Ask any farmer and they will tell you that farming is a labour of love, a passion deeply rooted in the the land they toil daily. But, as with any business, running an agricultural enterprise comes with accounting responsibilities that can easily fall by the wayside. On a weekly episode of Gather To Grow, experts give tips on how to balance your books.
While many farmers would consider the exercise tedious and time consuming, it does not have to be rocket science.
Frugal Sibusiso, business owner in the personal finance space; Mbali Nyembe, agricultural advisor and agri specialist; Roisin Povall, business coach and consultant; and Lungelo Nkwanyane, accountant and tax expert, unpacked the 101 of how to balance your books!
The session was led by Food For Mzansi editor for audience and engagement, Dawn Noemdoe.
Principles for beginner farmers
Sibusiso says that there are certain principles farmers should be aware of when starting a business. The first principle is that farmers should make more than they spend. He adds that another principle farmers should be aware of is, “What are we going to do should something go wrong? What happens if a hailstorm destroys my whole crop?”
Nyembe says a business plan is very important. “Start there and then do research around what is happening in the market in your area.”
The 4 W’s and H
Povall encourages start-up farmers to ask themselves the four W’s and H – Who, What, When, Why and How.
She says farmers should ask questions like: “Who is going to do my taxes?”, “Who is my client?”, “What am I going to sell?”, “When am I going to sell what produce?”, “Where am I going to sell my goods?”, and “Why do I need to have a tax consultant?”
Keep your personal and business finances separate
Nkwanyane explains that start-up farmers need to separate their personal account and their business account. “Try to get a business bank account so that all your business transactions are done in that account,” he says.
Although it may seem like a tedious process, Sibusiso says that balancing books and checking your books monthly is extremely important. “If you know what’s going on in your business you know, ‘can I expand? Can I grow? Can I scale it?’,” Sibusiso explains.
He adds that a business’ financial statements will give them the answers to those questions.
ALSO READ: Farmer 101: Use these tips to find finance, investment
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