How to Prepare Your Capital Plan for 2025

To build a successful capital plan, you have to understand two critical factors: which assets drive profitability and how much growth your balance sheet can realistically support. Now’s the time to take a hard look at your operation to ensure you’re building a resilient financial strategy.

In a recent conversation with Jay Joy, managing partner at agribusiness advisory Bridgeforth, we explored practical steps to build a strong capital plan. Here are four key takeaways to help you position your farm for success:

1. Rank Your Farms to Maximize Returns

Not all land is created equal and some farms may no longer contribute to operational efficiency or align with your long-term goals. Jay emphasized, “It’s critical to evaluate each farm by geography, productivity, and asset value.” 

By ranking farms based on these three factors, you can make data-driven decisions about which properties to keep and which to sell or lease. 

• Geography: Prioritize fields that are closer to your base of operations and have better infrastructure for logistics and access to markets.
• Productivity: Focus on farms with relatively higher productivity, stronger yield history, and effective irrigation or drainage systems.
• Market Value: Is the farm more valuable to someone else (e.g., another farmer, residential developer, or solar lessee)? What’s the value of the land, its equity potential, and its suitability for leasing or alternative uses?

2. Increase Efficiency Through Geographic Concentration

Operating farms across a wide area can quickly eat into your margins due to rising costs for transportation, labor, and machinery. Jay noted the benefits of consolidation, saying, “When farms are geographically concentrated, operations become much more efficient—it’s a simple but powerful strategy to reduce overhead.”

When you cluster operations, you can streamline workflows, improve labor efficiency, and cut down on equipment wear and tear.

3. Use Low or Non-Returning Assets to Generate Liquidity

Unlocking value from non-core assets can provide much-needed liquidity. As Jay put it, “Selling land shouldn’t be a dirty word.” By utilizing strategies like sale-leasebacks or leasing, you can free up capital while maintaining operational control. This approach helps improve cash flow, support debt repayment, or fund expansion without sacrificing long-term assets.

Another option is equity capital. Through an investor partner like Fractal, farmers can unlock the equity in their land to generate liquidity without losing title to the farm or control of farming decisions. 

4. Communicate Your Capital Plan With Your Lender

Your lender is a vital partner in achieving your operational and financial goals, but their ability to help depends on clear communication. Jay stressed the importance of proactive engagement: “Banks can only align with your needs when they understand your capital plan—whether it’s about deleveraging, improving cash flow, or planning for future growth.”

Share your strategy, including expected costs, revenue projections, and any planned investments or divestments, to ensure your lender can offer terms that align with your vision. This transparency builds trust and positions you as a reliable partner in their portfolio.

The Bottom Line

A solid capital plan is the cornerstone of a resilient farm operation. As Jay put it, “The path forward isn’t about doing everything; it’s about doing the right things.”

By understanding which assets drive your profitability and staying realistic about the growth capacity of your balance sheet, you can build a strategy that protects your margins and positions you for sustainable success in 2025 and beyond.

Bridgeforth provides financial, operation and management advising services to help agribusinesses navigate growth, transition and succession.

Note this is not investment advice. The information contained should be used for informational purposes.