Running a farm comes with enormous challenges. There exists a significant risk of even the best enterprise collapsing.
Those that fall into trouble typically face bankruptcy. Wise strategies help mitigate the prospect of this becoming a reality.
Make smart buys
While this advice suits anyone, it is especially relevant to agricultural hands. Farmers have many buying alternatives for improving their operations. Purchases worth considering include extra land, more livestock and modern machinery. The wrong choice could fail to deliver and trigger an unnecessary fiscal burden.
Limit tax deferments
Farmers that push off paying taxes could be unwittingly paving the way for their demise. The decision might appear to be fiscally savvy in light of plans to pass the farm on to a child. Then, inflation rises.
The higher costs lead to greater borrowing. Settling the debt leads to buying and selling of buildings and equipment. A flurry of such activity may result in an impossible-to-pay tax burden.
Situations shift in the blink of an eye. An economic downturn could be right around the corner. Emergency nest eggs are vital in case the worst happens. For instance, someone could receive an injury needing medical treatment.
There are other worrying scenarios. Scientists believe crop yields are going to become even more variable. Another possibility is that a backhoe or seed spreader might suddenly break down. An emergency fund makes it possible to get a replacement on short notice.
It remains unfortunate that farmers are in great danger of financial collapse. Fortunately, the right approach reduces the odds of calamity.