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5 Financial Tips for the Agricultural Industry

5 Financial Tips for the Agricultural Industry

| October 05, 2021

A key part of succeeding in any business is identifying and mitigating risk. That being said, finding success in the agricultural industry is a combination of this and keeping production costs low. Whether you own a large or small farm, it can truly feel as if the weight of the world is on your shoulders. The day-to-day management alone makes it easy to postpone financial planning, but it’s necessary to start right away. 

At Nichols Financial Strategies, we want to help producers prepare financially for the evolving agricultural industry. As laws and regulations begin to change, you should know that we can help you create a road map to successfully navigate your financial planning. Our team has made a list of what you can do now to start improving your business: 

1. Manage Operational Risk 

A big part of growing your business is finding the best ways to manage and mitigate risk. In this industry, risk management can save you tons of money and resources. By taking an honest look at how your business runs, you can reassess land use for the most profitable crops and look at net profits field by field. 

The next time you’re out on your land, take a critical look at your machinery inventory to make sure you still need and use it to its full potential. If not, you could be looking at changing farming practices to include no-till or contracting with custom operators. This would potentially reduce your machinery needs so you can spend less and make more. It’s also important to take advantage of forwarding pricing and crop insurance to further manage your risk. 

2. Manage Money & Capital 

By restructuring your debt, you can help reduce service payments, which frees up cash and buys you some time to pay it back. Be sure to especially look for unnecessary debt on items such as personal vehicles and excess machinery. There is also no need to stockpile supplies if cash is tight. The better idea is to sell those goods so that you can buy them back later when you’re in a better position financially. 

What some farmers don’t realize is that without a budget, you could be headed down the wrong path. By keeping an up-to-date record of your expenses and income, you’ll better understand the direction your business is heading. Another reason why budgets are so important is that cash is king. It’s important to carefully examine your capital purchases when it involves taking on additional debt. If the purchase can’t create enough cash to pay itself off over a reasonable amount of time, you should defer the purchase. 

3. Increase Asset Utilization

Some farmers are opting to tap into the sharing economy by partnering with neighbors on equipment and labor. This can have a great impact on your expenses such as paying workers and leasing or buying equipment. 

Depending on the number of people you share assets with, you can reduce your equipment and labor costs by simply sharing with willing neighbors. In some cases, purchasing can be streamlined through buying directly from the manufacturer or through buying a co-op. 

4. Create Value for Your Customer 

One thing you should always aim for is customer satisfaction. The people in your community who choose to buy locally or don’t have much of a choice will appreciate your service. Find ways to appeal to your customer base through offering quality products, timely delivery, and better packaging. The entire customer experience starts when they receive your product, so it’s important to make it count. 

5. Get Smart 

Don’t be afraid to get connected to the right people. Consult with those who understand your financial situation and can get you where you want to go. It can be difficult navigating a financial journey that you’re living every single day, but we have the resources and tools to get you through it. 

At Nichols Financial Strategies, we teach you how to proactively prepare for what’s to come in a changing agricultural economy. Held to the fiduciary standard of care, we’re focused on finding the right strategy for your situation. If you want to know more about how we serve our clients, reach out to us at 559-440-6999 or by email at

About Matt

T. Matthew Nichols is founder, CEO, and wealth advisor at Nichols Financial Strategies with more than 20 years of experience in the financial industry. He spends his days serving business owners and families, specializing in helping those in the agriculture industry proactively prepare for the unique challenges they face in a rapidly changing economy. Matt is an Accredited Investment Fiduciary® (AIF®) and holds his FINRA Series 7 and 63 securities registrations with LPL Financial and his California State Life & Health Insurance license. He’s also pursuing his ChFC designation and is dedicated to continuing his education and staying abreast of the latest financial trends and strategies. Matt’s mission is to help his clients transfer wealth from one generation to the next and work toward achieving their goals so they can spend more time on what they love most. Matt was born and raised in the California Central Valley and resides in Fresno with his wife, Christy, and their two daughters, Holly and Jillian. He enjoys golf, traveling, skiing, and spending quality time with his family. To learn more about Matt, connect with him on LinkedIn.