Is Your Farm Getting Good Advice?
What kind of advice were you asking for? Was the advisor the right person for the job? Did they have the necessary information to provide relevant advice? Was the advice delivered in a timely fashion? And more importantly, did you implement it swiftly, or did you wait too long? Bad advice often stems from talking to the wrong person or failing to put it into action in a timely fashion.
Running a farm business involves unpredictable elements much like other industries such as energy, real estate, healthcare, and transportation, to name a few. Ultimately, success depends on the decisions made and implemented. In the face of these uncontrollable factors, stop blaming circumstances or others. Are you leveraging the advisors on your team effectively?
Who are your Advisors Working For?
They are working for you based on their understanding of your needs. Some advisors are paid hourly, while others are compensated through the products and services they offer, including fees, interest, and premiums. Regardless, you are paying for their advice—either directly or indirectly—and it is rarely free. If you receive free advice, always conduct your due diligence.
Understanding Advisors’ Limitations.
Advisors are typically bound by some rules and/or regulations set by their own business or external regulators. For example, a small local credit union may not have the capacity to offer large lines of credit or mortgages simply because of their size and limitations, not because of your eligibility. Similarly, an accountant who’s been with your family farm for years may struggle to keep up with the latest tax laws and complex corporate structures necessary for a large, modern farming operation.
Operating a business is challenging, and you won’t know everything. You need various advisors, and over time, you may need to change them as your business evolves. Know what you don’t know and seek the expertise you need. Budget for this advice. Avoid comparing your business to others—their path may be different from yours.
Sharing Your Vision with Advisors.
Have you clearly defined your vision, goals and objectives for your farm business? Have you shared them with your advisors? Upon receiving advice from your advisors, do you evaluate it against your strategic plan? Do you evaluate the risks, the resources required, and the timing of the implementation? If the advice doesn’t align with your priorities or is too risky, it’s not relevant for now. Business conditions evolve, so what may be important today may not be in the future.
Lenders as Advisors.
A lot of discussion surrounds lenders, especially when they seem to retreat during tough times. It can feel like they aren’t committed to the agricultural sector, but they, too, face uncontrollable factors that influence their decisions. Lenders balance risk by diversifying across industries, and their timing on investments is crucial. While this may be frustrating, it’s part of doing business.
Many agricultural businesses are now turning to alternative lending, which makes up about 9% of agricultural debt. These alternative lenders can serve as a lifeline when traditional advisors or lenders are no longer an option. While they may come with different terms, they offer flexibility when you need it most.
Be Adaptable and Take Responsibility.
Being in business, especially in agriculture, is not easy. Success requires adaptability and the ability to make sound decisions quickly. Advisors are there to guide you, but you are the one responsible for executing the advice and adjusting your business strategy as needed.
Josée Lemoine, FCMC is VP Business Development Agriculture at Farm Lending Canada, an alternative lender in the agricultural sector.
She can be reached at josee.lemoine@farmlending.ca or 204-816-3256.