This is the Chinese year of the Wood Horse. The horse is part of a 12-year cycle of animals that make up the Chinese zodiac. In Chinese astrology, the horse year is considered a fortunate year that brings luck and good things. The Wood Horse year is a time of fast victories and unexpected adventure. Energy is high, and production is rewarded. Decisive action, not procrastination, brings victory. The horse is a hero in China because important battles were won due to the power and strength of this animal.
When I read this, I was reminded of the story of the Trojan horse from Greek history. Hopefully, 2014 won’t be noted for any unforeseen surprises. Since history is a teacher, however, it’s good to be prepared for the unexpected.
We face the reality that revenue assurance guarantees will be at lower levels than in the past. Think ahead and plan to deal with those lower revenue levels. It might be that expenses (farm and non-farm) that were ‘necessary’ in the past will be more of a luxury in 2014 and future years. With the same thought of controlling expenses, now—more than ever—is the time to think about your capital budget. A timetable of future capital purchases, with budgeted purchase costs, will help preserve working capital. University of Illinois data reveals that capital assets have been purchased at high levels for several years. Higher incomes of the recent past might have led some farmers to become lax in making a capital budget for longer-lasting farm assets. In the past, the IRS has incentivized us to advance purchases when we might otherwise have saved it for a future purchase. It’s time to find that Excel file you’ve used in the past to plan the timing and expense of your capital purchases. Thinner margins and fewer IRS incentives will lead to more prudent purchases.
Ideas to Help. Need more cash-crunching ideas for 2014? Check out coverage from our Top Producer Seminar within the pages of this magazine and at www.topproducerseminar.com. More than 40 speakers spent the week sharing strategies to improve profitability and business ideas for the farm. Be sure to check out the speaker presentations online and use them to help you build your business plans for 2014.
In the risk-taking, fast-moving horse year, people are impatient to regain their losses. Everyone wants to make fast money and win big! Stay balanced with your business plans so you’ll be in good shape to weather the storm, no matter if prices tear higher or lower in response to worldwide events.
Editor of Top Producer