2016, July

Farm update – 7/24/2016

Check out the Currently Available page for a la carte orders of okra, peppers, butternut squash, and herbs , and check back later in the week for tomatoes and eggplant.

My head is swimming this weekend with notions of accrual accounting, business plans, SWOT analysis, cash flow budgets, risk management, and on and on in farm finances. We attended a financial training program, AgAware, this week, sponsored by Southwest Georgia Farm Credit. The program was developed and delivered by a Pentecostal preacher (to be fair, also a very seasoned advocate of agriculture and program manager at AgSouth Farm Credit). This made for a day of somewhat dry financial topics intermixed with entertaining and wild stories, and, since we chose nerdy front-row seats, occasionally being spit upon!

As we continue to develop Calamint Farms from a hobby farm to a legitimate business it’s clear that there’s much more to learn and do. The first step would be a SWOT analysis, in which we would identify the strengths, weaknesses, opportunities, and threats facing the business. Next we would develop a business plan to help capitalize on the strengths of the business, take advantage of opportunities as they become available, address weaknesses, and minimize the risks from possible threats to the business. The business plan would utilize SMART (specific, measurable, attainable, rewarding, and timed) goals in the areas of farm personnel, finances, production, marketing, and legal. Then we would develop enterprise budgets, which help determine break-even costs (that is, how much should goods cost in order to be profitable). Once break-even costs are determined, monthly cash flow budgets can be developed to show what times of the year will be strong and weak for farm income. An income statement of farm activities will summarize revenues and expenses over a period of time, and gives a measure of profitability through the net profit ratio (net profit divided by gross revenue). Information from the income statement (gross margin percent) can be used in a project cost analysis to show anticipated return on investment for projects we want to undertake. Finally, a balance sheet can be prepared, typically for tax purposes at the end of the year, to show current, intermediate, and long-term assets and liabilities, and give insight into the liquidity, solvency, and net worth of the business.

Whew! Sound like a lot of material to cover? Let me tell you, it was. One of the most important things we discussed, however, was a question we were asked right at the beginning of the program: “Are you selling what you plant, or are you planting what you can sell?” Since this year was the first year we’re truly diving into farm operations, we’re growing a little of everything, and really just trying to sell what we have planted. By the end of this year, though, we should have a good sense of what our various markets are interested in, and that will help us develop a much better planting plan for next year, allowing us to focus on crops that will be financially rewarding.¬†Until then, we have lots of business planning to do!

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