra attention to expenses. Pay attention to each expense item. Sipiorski suggests paying extra attention to the larger expenses and discussing them with family, managers, and employees to all consider if any savings can be found.
- Analyze custom work. Custom tillage, manure handling and harvesting should be visited with a pencil to see if owning, renting or custom work makes sense.
- Maximize components and milk quality. Maximizing milk components and quality should be worked on, especially with limited bases for shipping milk pounds.
- Marketing Discussions. Milk marketing using government-supported programs and discussions with brokers should be researched to find a margin. Remember owners always make the final decisions.
