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Ten Mistakes to Avoid When Starting or Growing Your Operation (Video)
By: Dr. David Kohl, Agriculture Economist
TAGS: Young, Beginning Farmers, Risk Management Planning, Dairy, Grain, Swine, Women In Agriculture
 
April 03, 2017 -

Hi, I'm Dr. Dave Kohl, Professor Emeritus of Agricultural Economics at Virginia Tech, Blacksburg, Virginia. Today's subject matter in the macro clinic will be, “what are the ten best management practices for young producers?” Traveling the country, I work with a number of young and beginning farmers and ranchers. I will have to tell you, they're very, very energizing. The other day, one of the groups asked me, "What are the ten best practices for our demographic?" Let's look at those.

Number one, I tend to find that the best management practice for the young producer is that they're modest in family living. One of the things that they'll do is they'll have their business budgets, but also have a personal budget and they stay within their means. The second practice is they invest in productive assets, whether it's land or machinery or livestock or even themselves. They have a keen sense of investing in assets that give them a return.

Number three, they tend to be very interdependent. Moms and dads and grandpas and grandmas were independent, didn't want to deal with people. The future generation must be interdependent and oftentimes they will only go as far in life as their network. Another element is that they're a lifelong learner, they're very, very engaged, seeking to become better. Of course, one of the things that I find is that they'll have a strong group of peers where they can bounce ideas or if they get into financial difficulty or business difficulty, they can use them for consult.


For more insights from young & beginning farmers,
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Speaking of consult, oftentimes they'll have a strong set of mentors. Sometimes it's mom and dad, but sometimes it's a neighbor or sometimes it's a lender or supplier. Another element is that they'll have a profit plan. If they do make some money, they'll tend to follow the 60-30-10 Rule. 60% of their profits will be invested for growth and efficiency, 30% building that financial cushion called working capital and liquidity and then the other 10% they will spend. Another element is they get better before they get bigger. In other words, they seek growth but also look at efficiency before growth.

Of course, another element is that they have a strong relationship lender that understands the industry, understands the plight of the young producer. Then finally, they have the balance between the head and the heart. What am I talking about? The heart is the passion. The head is the numbers. One of the things that you'll find is most successful young producers have to have that burning desire with a passion, but also have to keep a keen sense of business and financial awareness by looking at the numbers.

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Dr. David Kohl
Agriculture Economist
Dr. Kohl is Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship at Virginia Tech, Blacksburg, VA.  He taught in the Agricultural and Applied Economics Department for 25 years. 

Dr. Kohl currently energizes agricultural lenders, producers and business people with his keen insight into the agricultural industry gained through extensive travel, research, and exposure during his career.  He has traveled over 8 million miles in his career and conducted more than 6,000 workshops and seminars for agricultural audiences.  He has published more than 1,300 articles and writes for many leading publications. 

Dr. Kohl’s personal involvement with agriculture and interaction with key industry players provide a unique perspective into future trends of the agricultural industry and economy. 
Contact Dr. David Kohl
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