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How to Keep your Farm Business Organized

About the Project

I am sure that at this point if you are like the majority of normal people on this earth, you will be sitting staring at the pile of documents in a shoebox patting yourself on the back for at least making the effort to shove them into a box.

The good news is that for not much more effort you can have all your financial documents organized and ready to be used at a moments notice.  Its simple, easy and the majority of your time will be spent in the initial set up.

If something should ever happen to the person in your business that takes care or the day to day aspects of your businesses or personal finances this will help other come in and understand where everything is sitting.  So valuable!


Materials and Tools

  • File folder box
  • 13 folders
  • Tax returns for the last 7 years
  • Your individual retirement savings and investment accounts
  • Your children’s education/investment savings plan statements
  • Your will and living will.  (If you need to make one talk to your lawyer, or if it’s quite simple, go to Legal Wills)
  • Your home and auto insurance
  • Your life, disability and critical illness insurance
  • Your group benefits plan
  • Your company retirement plan
  • Your credit card debts
  • Your loans for car, student loan, line of credit, other loans
  • Your mortgage
  • Your bank statements
  • Your lawyer, accountant and financial advisor information

 

General Instructions

Once you have collected all the above personal information, simply file it into individual folders.  Then take a snap shot of all the information for you to update every 12 months after that, using the downloadable chart provided.  Keep a record of this on your computer and also in one of your files in your box.

Why You Need a Capital Budget Plan for Your Business

If you’ve ever had to phone your banker from the auction mart about an un-planned capital purchase, you probably could use a capital budget plan.

Another component of financial risk is understanding your capital budget(i.e. what items in an ideal world do you think you need in the next 12 months?). This information is helpful for your banker, as it helps him/her plan for your farm’s future.

You need to have and understand your capital budget plan. Not only will it help you make good with your banker but it will also help to take the emotions of decision making in relation to the market place.

Watch Reg Shandro explain why you need a capital budget plan.

This workshop was funded in part by the Agriculture & Food Council of Alberta


Why you need a capital budget plan for your farm business

Risk and Return in Agriculture: An Intro to Risk Management

In essence, risk management means that the higher the risk, the higher return. However, in reality, risk managment in agriculture is somewhat different.

Watch Reg Shandro introduce the concept of risk management in yourfarm business.

What is risk management in agriculture?

The agriculture industry is unique with a different set of risks and rewards compared to other industries.  If you want to be successful you must know how to manage the risk to maximize your returns.

This workshop was funded in part by the Agriculture & Food Council of Alberta

 

 

The 6 Financial Options on Your Farm

What are the financial options for your farm?

Reg Shandro boils it down to 6 distinct areas where your farm businesscan get revenue from.

1. Surface right revenues;

  1. Inheritance or lottery;
  2. New borrowing or restructuring debt;
  3. Sale of Assets;
  4. Off Farm income;
  5. On farm income;Take a look at which ones are within your control, I bet it’s fewer than you’d think.

    If you’d like to follow along in figuring our the 6 financial options for your farm, you’ll need:

    1. A piece of paper divided up like in the video;

    2. A red pen and green pen;

    Watch the video to figure out how to do the rest!

This workshop was funded in part by the Agriculture & Food Council of Alberta

 

 

How to Understand Your Farm Operation’s Working Capital

 

Working capital = your current assets MINUS your current liabilities (what you need to pay off in the next year)

It’s a representative of your ability to weather your short term commitments. Different farms (with different focuses, for eg. wheat vs. dairy) will have different working capital expectations.

By rule of thumb, you should have 25% of next-years expenses sitting in working capital. So, if you have 1.25 million dollars of assets sitting there in cash or inventory and you have 1 million dollars of expenses next year, then you will have a $250,000 buffer to allow for some breathing room for next-years expenses. If your farm has no breathing room, you’ll have to have a plan for what will get you through the down curve, or unexpected events in your farming production.

Watch Reg Shandro shares a few simple tips to take a look at how your capital is working for you.

This workshop was funded in part by the Agriculture & Food Council of Alberta

 

Life Insurance: Who Should Pay the Premiums in Your Farm Family?

Derrick Peterson talks about who, in your farm family, should be paying the insurance premiums for life insurance.

Sometimes it makes sense that whoever is receiving the benefits of an insurance policy is the one that actually pays for the policy. So, in a scenario where the son is receiving the farm, then he would also be the one to pay the insurance premiums. When the son is very young it will certainly be Mom and Dad’s responsibility. However, once the young farmer hits around 30 years old, then often he would be in a position to start paying the insurance premiums.

This workshop was funded in part by the Agriculture & Food Council of Alberta

 

When is the Right Time for a Farmer to get Life Insurance?

Derrick Peterson talks about when is a good time for farmers to invest in a life insurance policy.

Trying to get life insurance in your 60s is a lot more difficult than getting it in your 30s. This is particularly so because health issues start to come into play as we age. Most farm accidents happen when people are younger, so it’s best to get insurance as soon as you can pay for it.

Once you buy life insurance and continue to pay the premiums, it’s yours for life. So, even if when you’re older and have a health issue, you already have the life insurance and no one can take that away from you. Therefore, in terms of planning, it’s prudent to take advantage of the health scenario you’re in as a young farmer.

This workshop was funded in part by the Agriculture & Food Council of Alberta


When is the right time for a farmer to get life insurance?

 

Dave Limpert’s Family Farm Story

Almost 15 years ago, Dave Limpert and his brother tossed a coin to see who would get to stay on the family farm.  We spoke to Dave at his farm near Okotoks, Alberta, and captured some of these powerful quotes that we pulled from his interview where Dave shares his incredible story, looking back on this and other defining moments for their family farm.

Make sure you scroll down to check out the full video of Dave’s story, where he reveals at 2:21 into the video why his mother ended up paying so much in taxes after her husband’s unexpected death, and at 9:32 he identifies something that is causing family farms in Canada to disappear.

Tell us about a pivotal moment for your family farm.

There was a couple of defining moments in the history of my family and ranching and farming, that could have changed things and went a different direction.  Probably the most impactful one was in 1981. My dad was farming with my grandfather and my brother and I at 18 and 16 – I’m the oldest of 6 kids.  We were just getting into the family farm, and my dad passed away, at age 46.  One day he was there, and the next day he just wasn’t there.  And the most unfortunate part of that whole story is that we had never had anyone drive into our yard and teach us anything about financial management on a business or a farm.
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What’s the biggest challenge facing young farmers?

A lot of the reason that the next generation, not even if they want to but can’t [take over the farm], is that we’ve paid for the exact same dirt four or five times over.  That has to be stopped, or everything we’re doing is for nothing.  That’s why the next generation can’t take over.  It’s not that they don’t want to.  They can’t.

 

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What’s one major lesson you’ve learned about farming?

Harvest is a funny time of year, because while you’re harvesting, what are you thinking?  Gotta get done, gotta get done.  But the moment you’re done, what are you thinking?  Wish I had more, wish I had more. Right?  And I remember the day we were down there and my brother came in with our brand new John Deere combine, and up in the quonset I was leaning on that same 65’ chev half tonne that I learned to drive when I was like 8 or 9 years old.  And I was just kicking rocks there and going “man I gotta put that combine to work”, you know?  I got a payment coming out, and combines are a funny machine because you use them about 150 hours a year, and then they sit in the quonset.  So I’m kicking stones, and as my brother’s walking down from the quonset and I was just kicking those stones, looking down like this, and I had a defining moment.  And I realized where all our money was.  I was standing on it.  I was an asset millionaire, but I didn’t have enough money in my pocket to go to town for a coffee.

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Dave Limpert’s Family Farm Story