10 Money-Saving Tips for Agriculture Businesses
Small business owners know the importance of keeping a tight budget. For farmers and ranchers, cutting down on expenses can make all the difference when it comes to surviving the off season. At BTC Bank, we serve a community that thrives on successful agriculture businesses. We’ve curated these 10 money-saving tips for farmers to help ensure the financial health of our community and your agricultural business.
1. Prioritize Your Projects
With so many tasks and opportunities on a farm, many owners fall into the trap of tackling multiple projects at once. Not only can this deplete your liquid assets, but it can also lead to multiple unfinished projects. Start with one project such as growing your own hay to feed your livestock. Budget and plan for the steps needed to complete the project, and don’t start another project until it is complete. Hopefully growing your own hay saves you money once established. You can then replenish your liquid assets and set about working on your next business goal.
2. Keep Detailed Records
It’s not enough to perform a yearly analysis of your profits and losses. Manage farm finances by keeping detailed records throughout the year. Doing this will help you identify short-term and seasonal trends, as well as long-term shifts in profitability. Detailed records will include purchases, maintenance expenses, administration fees, and their associated details. Details like dates, suppliers, and raw material costs are important to help analyze trends. You may be surprised to find that the areas of your business that generate the least profit are costing you the most to maintain.
3. Implement Robust Data Management Solutions
Many agricultural business owners are slow to adopt digital record management systems. Pen and paper record keeping is familiar, and who has the time to learn a new system? Adopting a digital data management solution is worth the investment of your time. Once implemented, you can quickly review your sales and expenses, identify trends that are affecting your business, and accurately estimate your future expenses. Digital software will help you see the big picture of your farm’s financial health.
4. Improve Workflow Efficiency for Farming Processes
An efficient business saves money. Whether your efficiency leads to less hours worked or less material waste, your budget will thank you. Detailed record keeping can help make efficient purchases. By analyzing how much feed, fertilizer, seed, and fuel you need each season, you can make educated purchases in the future. Unnecessary purchases are avoided, cutting down on your seasonal costs. Partnering with a reliable agriculture supplier can help you plan your spending. Knowledgeable suppliers can help identify your supply needs if you are unsure of the quantities you need.
5. Analyze Your Pest Management Strategy
Investing in pest control can be a financial balancing act. If you don’t invest enough time and money into pest control, you lose your product and profit. If you invest more than you need, you cut into your profit margins. When planning your pesticide purchases, carefully examine the coverage and application rates for each product. Many farmers over-buy these materials, raising their overall expenses. In order to reduce your costs, consider generic pesticide options rather than name brands. By taking the time to evaluate the warranties and guarantees of your pesticide options, you can help ensure that your purchases are effective.
6. Consider Non-Chemical Weed Control
Similar to chemical pest management, many agricultural businesses spend a large chunk of their budget on herbicide purchases. Weed suppression can often be achieved without recurring chemical costs. Cover crops can help suppress weeds and increase soil fertility. Physical weed barriers such as landscape fabric can line rows to mechanically suppress weed growth. If your weeds require chemical interventions, the University of Missouri’s Division of Plant Sciences has a comprehensive guide to help you research efficient herbicide purchases.
7. Make Your Own Fertilizer
Farmers need fertilizer for their crops and ranchers need fertilizer for their pastures, but there are other solutions than simply buying retail fertilizer year after year. According to Farm Progress, controlled grazing management can increase the percent of utilization of the forage produced by 20 to 30 percent, the same result that 20 to 30 percent more fertilizer would achieve. Another way to save on fertilizer costs is to make your own fertilizer from your agricultural byproducts. Vegetable scraps, grass clippings, and livestock manure can simply and cost-effectively be turned into an asset for your farm.
8. Invest in Alternative Energy Sources
For future savings on energy costs, consider investing in wind turbines and solar panels for smart agriculture management. These alternative energy solutions can greatly decrease your energy expenditures in future years. Farm equipment and agricultural machinery can be powered by the electricity created by wind turbines, and costs to operate irrigation systems and water desalination can be reduced with the use of energy from solar panels.
9. Hold Off on Repairs That Aren’t Time Sensitive
Not everything that is broken needs an immediate fix. In order to balance your business expenses, keep an ongoing list of needed repairs. Prioritize your farm equipment maintenance to highlight repairs that are time-sensitive or essential to the operation of your business. By holding off on minor repairs, you can focus your spending on the most important issues.
10. Buy Seeds and Seasonal Items On Sale
Another cost reduction strategy for farms is timing your business purchases to take advantage of the best prices. Seed prices can vary depending on the season, and you may get discounted prices by pre-purchasing for next season around the end of summer. The quality of the seeds should not diminish if stored properly. By identifying supplies that exhibit seasonal price changes, you can decrease your spending.
We Can Help Your Farm Succeed
At BTC, we know that running a successful farm business takes hard work and long hours. Detailed planning plays a big role in maximizing your income and lowering expenses. If you need help covering your expenses in the off season, our knowledge agricultural lending team may be able to help with farm financing loans in Missouri.
Whether you need help paying for farm equipment or covering your operating costs, BTC Bank has the right agricultural loan to fit your needs. Contact BTC to learn more about Farm Operating Loans and other Agriculture financing options. We proudly serve Missouri with 22 full service locations in Bethany, Gallatin, Albany, Cameron, Pattonsburg, Chillicothe, Carrollton, Boonville, Beaman, Trenton, Gilman City, Maysville, Osborn, Jamesport, Buffalo, Oregon, Salisbury, Fayette, Columbia, Hardin and Lamoni, Iowa. Contact us online or call 1-877-BTC-BANK. We’re proud to be your community partner for all your farm loan needs.