Here are five tasks to address before Jan. 1.
- Hold a “year in review” meeting with key employees. Gather your team leaders to discuss crop performances, farm problems and other issues that arose during the year. Assess how your farm performed during 2024. What worked, and what didn’t? A late-year meeting is also a good opportunity to discuss bonuses and compensation. Send out an agenda ahead of time so your staff members can prepare. This pre-meeting outline not only signifies the importance of the gathering but helps keep everyone on track. Knowing in advance what you’ll discuss should keep the meeting to an hour or two in length for most farms.
- Evaluate your past and future goals. What goals were met? For example, did you plan to cut expenses? Reduce employee turnover? Plant more acres? Did you achieve those goals? If not, why not? Discuss the outcome of your goals and how you could meet them going forward. Also, talk over “soft goals,” such as market opportunities, growth, acquisitions and updating software systems. Be specific. Is your goal to acquire 1,000 more acres? Should you incorporate a farm management system? GPS on your tractors? A drone?
- Review your financial statements. Clean up your books for the year. Know where you stand with year-to-date revenues and expenses. Do they align with your budget? Go over your financial statement ratios and working capital numbers. Reconcile your loan and checking account balances to make sure they agree with your lender. It’s a good idea to pull together any 2024 purchases of equipment, livestock and land so they’re ready to share with your CPA. He or she will need them to update your depreciation schedule. If crop yields fell, or input costs exceeded your expectations, clarify why. Did Mother Nature play a part? Were repairs and maintenance too costly? Maybe it’s time to find another mechanic. Overall, reevaluate why your expenses did not match what you budgeted.
- Establish “SMART” goals for 2025. Set new goals and benchmarks. Consider adopting the “SMART” method, which means goals that are: First, Specific; second, Measurable; third, Actionable; fourth, Relevant; and fifth, Timely. You don’t have to hit 100% of your goals. If you do, your goals are probably too low. But as long as you’re making progress, that’s good. Decide what you want your business to achieve. It’s a way to monitor your farm’s performance, to look at where you are and what you need to be doing. As part of your goal planning, explore how yourfarm budget might change. Should you shop around for better-priced products or services? What crops will you plant on which acreage? What do commodity prices look like? What equipment repairs or purchases will you need before planting? Should you update your lease agreements or risk management plan? Is your land-rent arrangement as good as it could be? Set a timeline for your strategic steps to help you stay on course.
- Look at your tax picture. Have a conversation with your CPA to determine ways to minimize your tax liability. There are ways to defer revenue to manage your overall taxable income. Your CPA can also tell you about any tax changes that could affect your farm.
By checking off these tasks, you’ll have a clearer picture of your farm’s performance for 2024. The more you know about your actual per-acre costs and revenue, the more likely you are to make good decisions. You may even discover opportunities to save or make money for the year. Moreover, you’ll have a better idea of where your business stands when 2025 arrives.
Editor’s note: Maxson Irsik, a certified public accountant, advises owners of professionally managed agribusinesses and family-owned ranches on ways to achieve their goals. Whether an owner’s goal is to expand and grow the business, discover and leverage core competencies or protect the current owners’ legacy through careful structuring and estate planning, Irsik applies his experience working on and running his own family’s farm to find innovative ways to make it a reality. Contact him at [email protected].
