The farm visit: what your banker’s looking for
When a banker visits your home to talk business, the farm’s finances will naturally
be an important topic. Having made about 1,000 visits to clients’ farms over a
20-year period though, I can tell you that finance is not the only issue your banker
is thinking about, or even the most important.
The farm itself. In my years of farm calls, I’d always spend a few minutes looking
around the yard. Is it well organized and neat? Is the equipment lined up in an
orderly fashion? What kind of condition are the buildings in? Are the livestock
and crops clean, healthy and well maintained? Is the machinery and equipment
in good shape?
The farm couple. Sitting at the kitchen table or in the farm office, you want to
observe how the couple and family get along. Is the spouse involved? Does the
spouse appear to be welcome at the table when the banker visits? When the
couple communicates – with the banker and with each other – are they relaxed
or stressed?
The farm’s direction. Do all the farm’s partners have a complete picture of the
farm’s finances: total assets, liabilities and equity? Does it appear that each of
them is knowledgeable about the business? Are there any signs of friction between
the partners? Do they share information freely? Do they share the same goals for
the farm?
The farm as a family. The small things can sometimes matter a great deal. I want
to know the last time they took a vacation as a family. How do they relax and have
fun? Which community or industry events do they participate in?
All of this paints a picture about the farm family and the farm business – a picture
that complements the information available in the financial statements.
You can have great equity, and terrific cash flow. But in my experience, if the family
is under stress, the farm can’t reach its full potential. In the same way, if there’s a
good plan in place, and everyone is pulling in the same direction, the farm can
really thrive.
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