Managing the Farm as Two Separate Businesses

Managing the Farm as Two Separate Businesses

Tim Hammerich
Tim Hammerich
News Reporter
This is Tim Hammerich of the Ag Information Network with your Farm of the Future Report.

Running a successful ag business often means balancing multiple moving parts at once and understanding how to leverage cash flow and equity for growth. That’s why Kristjan Hebert, president and visionary of Hebert Grain Ventures, challenges farmers to look at their farm operation and real estate as two separate assets.

Hebert… “Step number one, you run two businesses. You run a farm operation and you run a real estate business. And understand the numbers on both those. And it's no different than, you know, Walmart sells stuff and they have a building. If you have a hotel, you need it to be full. So is your farm operation profitable? And is your real estate operation profitable? Yes, they're at different rates. And then how much cash flow does your farm operation have? And how much equity does your real estate operation have? And you need to know both those numbers. Because your real estate equity allows you to buy land, your cash flow from your farm allows you to pay for it. And you can't be going into your banker saying, Hey, I'd like to buy this 80 acre, you know, track, but I don't know if I can afford it. No. If you know those two numbers, you go into your banker and say, Hey, I am buying this. Here's the, here's my equity that I can put down. Here's my cash flow to make the payment. Will you give me the money? Can we work together? Do I need to go to check out a couple other banks, right? You know, step two is have that, have that culture that not only you, but everybody that works for you. If somebody stopped him and said, Hey, are you guys looking for more land? Ah, we're always looking for more land.”

Again that’s the president and visionary of Hebert Grain Ventures, Kristjan Hebert.

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