Every small business needs some sort of contingency in place and a small farm is no different. Farms can be affected by climate, visiting customer numbers, trends or animal and crop disease. Below we shall take a look at some of the areas that you need to have in place to ensure that your farm business is prepared for the worst.
Small Business Loans
A small business loan is a great way of getting your business up and running, as it raises enough money to start operations but should also supply you with a contingency budget if things are lean at the start. To get a small business loan you will need to put a business plan in place and highlight all the areas that have been considered to ensure that there will be growth at some point. The places that you approach for a small business loans will be able to provide you with expert advice on what aspects you need to consider and be mindful of. They will also be able to provide you with advice related to options to consider for success. There are two other things that you need to consider when applying for a small business loan:
- The length of time that you want to take a loan for has a bearing on your loan. For example, the temptation is to always take a bigger loan for longer, but this often incurs more interest. It may be that you could take a smaller loan for a shorter period of time, which would benefit your business and once you have paid the loan off, any profit made is all yours. This is especially in a situation where your business may produce a high yield early on.
- The repayment of your loan needs to be considered. In most cases, you will have a monthly term to adhere to. However, it is worth checking if there are any early repayment fees or on the opposite hand, any fees or attributes in place for situations where you may have difficulty making payments.
Farm insurance is ideal for your farm as it is purposely designed to insure farms and their risks. Farms have different risks compared to other business as they have machinery, livestock, outbuildings i.e. farm sheds and exposure to all outside elements. Although farming is relatively low risk when it comes to insurance claims, proper cover is essential as if an incidence occurs, you need to make sure that you are properly covered and will be paid out for any losses.
Business insurance is an essential part of any business as it offers peace of mind whilst trading. There are different types of business insurance that can cover liabilities, theft, losses and loss of earnings. As farming is an industry that relies on crops and livestock, it is important that these two elements are fully protected. For example, if you have livestock that contract a disease, you may end up having to cull a whole herd of animals. This would mean a total loss of your revenue from that livestock. The losses of this could be detrimental to your business, so having the correct cover in place is vital.
Another example is related to crop. If a crop is attacked by a deadly parasite, extreme weather or vandalism you could end up having a loss of crop for that year which again would have a massive impact your income. So now you can see why business insurance a necessity worth considering.
For a farm, as mentioned above, livestock insurance is very important. It can cover things such as fire, electrocution, fatality, impact from a vehicle and disease. Occasionally your animals may need transporting by vehicle which carries risk related to distress and accidents. This is where livestock insurance is very important, as you can also appreciate livestock need areas to be able to graze, thus increasing the risk of theft as often, they graze far away from farm houses so they are not always in view. Some other areas that you may not have considered for some animals that are covered by your insurance are:
- High Value Livestock:
This could be a pedigree bull or cow which are used for reproducing. If these suffer any form of loss, this could be detrimental to your business.
- The Feed
Your food is covered under some policies. This is important as food can be contaminated, thus having an impact on your livestock.
- Animal Disease
Diseases such as foot and mouth, as this can cause the need for culling of a whole heard. Covering this would protect you against a total loss.
- Breeders Guarantee
This will cover you to ensure that your breeds are guaranteed to be genuine.
The above information highlights how important aspects such as insurance are so that your farm is prepared for any eventualities that may occur whilst trading. There are many other areas which also need to be considered and these are just a few. Seeking advice from other farmers is a good option as this can help you to check that you are in a good position. With regards to the insurance side of things, you need to talk to various insurers as they will be able to advise you of the exact type of cover that suits your small business farm. They will also be able to advise you on any other extra elements that you need to factor in or that you are covered for but may not be aware of. All of this provides you with extra peace of mind whilst running your own small business.