How to position yourself for growth

Here at Fractal, we’re always looking for insights from leading thinkers and doers in agriculture – specifically around growth.

Fractal CEO recently sat down with farmer and ag lender Grant Wiese. Grant has been a frequent contributor to our webinars and content, and we believe his insights are spot-on. Through his Farm 640 newsletter and recently introduced Farm Buying Toolbox, and experience growing his own farm, Grant is focused on equipping other producers with the essential tools and resources they need to succeed in the farm buying process.

Here are the Grant’s top five strategies to positioning yourself for growth: 

1. Develop a clear vision and growth plan for your farm operation, even if it’s just a 3 to 5-year plan. 

Having a proactive plan provides a touchpoint for all other decisions you need to make on your farm. It keeps you focused on your vision of where you want to be and how you need to grow to be sustainable. Farmers too often are bogged down with daily decisions and taking care of what’s in front of them. Breaking big goals down into daily action can help you get there, faster.

“If you don’t even have a plan for one year out, how are you supposed to have any idea of what the operation looks like three years out and five years out?” – Grant

2. Understand your current financial position and work closely with your lender to align on your capacity for growth. Know your limits and don’t overextend yourself.

Understand your working capital, your owner’s equity, and what your cash flow looks like. Identify a partner who is aligned with you and can help you achieve your goals, and map out together what it will take to get there. Most importantly, take care of what’s right in front of you.

“The first thing you need to do is make sure you’re secure financially. Once you’re in a position where you have room to grow, know how much you can grow and how quickly, so you’re always on the same page with your lender.”

3. Explore creative financing options beyond just buying land outright so you can grow your operation in a disciplined manner.

Understand your finances first, then focus on growing strategically. Take time to understand the hundreds of creative financing options – from general partnerships and equity partners to renting, 1031 exchanges, sweat equity investments, and more. Arming yourself with as much knowledge as possible can help you achieve your goals and ensure you maintain a stable financial position.

“When you have 15 different ways to buy ground, suddenly you have 15 more options than the person next to you. While you might both be in the same financial position, they only have two options to secure that ground.”

4. Stay proactive and communicate your interest in acquiring additional land. 

Over 50 percent of farm ground purchases now are happening privately and off-market, and most farmers will never see or hear about these deals.

“When you’re ready to grow, get the word out there. If these private parties don’t know you’re an interested buyer, you’re not going to get called.”

5. Be prepared to seize opportunities, especially in down markets. Look for properties that need improvements or sweat equity, as these can provide a springboard for future growth.

The most valuable or best properties will come down slowest in value, but the weaker properties will take the dip first, fastest and furthest.

“Some of the best or most valuable properties need improvements or sweat equity. You’ll probably be able to get those on a discount, put a little bit of cash into them to fix them up and use it as a springboard for your next quarter.”

Added Ben Gordon, “When you have that conversation with your banker or other partner, it’s about understanding how far you can stretch. Know your limits. Plan not just for this transaction, but the next one as well – because you don’t know when that’s coming. When you’re proactive, you might position yourself to add three in a way that you’d only get two if you were reactive.”

Stay tuned for continuing conversations across the ag spectrum as we share smart ideas and stories to inspire your business.

Grant Wiese is a former ag loan underwriter and current ag lender who also farms corn and soybeans in Nebraska. For more great content, sign up for Grant’s weekly newsletter at www.farm640.com and follow Grant on www.X.com @gwiesefarms