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Author: ThorneBrookFarms (Page 1 of 3)

Financing a Farm Dream: Is It Ok to Liquidate Assets to Pay for Expenses?

In our Financing a Farm Dream series, we’ve talked about some of the challenges farms are facing today with regard to money management. It’s an uphill battle to make the farm support the farmer. In our second post, we discussed the comparison trap and the many reasons to avoid it. There is just no sense in trying to replicate another farmer’s farm to the finite detail.

Today, I want to share a golden rule in our business. It’s our rule about selling assets and what to do with the proceeds.

There are seasons in life and business where you will find yourself in a pickle. Perhaps the credit card came in and it was a surprise… really it shouldn’t be but I’ll just be nice and leave it there… Or maybe you haven’t been too keen on keeping expenses low and now there’s just not enough money for the month.

I’ll bet the first thing you go for is the assets. Those big masses of livestock eating forage out in the field. “Well, I’ll just sell a few. Get caught up and do better next time.” Said that before?

It is really common practice to start liquidating assets to keep debt at bay or to make up for spending overages, in general. But, I am here to tell you, that’s not a good practice. Happens once. Ok. But, don’t make it a habit.

Our golden rule of assets is this:

Proceeds from sale of assets should only be used to buy more or invest in new assets.

Brooks and I are no different. We live and breath the same air as you. We, too, throughout our years of being in business had not adopted this as a general rule. We sold some of our breeder cows to make the budget work. Now that we have some experience behind us, we work hard to sustain assets and not consume them.

What this means for a cattle business in practical terms is: we have two types of cattle on our farm – breeding stock (cows) and heifers/bulls used for harvest. The breeding stock (cows) are those animals that are used to produce what we sell. They are an income producing asset. The heifers and bulls are our product. So, when it’s time to replace one of our cows, we sell her or process her. The money made from the sale/processing will go directly back into something that produces an income.

Asset to asset.

It will not go towards paying the bills. Asset to expense.

It’s a reinvestment of funds.

In non-farming terms, it would be like you taking your hard earned savings account and moving it to a CD. Or investing in a new start up. Or buying a piece of real estate. Instead of using your savings to buy a new tv. Or a new car. Or groceries. Or paying off the credit card. Etc. Etc.

Remember, asset to asset.

This is the rule we are abiding by as we analyze our current herd size, land resources, projections for the years ahead, and the unending projects at the Cumberland farm. This is one way our money works hard for us instead of the other way around.

This requires a mindset change. It’s all about how you view certain components to farming and business. We all should know by now how difficult it is to make money farming. So, we have to be extremely intentional with how we utilize our funds.

Study Many, Glean Few: Avoid the Comparison Trap in Farm Biz

How do we build a farm dream?

One step at a time. There you have it. That’s how we’re doing it. Rocket science, isn’t it? You’re now sitting in the midst of your ‘ah-ha’ moment! Like, ‘That’s it! She just said exactly what I’ve been missing.’

No?

I know that my saying we’ve been doing this thing one step at a time is nothing too inspirational. But, it’s realty and I think embracing it will launch you into building your business protocol wisely.

The Comparison Trap

In trying to figure out this whole farm biz thing, I studied and reflected on the stories of farms that were or are “making it”. They have a comparable model of operation as us but somehow they seem to be killing it in the finance and business sense. They preach the farming gospel that they make a comfortable living off their farm and “here’s how”. Continue reading

Financing a Farm Dream: The Challenges We Face

Money can be either your master or your slave. It’s amoral meaning it’s only what you make it. If you allow it, money will consume your every thought. Or you can whip it into shape and make it work its tail off for you.

I admit that the finances of our farm have always expended a large portion of our thoughts. There were seasons where it ruled us and seasons where, after building a brand and model, our money has worked hard for us.

When we started farming 12 years ago, we had a lot of people supporting us emotionally through the endeavor. But, we also had the old timers who implored us to run in the other direction because “you can’t make money in farming”.  Or somehow, farming was seen as degrading. One family member even said, “Why would you do that????” speaking of our going into farming.

Personally, we disagree. Continue reading

Chewn’ the Fat: Brooks’ Winter Weather Gear

While Virginia is considered a southern state, we still get some brutal winters come through. It’s been one for the books this year and we are only a little ways through.

We’re starting a new series called Chewn’ the Fat that will be Brooks’ two pennies on just about anything. For our first installment, we’ll talk about Brooks’ winter weather gear.

This guy has had to overcome zero degree temps, wind chills in the negatives, frozen water systems, and cold livestock.

How does he do it? With a lot of faith and prayer. Plus, it doesn’t hurt to have a few pieces of winter gear to keep him warm.

Join us as we dig into what keeps our farmer warm. Continue reading

A Cumberland Farmhouse: More Discoveries

The days had turned cooler and leaves started dropping as we took a few trips out to the farm. We met the soil folks out there who informed us that the soil was some of the best in the Piedmont. This was absolutely fantastic news!

The Piedmont area of Virginia is a stretch that goes from north to south and is centrally located. It’s a section of Virginia that is known for ideal soil conditions for various farming operations.

Our soil study revealed ideal soil and the owner of the company made it a point to call Brooks personally to tell him. In his words, he said, “How ever [we] decide to use the property, the soil will support us well.”

Awesome. Continue reading

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