The close of another year is upon us and it is time to take stock of the past and prepare for the future. Looking ahead to next year, inflated cost structures along with geopolitical uncertainty and trade deal negotiations will create both challenges and opportunities. Layer on possible small increases in interest rates, extreme weather and labor challenges that are always a common thread in the planning process. The central banks around the world walk a tightrope of tapping the brakes on inflation without stalling economic growth. With that being said, this is an economic environment where one needs to be innovative and adaptable with focused discipline that can lead to resiliency.

Goals and values

One of the quickest methods to develop agility and resiliency in business and life is a good old-fashioned goal setting session. While it sounds simple, in my experience less than 20% of those in the agriculture industry go through the process. When setting goals, think about short-term goals to be accomplished within one year and longer-term goals that are greater than three years. Bullet out statements of goals and values for your business, family and personal life. Goal setting provides balance in a world of chaos, often magnified by social and mainstream media.

Balance sheet

Take stock of the year's financial activities and outcomes by completing both a personal and business balance sheet. Did your net worth increase? Are any changes the result of retained earnings or an increase in the value of assets? A year-end balance sheet will also help you complete an accrual analysis of your income statement.

Wider guardrails

Next on the list is to develop a projected cash flow with wider guardrails of outcomes. The aforementioned macroeconomic uncertainties will require one to think through different production, cost and price scenarios. Maintaining a spreadsheet with these outcomes that is monitored at least quarterly is the ownership of numbers that will be required for positive outcomes.

Give thanks

There is no better time than at year’s end to give personal thanks to someone who has assisted you in your business and life journey. If anything, showing your appreciation will require you to pause from a hectic schedule to think about how someone has given you a boost or assisted you in navigating through the whitewater of life.

Dr. Kohl is Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship in the Department of Agricultural and Applied Economics at Virginia Polytechnic Institute and State University. Dr. Kohl has traveled over 8 million miles throughout his professional career and has conducted more than 6,000 workshops and seminars for agricultural groups such as bankers, Farm Credit, FSA and regulators, as well as producer and agribusiness groups. He has published four books and over 1,300 articles on financial and business-related topics in journals, extension and other popular publications.

© Northwest Farm Credit Services 2021