The week of June 10, Farm Journal is celebrating the next generation of American agriculture. Our goal is to encourage you to plan for the future and cultivate multigenerational success through the transfer of skills and knowledge. Think tomorrow, act today to align your asset, resource and financial legacy.
I offer to you five gray haired Machinery Pete pearls of wisdom and/or advice aimed at those poised to take over management of the farm soon.
1. Subscribe to The Theory of Opposites
When others are running away, it’s time to be bullish. When folks say it’s a sure bet, run the other way. It’s one thing to teach yourself to think this way, to see real opportunities when others don’t, but the key to executing this strategy lies in having your financial powder dry and being able to act.
It takes years if not decades of preparation for when the moment arrives.
One such moment arrived a decade ago, in 2014 and 2015 when used equipment tanked 20% to 25% year over year, two years in a row. No one wanted to buy. Five of the six highest auction sale prices back then on 2010 model John Deere 8345R tractors went for between $136,000 and $146,300. The past two years, when everyone was buying, the three highest auction prices on 2010 model John Deere 8345Rs sold between $259,750 and $297,000.
2. 4-to-7-Year-Old Equipment is Where the Best Buys Are
See the example above on what 5-year-old 8345Rs sold for in 2015. The cost of new equipment has been skyrocketing. While the rate of initial depreciation is increasing sharply. By the time a tractor, combine, sprayer or skid steer is 10 years old and in good shape, everyone and their brother wants it. Comparatively, it’s so much cheaper versus the cost of new.
You can beat ‘em to the punch. Pete says four to seven years old is the sweet spot.
3. Own Your Mistakes
They are 10 times as valuable. The human urge to protect our sense of self is strong. The easy thing to do is blame others. Mistakes happen. We all make them. Train yourself, at your still young age, to view your missteps as opportunities to learn and opportunities to make it right.
If your mistake involves another person, apologizing and making it right with them will turn that person into your biggest advocate — forever. Trust me. It’s off-the-charts powerful.
4. In An Impersonal World, Be Personable
I’m not trying to be the cranky, gray-haired guy on the front porch, but our world increasingly has everyone with downward gazes into their cellphones. Technology is cool and powerful. Use it, yes, by all means, but set yourself apart from others by looking folks in the eye and talking to them. Listen to them. Write brief, personal, handwritten thank you notes.
Again, trust me here. You will make an impression 20 times more powerful that will serve you in the long run better than I can convey. Yes, it will in fact benefit the business side of your life powerfully.
5. Record Your Equipment in Action
While planting, harvesting and any doing field work, capture it. Drone video is best if you can, but cell phone videos work great too. This is not for funzies or for vanity sake, nope. Get the video clips because it will make your equipment worth more money three, five or 10 years down the road when it’s time to sell or trade.
These video clips emotionally engage potential buyers. There might be tons of Case IH Magnum 315 tractors and Kinze 4705 planters for sale five years from now, but only one from your farm with video of you rolling on a beautiful sunny day getting the job done, getting that crop in. Actual video clips from the farm make your equipment stand out and pull in potential buyers.
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