4 Strategies to Cope With Financial Pain

April 20, 2019 09:00 AM
Identify the cause of your financial pain, suggests Bob Milligan, a senior consultant with Dairy Strategies.

When grain prices sink and margins are tight, producers are faced with tough decisions. Some might even have a hard time paying their bills this year.


Identify the cause of your financial pain, suggests Bob Milligan, a senior consultant with Dairy Strategies.


“Are we short on cash because we had a low yield last year or the price is particularly low, or is this a sign that our business isn’t sustainable?” Milligan asks.


Sometimes that requires a producer to restructure failing entities. If your money problems involve more than just cash flow, you might need to reconsider the financial sustainability of your business. Milligan and Ryan Bristle, an Iowa corn and soybean farmer and consultant with Russell Consulting Group, say these steps can help you restructure.


1. Get some perspective. “Determine if there is some form of the business that is sustainable,” Milligan says. Restructuring isn’t what many farmers want to do, but it could allow them to recover.


2. Set emotions aside. Farmers who find they need to restructure should not let their emotions get the best of them. “Making business decisions from a business perspective rather than an emotional perspective will be better in the long run,” Bristle says.


3. Determine what you can sell. Know which assets are not held by the bank, Milligan says. “A farm we are currently working with to get out of bankruptcy has most of its assets tied into loans, but their young stock isn’t,” he says. “We are using those assets to help them restructure.”


4. Develop a bullet-proof business plan. What you do in the good times reveals itself in the bad times, Bristle explains. He encourages clients to take a long-term view. “If you are losing money this year, you need to know how, so you can avoid it next year,” he says.


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