Hindsight is 20/20, but heading into the year 2020 it is the time of year to start working on gaining foresight. What I mean by that confusing sentence (I’m trying to tell a hindsight 20/20 joke folks…work with me) is that the time to start thinking about the ending to this crop year and the beginning of the next is once again upon us.
The thoughts/questions we will be addressing here today: How do you think 2019 will turn out for you? Profitable? A loss? Breakeven? How will you handle any of those situations? If you had a weather issue, how did you like how your crop insurance handled it? How are you positioned to cover paying off your LOC and term debts for 2019?
So how do you currently think 2019 will end up for you? By this point even though there is still no way to completely pinpoint the actual bottom line…you at least have that feeling in the pit of your stomach of “this is going to be great” or “meh” or “crap.” If you had some weather issues it is very understandable that you might be a bit uneasy heading into harvest. If you had a crop insurance claim or still might have one on the horizon how do you feel about the coverage you had/have? Do you think you dropped the ball and were/are underinsured? Or are you thinking, I am a GENIUS. I will get this type policy from now on!! Now is a good time to start weighing how you feel about 2019 to start planning for 2020. So if you think you will have a down year and a part of that can be attributed to lack of insurance coverage then – What better time to start doing some research about insurance? Make some calls, ask some peers, and do some online research before you get busy with harvest.
I know I sound like a broken record when I tell you that you should go ahead and start thinking about next year, but there is no need to wait until you are drowning in harvest and year end items. Make yourself a preliminary financial model of how you see 2019 shaking out as of now and update as results begin to materialize. By doing this you can go ahead and know what important calls you need to be making. “Hey Accountant, if I come in over my projected revenue for this year how will it impact the tax plan we have in place? What can we do?” “Hey Banker if I come up short, how can we amortize the loss? What are the options?” “Hey Banker I think I will be able to pay out, but may need some extra time to get my corn delivered. Can we go ahead and think about an extension?” How GREAT would it be to have the conversations ahead of time? Plant the seeds in the ears of the ones you may need help from. Then as you see how things are coming with harvest just keep them in the loop. Wouldn’t that be 1000% better than running around like a chicken with its head cut off 12-30-2019 with a tax problem and a loan problem? *By preliminary financial model, I mean a projected year end scenario, if you need help putting one of those together let me know*
I know I post something similar to this every year urging everyone to not wait until the last minute. Y’all expect this from me by now. BUT I think this year heading into 2020 is going to be very busy for bankers, accountants, and crop ins agents. There were widespread issues with weather, then prices have dropped, etc… I could see the possibility for a lot of farmers needing to restructure their debt and wanting to talk about their insurance. I hope it is not the case, but the writing is on the wall for some areas. So if you have never listened to me before, this is the year to start. Your banker, CPA, Insurance Agent and others on your team will be busier than ever this Fall, Winter, and Spring DO NOT wait until the last minute.