Tag Archives: cash

Farm Finance

Every business or family finances have some unique components that you must determine to help your business or home run smoothly.  However, there are some very basic tools that apply to all.

  1. Bookkeeping-every family and small business should employ bookkeeping principles.  These will include records by account, labor costs, profit and loss (income statement), working capital, balance sheet, debt-to-asset ratios.
  2. Use a double-entry system to keep track of where your money is spent.
  3. Set up basic accounts, these may need sub accounts depending on your company, but here are 10 basic ones:  sales, expenses, payroll, and retained earnings for your income statement and cash, accounts payable, accounts receivable, notes payable, inventory, and owner’s equity for your balance sheet.

 

Most of us have taken basic bookkeeping in high school and so already have the foundation for setting up appicable accounts for our own families and businesses.  The stumbling block is actually doing it!  If you wonder where all your money is at the end of the month or year or complain about the lack of funds, then it’s time to make a resolution and commitment to keeping track of where your money goes. This especially includes all those little cash purchases; coffee, candy bar, water bottle, etc.  Remember, too, you don’t have to buy software to do this.  For millenia, record keeping has been done with pen and paper.  However,  if computer software will encourage you to move forward, I think there are some very reasonably priced packages out there.  Many you may be able to try out for free for a short time.

Here’s a budget helper that seems to be free, but i don’t know anything about is.  It is Dave Ramsey’s EveryDollar free budgeting tool.  Plus Dave Ramsey has a bunch of free tools available.

Whether you choose computer software or a pencil and notebook, start this year taking control of your finances.

Cheers!

tauna

The Road Ahead

Reprinted in part from Farm Journal, December 2015.

Reassess, Dump Loser Assets

Smart farmers will survive the challenges that arise in 2016.  Just as they’ve done in the past, they’ll reassess their spending and recognize cash is king.  I also recommend the following:

Understand true cost of production.  Account for every dollar.  It’s how you’ll quantify whether you’re headed for profit, loss, or breakeven.  Don’t overlook your true living expenses, including what you set aside for college and retirement.  “Tis the year for living frugally.

Scrutinize every line item in your budget.  It’s the only way you can stop haemorrhaging cash and become leaner.  Is there a way to cut your overall costs?  I challenge you to cut all expenses by 1%.  It might seem small, but I’ve witnessed this exercise lead to six-figure savings.  Question input costs and negotiate with suppliers.

Be sure to liquidate all non-productive assets.  You can generate thousands of dollars by selling losers.

Stay in contact with your lender.  They realise down cycles occur.  The last thing you want to do in tough times is cut them off.

article by Peter Martin, Finance & Growth Expert, Farm Journal magazine.

My comments:  Just because an asset is no longer working in your operation, doesn’t necessarily mean it’s a ‘loser’ for everyone.  Sometimes our goals change and someone else needs exactly what we no longer need.  Of course, if the asset is junk,  be sure to sell it that way.