Winding down 2025 with the holidays fast approaching is an opportune time to reflect on the year. Regardless of which side of the profit equation you are navigating, (grain or row crop headwinds or the livestock and beef tailwinds), some elements stand the test of time.
Manage incoming information
Do not make a long-term financial decision based upon a headline tweet or tip on the "next big thing." Global agreements often are not for the long run. They are analogous to a subscription within a defined short-term period.
Critically think about how both your business and life will be impacted if everything goes as planned or the worst-case scenario occurs.
Guard against “the waiters”
Many of you are not only challenged by geopolitics, weather and other macro events, but also by elements of transition or estate planning with family members. An observation from the speaking circuit is that more families and farm businesses are being fragmented as parts are sold when non-farm family members want to cash in or take advantage of lifetime revenue streams from alternative sources such as solar, wind or land development. I call them “the waiters” because they’re waiting for a financial windfall.
This often places extreme pressure on farm family members who are required to purchase inflated assets that have little or no opportunity for cash flow. This in turn wreaks financial and emotional havoc on the farmer, the business and the family. The cure is to understand this: all family members cannot be treated equally. Instead, fair and equitable should be a priority, particularly if the existing transitional owners have been building legacy or have earned net worth.
Weigh the cost of avoiding taxes
The most dangerous 30 days of the year are the last ones. Do not get caught in the emotional trap of spending a dollar on capital expenditures to save 20 cents on taxes.
As mentioned earlier, think of how the additional debt obligations or a resulting reduction in working capital will impact your financial resiliency, agility and nimbleness. You must strike a balance between prioritizing capital expenditures, debt, working capital and tax management. Remember, few businesses go broke paying income tax, but some do go broke attempting to minimize income taxes.