Hoping for higher prices will not save you
Welcome to my column. One thing you will learn about me very quickly, I’m the guy that says what everyone is thinking but is uncomfortable saying. I do this because I truly believe that all of our hard-working farmers and ranchers need to hear the hard truth.
Today’s discussion is around “Hoping for higher prices will not save you.”
During my five years as an ag loan officer in Western Kansas, I cannot tell you how many times I heard “well, hopefully prices go up next year and we will be good to go.”
That is literally how cash flow projections are built these days. Built on hope. Built on living in the fantasy land of higher prices.
Then judgement day comes. The day of reckoning. The day when your banker has to call you and say — “We can’t renew your operating line this year,” or “We have to take another mortgage and eat up all of your equity.”
This frustrates me, why?
Because it doesn’t solve the foundational issue. Doing the same thing year after year and hoping for different results isn’t a strategy. It’s INSANITY.
I share this because I want you to consider the possibility that there is a different path for you. BUT some things have to change. We can no longer do what our parents and grandparents did 30-60 years ago. We have to look at the facts and make a course correction in our business. You have to be willing to change things up and do whatever is required to build cashflow.
What’s funny is back in 2012 greed took over everyone for the most part. The banks started loaning money on net worth. And farmers started buying assets because of net worth.
And we forgot about the one foundational resource that makes every business tick — cashflow. Now banks have been cracking down. And the farmer is left with what? Not much.
I’ll leave you with this. You need cashflow. That’s it. There is no secret way to building a profitable farm operation and Family Farm Legacy. Cash flow is the only way.
So, my question is this — What skills, expertise, and resources do you have personally and on your farm operation that could be used to build additional cash flow? Every single one of us has something extremely valuable that we can provide to the world that will result in cash flow. You just have to BELIEVE that you can find it and utilize it.
Also, focusing on the problems you face only brings you more problems. Focus on the one thing that is going to solve them. Cash flow. Find it. Build it. Succeed.
You got this! ❖