To implement a successful farm business succession plan, there must be adequate income to meet the financial and personal goals of the families involved in the plan.  Financial analysis is an important component of a successful farm business succession plan.

Financial Feasibility

The resources included in this section can aid in the analysis of the current situation.  Resources can also help with developing economic feasibility studies of farm business plans to determine the best business options to meet the goals of all the parties involved.  The resources include worksheets and computer programs for analyzing the current situation and developing a long range financial plan.

AgVentures Chapter 2: Financial Considerations PDF Business Arrangements and Farm Transfers This chapter covers financial considerations including balance sheets, net farm earnings statement and cash flow statement.  It includes a worksheet to assess family living expenses and a SWOT analysis.

FINPACK This software will help potential and existing farmers make more informed decisions about financial aspects of their business.  The Professional Version is used by Agriculture Agents and other consultants as they work with farm clients.  It includes balance sheet construction and enterprise or unit budget formats.    The FINLRB section helps users develop long-range budgets and compares financial measures related to various projected alternatives.   It is the part of FINPACK that has the most application to studying the financial considerations of beginning farming situations.  It works well to answer the question “What would my finances look like if I bought a farm?”  The FINAN section will analyze the financial situation of an existing farm business.  In other words, “Where am I now?” The FINFLO part of the program analyses future annual cash flow projections.

The UW-Extension Agriculture and Natural Resources Education (ANRE) Program Area Farm and Risk Management (FARM) Team provides routine training on the use of the software with farmers and producers in your area.

AgFA Agriculture Financial Advisor This software may be used to analyze the past performance of a farm business to determine if there is sufficient profitability and cash flow to develop a successful farm business succession plan. An individual farm business analysis report is developed for a producer. There is also a database housed at the University of Wisconsin Center for Dairy Profitability of farms entering data in the AgFA program. The data base may be accessed to develop bench mark reports for comparison purposes and use as a guide for developing future financial projections.

Farm Finance Scorecard  PDF This financial scorecard ranks the Farm Financial Standards Council’s recommended 16 financial measures for analyzing a farms financial performance. The scorecard ranks the measures on a scale from “vulnerable to strong”. This provides a method for a producer to determine the financial strengths and weaknesses of a farm business.

Additional Resources