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Episode 123: “Feasibility of Going Back to The Farm” w/Michael Langemeier
In this week’s episode, we speak to Michael Langemeier, Purdue University Professor, about the “Feasibility of Going Back to The Farm”.
In business, it is a commonplace activity to perform a feasibility study before buying or expanding a business to allow a family member to join. In today's interview, we discuss exactly that.
While there are many ratios and calculations to perform to help answer this question, this episode looks at the decision from a 30,000 foot view. It provides some critical information, questions to ask, and pitfalls to avoid when making this important decision.
Throughout the episode, Tracy and Michael discuss:
- Some of the biggest mistakes that he sees students and farm families making when it comes to going back to the farm. Michael proposes a better strategy for success.
- Why must this feasibility conversation be had?
- They discuss how clear communication is essential before this process begins. Not when the second generation arrives back at the farm.
- Why knowing your financials is key to having this conversation.
- Michael explores how the financial implications of this decision go much deeper than just one new wage. He shares how some of the most important costs and considerations of welcoming back the next generation to the farm are often completely missed. He provides key financial considerations beyond the wage.
- They touch on compensating the next generation and sweat equity.
- They address ownership and the benefits of looking at the opportunities gained/missed by investing a portion of your working career in the farm, especially if ownership conversations are avoided.
Whether you are the founder or the next generation looking to come back to the farm, this conversation should not be missed. This episode provides amazing insight to make sure that everyone is making this decision with their eyes wide open. Having clarity and asking the tough questions ahead of time can put both generations on a path to success and continued family harmony. Isn’t that what we all want?
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* Disclaimer - As always, this information is not intended to provide business or medical advice. To ensure that your own circumstances have been properly considered and that action is taken based on the latest information available, you should obtain professional advice from qualified business or medical professionals before acting on any of the information in this post.
Thank You To Our Show Sponsor
Here at The Impact Farming Show, our goal is to bring our audience the people and ideas that will IMPACT their farming operation. We couldn't do it without the continued support of our sponsors that are committed to supporting our show and our shared vision of helping farmers succeed.
Please take a moment to check out this week's show sponsor:
Smart Nutrition™: Boost your soil’s performance with new Smart Nutrition MAP+MST.
Smart Nutrition fertilizer products use Micronized Sulfur Technology (MST®) to supply crops with sulfur throughout the growing season. MST is a patented technology where the elemental sulfur source has been micronized, resulting in an average particle size of 15 micron. The small particle size allows for quicker elemental sulfur oxidation.
Learn more HERE.
For more information about farm business management, check out these links:
Associate Director, Center For Commercial Agriculture And Professor, Department Of Agricultural Economics, Purdue University
Prior to arriving at Purdue, Michael spent 22 years in the Department of Agricultural Economics at Kansas State University. In addition to working on Extension and research projects, Michael taught courses in economic theory and farm management and worked closely with the Kansas Farm Management Association. He also conducted workshops for feed mill managers, emphasizing the importance of tracking financial performance, benchmarking and capital budgeting.
Connect with Michael Langemeier - LinkedIn / Website
The Impact Farming Show
Welcome to Impact Farming, Farm Marketer's video and audio show dedicated to helping Canadian farmers excel in the business of farming. Our goal with this show is to introduce our audience to the people and ideas that are going to make an IMPACT on their farming operation.
Show Host - Tracy Brunet
CEO of Farm Marketer
Tracy and her husband are cattle ranchers in South East, Manitoba. As host of the show, primary producer and agvocate, Tracy is passionate about helping farmers succeed in the business of farming.
In each episode, Tracy chats with today's most successful farm advisors and industry leaders to bring our audience the best and most important ideas.