Business Credit Lessons from Farming. (They Get It!)

Your business may be in a fairly stable industry. The ten years running up to this recession might have been smooth sailing, with bumps along the way only when you caused them by expansion or acquisition.

Agriculture, though, has always had a volatility that other industries have not. The thrill of victory and the agony of defeat is a motto that fits farming every bit as well as it does athletics. I know, my husband ran a greenhouse range for years.

As I was training the Credit Officers of Northwest Farm Credit Services last week on 'Tax Return Analysis in a Tough Lending Environment', we focused on how to tell what will happen next when historical information is not likely to predict the immediate future. And it hit me, the ag lenders do this all the time.

With unpredicatable commodity prices, the impact of weather, and the ups and downs of government programs...if things are going well a farmer knows it is time to save up! And an ag lender knows the farmer needs to be conservative, watch their capital, be careful not to overleverage or to grow too fast. They regroup in the good times to prepare for the challenges.

As the recovery kicks in and your company gears up for better times, take a page from the farmers. Repair your liquidity and capital levels, make careful choices regarding rehiring and tooling up. Keep the umbrella handy...rainy days will come again.