What should I include in my budget for landlords beyond just rent?
It is normally this time of year when many producers are thinking about the annual budgets and planning their cash flow for next year. This is a must for any business, so it is just as important in farming. Many producers do a great job budgeting their production expenses, their risk management expenses, and even on the income side forecasting their bushels sold. But do you budget for growth?
The first question to ask yourself is: “Why do I want to grow?”
This can be a different answer for every grower, but a few reasons that make the top of the list is to bring kids back to the farm and to build your own legacy. These are two admirable reasons of why it is important to grow your farm.
The next question is: “What does growth look like for me?”
Does growth involve any capital investments like bin space, buildings, machinery or drainage tile?
Does growth involve becoming more efficient in your production decisions or does it mean continuing to add acres to your farm?
All three of these areas would be very important for today’s producers to concentrate on. But today I will talk about budgeting to grow the acres you farm. I think including a line item in your farm budget for growth is something that is foreign to many growers.
A line Item for Growth
If you look at most businesses today, especially if you are using an accounting software, every business has or should have a line item for advertising and promotion. Many producers probably have used this line item only for buying livestock at the county 4-H fair or giving to the local FFA chapter. A few farmers who have a sideline business on the farm may place an ad in the paper or sponsor a spot in the SWCD newsletter, but this is minimal and it doesn’t target growing your farm.
Promote the Next Generation
So what does a budget line item look like for growing the acres of your farm? First of all, the things mentioned in the previous paragraph absolutely belongs in this area of the budget. Keep buying the 4-Hers’ livestock and supporting the hard work of the FFA. This is an investment in the future that you may never see personal benefits from, but it is very important in building into kids and their future.
Take care of your landlords
The second item in this area of advertising and promotion are the things you do for the landlords you are currently working with. This could also be an appreciation dinner or tickets to see their favorite college basketball team. A ham at Christmas and a turkey for Thanksgiving. Make a contribution to their favorite benevolence organization. There are many ways to show appreciation, but the most important thing is to get to know your landlords. Then you see how best to show your appreciation. Look at this as an investment in those you are currently working with. What appreciation do you show them?
Improve Communication with Landlords
The third area are the ways you communicate with them. This could be a newsletter in either paper or e-mail form, depending on their preference. A website can be a very good way of sharing information about you and your farm. It can be a way to promote yourself to those looking to find a new tenant. It can also be a great way to communicate with existing landlords and keep them posted with things happening on the farm. Depending on the website, you can create a login that gives them access to their information about their field. Make sure to use this for those who like technology but others, just a letter in the mail may be their preferred choice of communication. Website, LinkedIn, Facebook, Twitter are all ways to help others determine, do I want to work with you? The social media options are little to no cost, but use them with care.
Invest in Growing your Farm-Add new Acres
The fourth and final area is how you as a producer pursues growth. Are you invested in growing your farm? How will you accomplish this? Bird Dog exists because many in farming today had no way of sharing who they are and why a landlord should work with them. Building relationships in a community has always been a valuable but unpredictable way to grow. As landowners become further removed from the farm, this gets even more challenging.
Many small businesses today who are seeing growth spend 7-8% of the total revenue on marketing. This 7-8% could incorporate all the areas I shared in the previous paragraphs as well as working with Bird Dog to market yourself. But these businesses are focused and strategic with the dollars they use to promote themselves. The producers who will see growth on their farms and in their business understand this need for marketing and promotion. They will continue to grow because times are changing and they have to think more like a business. This next generation of landlords are doing business in different ways already.
Consult your accountant or financial advisor
I want to also recommend that if there are any questions on what is considered a cost of doing business involving advertising and promotion, always seek input from your accountant or financial advisor. So what will your budget look like this year when it comes to marketing and promotion? Budgeting and planning have to be the first step, then Bird Dog can get to work for you. We want to help build your future. Let’s get started.