Well, here we are heading into another new year. As the old cliché goes, it seems like they roll by faster and faster. By writing this, in mid-January, most people will have already abandoned those resolutions to lose weight, save money, or just be a nicer person. I want to share with you my feelings on some financial resolutions that we as farmers or small business owners need to prioritize and stick to year after year.
Prepare an Annual Financial Statement as of December 31
Do this annually and accurately to determine if you are truly making the financial progress that you desire. Plus, bankers will love you for this.
Organize your Taxes
Take your tax information to your tax preparers or CPA’s early in the year. More and more people are filing extensions, but I encourage you not to do that. Again, like preparing a financial statement, there is no way to gauge the financial progress you are making without the taxes being completed. As a banker, there is nothing more frustrating than trying to analyze a loan request and service our customers’ needs and discover the taxes have been extended, and the applicant does not have current financial information. So, file your taxes early. Again, bankers will love you for this.
Review your Estate or Succession Plan
Take a serious look at what would happen today to your farm or business if you were not there. I encourage you to schedule a meeting with an estate planning specialist or attorney to review how you want to transition your assets. They can help assure that you are the one in charge and not a probate court.
Review your Insurance Policies with your Insurance Agent
The first of the year is a great time to review both your property and casualty policies as well as your life insurance policies. Unfortunately, many people discover that they are not insured for what they believe they are. You need to understand the coverage you have.
Make a Capital Investment Plan
Inventory your equipment and determine what may need to be replaced in the next few years. Inspect your infrastructure, such as fencing, roads, and water sources to determine repairs and upgrades which may need to be tackled.
Pledge to Schedule Regular Meetings to Access Goals
If you are a family-owned farm or business that has family members involved in the day-to-day operation of your business, then pledge to schedule
meetings on a regular basis to review the financial goals of the entity. Too many family members are in the dark about the family business until a crisis develops.
Schedule a Meeting with your Banker
Review your financial goals with them and alert them to any financing needs you might have over the coming year. You will find that your banker will appreciate the opportunity to get to know you and your business better. Include family members involved in the operation in these conversations as well.
Review your Financial Progress on a Quarterly Basis
Do not wait until next year to discover you have made a financial misstep. Again, involve your family and your decision makers in these reviews.
In closing, make a pledge to get your finances in order and keep them updated throughout the year. It will help you understand the profitability of your own business better and will help lenders more quickly analyze and respond to a credit request from you. Bankers will love you for staying on top of your financial information. They will also welcome the opportunity to meet other family members or employees that are involved in your operation.
Kim Light is the CEO of Heritage Bank of the Ozarks in Lebanon, Camdenton and Plato, Missouri.
