Finance is definitely not at the top of the list of limitations on taking opportunities!
After having first read or heard about the 6 Profit Principles, many farmers say “but I can’t do that, I don’t have enough money/know of any opportunities/can’t change my system like that” etc, etc. What am I talking about? Read on.
Firstly, finance is everywhere. Commerce, housing and other aspects of our lives were built on the organised use of capital. There is plenty of it, flowing backwards and forwards every day. If you believe it is scarce then you will not be open to seeking it out or allowing some of it to flow your way. You must prepare to attract it, receive it and use it profitably, or it will be elusive. This begins with positivity, honesty and solid planning.
Secondly, if you look hard enough for it you will find it. If available finance is not immediately apparent, look again. Often it is hidden behind false beliefs about money (lack of positive preparation) so some perception adjustment may be needed. If you want to run certain stock for profit but don’t have the money, here are a few ideas:
Some organisations have funding specifically for livestock. You agree on terms such as length of borrowing, interest rate and penalty strategies. Yes there will be a cost (interest) and potential risks just as there is in using your own money. These organisations may include the likes of specialist livestock funders, meat companies, stock firms, even family money!
Liveweight gain deals. You can get paid to grow animals (sometimes to an agreed weight). You are usually paid in $ / kg Liveweight Gain (LWG) e.g. $1.50/kg LWG for 100 kg LWG on cattle = $150 payment after the deal is completed. Payment amounts can vary between and even within each season. You could set up contracts for slaughter of the animals or purely for grazing. They are usually undertaken by meat companies, stock firms and other farmers.
Value Change deals. Value Change Percentage deals are where you do not own the stock but share in the value change e.g. 80/20 where you get 80% of the value change and the financier gets 20%. There are also Value Change less Interest deals where once again you do not own the stock but pay the interest on the capital used to purchase the stock. Interest is removed from the value change payment at the end of the deal. Meat companies and stock firms usually provide these.
Grazing per head per agreed period. You can graze other people’s stock on a set grazing fee per period e.g. a week, and be paid that amount monthly or at some other interval.
Your own money. This is usually the default situation but the other deals above show that you can graze stock and not own them.
Build relationships and trust before you expect to utilise these opportunities. Lenders do want to receive profit but they also want great investments to ensure a Return of Investment. Make sure you are well prepared prior to requesting these deals, and that you are prepared to do what you say you are going to do.
In summary, you can either use your own money or someone else’s. In the end the result may be very similar either way. Research and understand the deals before doing them, as well as the risks involved so that you can analyse the deal properly to see if it suits your situation. Those who own the money or stock want to make profit too (or they may not have enough grass) so these deals can provide a win/win for you both.
Finance does not have to be a limitation if you see an opportunity and are short of funds.