I work for an Idiot
By Joy Benning
Ask any producer why they farm, and a common response is, “I get to be my own boss.” That begs the question – are you a good one?
It’s a fair question, especially in this industry. Roughly 160 farm businesses have closed their doors every day for the last 83 years, as the number of farms dropped from 6.8 million in 1935 to 2.05 million today, according to the USDA Economic Research Service.
In fact, today’s average producer, who makes up a mere two percent of the U.S. population, has survived one, possibly two
(depending how you view 2018) farm crises, the worst financial collapse since the Great Depression and major trade wars affecting agricultural goods.
So, how do you maintain rights to that #1 Boss coffee mug and continue to thrive in a seemingly cut-throat industry? By wising up, successfully navigating three major risks to self-employment.
Number Crunching > Taxes
For business owners, taxes can be overwhelming and time-consuming. On top of that, there are many farm-specific rules that don’t apply to other industries, leaving room for missed opportunities, says Paul Neiffer, CPA with CliftonLarsonAllen (CLA).
“Most producers try to get income to $0 — or even less — because they think that’s best,” he adds. “However, at that point, there are several credits you can’t take advantage of. Having some income allows you to, at the very least, soak up the 10 percent income tax bracket, which will likely never be that low again.”
Boss Tip: Take advantage of the 10 percent tax bracket to optimize taxable income.
Selling Your Product > Scenario Planning
When it comes to crop marketing, the producer can often be his or her own worst enemy.
“When do I pull the trigger?” “Am I selling too soon?” Markets can be unpredictable, leaving producers to ask these questions. That’s why Naomi Blohm, senior market advisor with Stewart-Peterson, recommends producers take the time to scenario plan.
“It can be an hour or less a week — read market news, brokerage newsletters and other content that’ll help you answer the question, ‘What could make the market change?’” she says.
Taking emotion out of the process, applying critical thinking and understanding tools available makes producers smarter about navigating the art and science of marketing their own product.
Boss Tip: Winter is a great time to get current on markets. Do scenario planning for 2019.
HR Management > Employee On-Boarding
A farm operation is only as good as its people, which is why HR management shouldn’t fall to the backburner. Every small business owner — whether in agriculture or another industry — faces universal challenges in people management, says Laura Backe, HR director for MRA — The Management Association, an employers association in the Upper Midwest.
“Business owners are smart to take notice of what happens between hiring and separating employment with an employee,” she says. “The biggest HR mistake I see is owners not giving feedback to underperforming employees and letting them languish. That’s bad for business.”
Regardless of the business size, business owners should have an on-boarding process, adds Backe, including necessary documentation and orientation to how the business runs.
“That holds true for a family-owned business,” she says. “Employed family members should understand the vision for your business and how they can help you succeed in the day-to-day.”
Boss Tip: Check in with new employees after a few weeks to ask how it’s going, if it’s what they expected and what more they need to know. This will pay off in the long run – both in employee performance and satisfaction.