The 5 stages of burnout…and how to get out of each one

The 5 stages of burnout…and how to get out of each one

Quick check-in: 

Are you tired? 

Feeling unmotivated? 

Getting angry and snapping at your partner, kids, or farmhand? 

Suffering from headaches, stomachaches, or intestinal issues? 

Generally not feeling a sense of purpose or accomplishment on the farm?

If you answered “yes” to one or more of these, you may be in burnout, my friend. 

But don’t worry, you’re not alone. Many farmers come to Farm Owners Academy when they’re living in burnout, day in, day out.

Especially in the farming community, we value hard work. Maybe you were told that you needed to work 7 days a week, 12+ hours per day, so that’s what you’ve always done.

Maybe you think you have no choice if you want to be successful, that you simply have to work yourself to the bone to get ahead.

And maybe, the exhaustion and stress has become so normal that you don’t even know anything different.

That’s why it’s so important that we talk about burnout today. Because the truth is:

It’s not healthy to work this way

  • It’s costing you productivity and results, and
  • You can be successful without being constantly tired, stressed, and irritable (in fact, you’ll probably be much MORE successful when you get yourself out of burnout)

We consulted the big guns — Farm Owners Academy accountability coach Tracey Secombe, who works with our Platinum Mastermind members. And in today’s blog post, we’re sharing the symptoms of the 5 stages of burnout, to see if you’re in one of them.

And if you find that you are in burnout (most of us are!) we’ll share some steps you can take to reduce your stress levels and work from a much healthier place.

Our goal here at Farm Owners Academy is to help you create a Freedom Farm – that is to get better results in your farming business in less time and with less stress. (It’s completely possible — our Farm Owners Academy members have proven it.)

And it starts by taking care of the #1 asset on your farm: YOU. So let’s dive in…

The 5 Stages of Burnout  

 

Stage 1: The Honeymoon Phase

You know when you start a new diet, exercise regime, or project and you feel excited for the challenge and committed to getting results? That’s the Honeymoon Phase.

This stage occurs before the real symptoms of burnout start.

Stage 1 is marked by high job satisfaction and commitment to the job at hand. You’ll also have high energy levels, good productivity, creativity, and optimism.

You may start to experience some light stress. But generally, you’re working from a high-energy, good-mood place.

The good news: Even if you’ve been running your farm 10, 20, or 30+ years, you can still get back into the Honeymoon Phase!

Doing things like developing a positive mindset, creating a strategic business plan, and growing a team to help you manage the farm will help you focus your energy on the tasks and projects you like best and produce great results. This can get and keep you in the healthy Honeymoon Phase.

 

Stage 2: Onset of Stress

As time goes on, some days feel more difficult than others.

Some days are still exciting but others aren’t.

You may start to lose enthusiasm and momentum as tasks and projects don’t go as smoothly as you expect.

And you may find your optimism waning and notice stress affecting you physically, mentally, or emotionally.

That’s when you’ve moved from the Honeymoon Phase to Stage 2: the Onset of Stress.

The symptoms of Stage 2 of burnout appear at three levels:

  • Physical symptoms: fatigue, grinding your teeth at night, headaches, high blood pressure, lack of quality sleep, unusual heart rhythms or palpitations
  • Emotional symptoms: anxiety, forgetfulness, inability to focus, irritability, job dissatisfaction
  • Behavioural symptoms: avoidance of decision-making, change in appetite/diet, general neglect of personal needs (eating well, exercising, taking care of yourself), lack of social interaction, lower productivity

Those symptoms sound pretty common, right? Most of us have been in Stage 2 at some point.

Sometimes, work is just a bit more stressful than usual — it happens to all of us.

Stage 2 can still be a healthy place if you use coping strategies to manage the stress without letting it overcome you. (Keep reading for specific stress management suggestions below).

 

Stage 3: Chronic Stress

If you’ve been putting up with Stage 2 for a while, it often progresses to Stage 3: Chronic Stress.

You’ll notice a marked change in stress levels and may experience more intense symptoms than Stage 2.

Stage 3 symptoms include everything in Stage 2, PLUS:

  • Physical symptoms: deep exhaustion, persistent tiredness (more than just low energy), physical illness, odd ailments
  • Emotional symptoms: anger, aggressive behavior, apathy (“I don’t even care”), cynical attitude, resentfulness, feeling threatened, panicked, or out of control
  • Behavioural symptoms: decreased sexual desire, denial of problems at work or home, increased alcohol/drug use, increased caffeine consumption, lack of hobbies, missed work deadlines/targets, procrastination, social withdrawal, uptake of escapist activities (watching TV, scrolling social media, anything to “switch off” and avoid reality).


Many of us have been in Stage 3 before. So if you feel like that’s you, there are things you can do to turn it around.

It’s important to implement some coping strategies here to support your wellbeing and prevent you from moving into a further stage of burnout. Here are some key things to keep in mind:

Cut yourself some slack. Accept that you’re feeling overwhelmed, and that’s okay. Almost all farmers and business owners have felt this way. All you can do is your best, so try to have realistic expectations…and not feel pressured to achieve superhuman results overnight.

Take care of yourself. You know the drill! Drink enough water. Eat quality foods. Get enough sleep. Exercise. Spend time doing things you love, with people you love. Take deep breaths and engage in a mindfulness practice like meditation. These things are often overlooked but can make the biggest difference!

Focus on the lessons, not the losses. You’re always growing and changing as a business owner. There’s no such thing as failure, remember. Every so-called “loss” is a lesson that will help you do better next time. Embracing “failure” as a natural part of the road to success can help you feel less stressed when things don’t go perfectly.

Do what you can to reduce your stress levels. Maybe it’s hiring a farmhand. Re-organising your business to take some things off your plate. Working with a coach. (Farm Owners Academy can help!) Ideally, you want to move back down to Stage 2, where you feel some stress but it doesn’t overwhelm you. Think of what will help YOU (because everyone’s different) take your stress levels down a notch or two so they feel more manageable.

 

Stage 4: Burnout

This is when you cross the threshold from stress into burnout itself.

Burnout is the result of chronic, long-term stress. And it’s much more than feeling overwhelmed.

It’s a constant state of exhaustion and it becomes increasingly difficult to cope. Continuing as normal is often not possible and many people have some sort of breakdown when they’re in burnout.

Here are the symptoms of Burnout:

  • Physical symptoms: chronic headaches, chronic stomach or bowel problems, physical symptoms/illnesses that have intensified or increased
  • Emotional symptoms: desire to “drop out” of society, desire to move away from work or family/friends, feeling empty inside, pessimistic outlook on work and life, extreme self-doubt
  • Behavioural symptoms: complete neglect of personal needs, increase in escapist activities, obsession over problems at work or in life, social isolation, working all the time and have no balance in your life

Steps to Recover from Burnout Without Progressing to Stage 5

If you recognise that you’re in Stage 4, it’s important to take steps to recover NOW.

You must make it a priority to reduce your stress and feel better; it’ll only get harder the more you progress.

There will ALWAYS be more to do on the farm. And there will never be someone forcing you to prioritise yourself and fix your burnout situation — only you can do that.

Luckily, there are simple things you can start TODAY to prioritise your well-being. Here’s a list of the best things you can do now to treat your burnout before it gets worse:

DO LESS: Prioritise your to-do list

A lot of the time, the reason we’re burning out is we’re saying “yes” to too many things, rather than being really clear about what our priorities are. We call this “hitting the ceiling” because you’ve reached capacity and need to do less to recover.

This is the beauty of making a quarterly plan because it tells you what’s most important to focus on. A quarterly plan makes it easy to say “no” or “later” to anything that doesn’t support your goals for the quarter.

It’s also helpful to create a STOP-doing list. This is often more powerful than a to-do list!

To create your stop-doing list, look at your schedule and audit the activities on your weekly list, by asking yourself:

  • Why am I doing this task?
  • Will it really benefit me to do this? (Does it really need to be done?)
  • Am I the person who should be doing this? (For example, maybe your kids can make lunches or a farmhand can drive the tractor).
  • Can I do this later?

You’re bound to find tasks that you don’t really need to do right now. Add these to your stop-doing list! Freeing up space in your schedule is step 1 to feel less burnt out.

RELATED POST: The 5 Ways to Break Through the Ceiling
 

Sleep!

This sounds so simple but is absolutely vital to recover from burnout! Prioritise your sleep.

That means going to bed at a good time, especially if you wake up really early. If you struggle to unwind at night, try some deep breathing exercises or meditation before bed. (See next section.)

Pay attention to your own rhythms. Different people have different sleep needs. Just because your wife or your dad only need 5 hours to function well doesn’t mean you do! Start by aiming for 8 hours of sleep each night and notice how you feel. Adjust from there to find your ideal amount.

Calm your mind

I know meditation and deep breathing exercises might feel fluffy to you. But don’t knock it until you try it! They’re powerful, proven strategies to overcome burnout.

You can reset your stress levels by pausing and breathing intentionally, even just for a minute. By taking slow, rhythmic breaths, you “speak” to your brain and tell it you’re okay. It’s scientifically proven to de-stress your body. (Harvard Medical School even agrees!)

Here’s a simple breathing exercise:

Breathe in for a count of 4, then breathe out for a count of 8.

Easy, right? Anyone can do it. The next time you’re feeling stressed, try it for a minute or so…you’ll be amazed how just a few deep breaths can instantly calm you down and make you feel less stressed.

Meditation is also a great strategy to quiet your thoughts. Feeling exhausted is linked to being disconnected. When we’re aligned, tuned in, and relaxed, we feel good and in control of our lives.

There are millions of free meditations on the internet. You can try a free trial of the Headspace app or watch a video on The Mindful Movement Youtube channel.

Here’s a great meditation to start with:

 


Exercise

You can release so much stress and anxiety through moving your body. So don’t overlook the importance of exercise not just for your physical health, but for your mental and emotional health as well.

We often think high intensity is the best way to release stress, but it can actually increase your stress levels. So aim for moderate activities instead. Walking at a brisk pace is a great exercise that will naturally release stress.

Try a variety of exercise: walking, playing sport, swimming, yoga, stretching, weight training — and see which one(s) helps you feel your best.

Eat (and drink) well

Poor hydration is linked to exhaustion. So make sure you’re drinking plenty of water throughout the day. For women living in a temperate climate you need about 2.7L per day, and for men about 3.7L per day. Approximately 20% of this comes from what you eat, the rest needs to come from fluids. If you are doing exercise or physical work the requirements increase.

Give it a try for a week — bet you’ll notice a positive change in your energy levels and mood when you’re fully hydrated.

When it comes to food, start by eating when you’re hungry. You’re better off following your own hunger cues than sticking to a regimented breakfast-lunch-dinner schedule. Your needs may differ depending on the day.

You know how to eat healthy, right? We don’t need to go into the details. Add more whole foods, vegetables, and fruits to your plate and take away some sugar and processed stuff. High sugar causes a blood sugar spike and drop, which leaves you feeling exhausted.

Accountability coach Tracy specifically suggests that adding more alkaline foods into your diet helps with burnout. (You can Google this to find out what they are). Alkaline foods are excellent for nourishing the body and helping to reduce stress.

It’s also great to have some go-to healthy snacks ready when hunger strikes so you don’t grab something that will make you feel crap an hour later. A few examples:

  • apple and peanut butter
  • cucumber with cream cheese
  • crackers and hummus
  • a handful of nuts

These snacks will keep you fueled without the energy crash of sugary sweets.

Spend time with hobbies / passions

The farming community is so work-focused. But life’s too short not to do things just for you, too.

That’s why spending some time doing things you love is a great treatment for burnout.

Even 5 minutes a day of something you enjoy can make a difference. That could be:

  • Building model trains
  • Listening to music
  • Playing sport
  • Riding bikes with your kids
  • Lighting a bon fire and spending time with friends or family

Make time for activities you enjoy, even if it’s only a short amount of time. Tapping into this sense of passion will increase your energy and mood, and make you more resilient to handle the stress of work.


Stage 5: Habitual Burnout

If you don’t address the symptoms of burnout at Stage 4, it can progress to Stage 5.

This is when burnout becomes so normal in your life that you experience significant ongoing mental, physical or emotional problems.

Stage 5 happens in farming all too often because our community has such a strong work ethic. It often crosses over into unhealthy territory and pushes farm owners to the brink.

Habitual Burnout is when burnout has become very severe, and includes additional symptoms of:

  • Burnout syndrome
  • Chronic mental fatigue
  • Chronic physical fatigue
  • Chronic sadness
  • Depression

It’s critical you reach out for professional help if you’re in Stage 5. You can’t do it on your own.

Let’s say that again: You can’t do it on your own.

Talking to your doctor is a great first step. Psychologists or counselors are other professionals you can reach out to help.

(And you can always email us at support@farmownersacademy.com. We’re not mental health professionals but we can connect you with resources to help.)

In an industry as challenging and difficult as farming, burnout is a common problem.

If you find yourself in burnout, don’t beat yourself up. So many of us have been there!

But equally, don’t downplay it or let it slide. It’s really important you take steps to address your stress levels NOW (not tomorrow or next week or next year) or it can quickly spiral out of control.

If you’re feeling stressed, try one of these things today to get started (then add another one tomorrow):

  • Do less — create a stop-doing list and cut out any tasks you don’t need to do today
  • Get 8 hours of sleep
  • Deep breathing: breathe in for 4 counts, out for 8 counts, repeat for 2-3 minutes
  • Meditate
  • Go for a brisk walk
  • Drink enough water
  • Eat more alkaline foods…and less sugar and processed foods
  • Spend time doing activities you love outside of work
  • Seek professional help

As always, if you need to talk, we’re here for you. Just reach out at support@farmownersacademy.com. 

Every farmer avoids this…and it costs them everything.

Every farmer avoids this…and it costs them everything.

^^ This is a countdown to the day you hang up your Akubra for the last time and head to the great farm in the sky.

Okay, maybe not the exact day.

But the reality is, all of us have a countdown timer like this…we just don’t spend much time looking at it.

Forgive us for being so blunt here…

But one day, you will die, and your farm WILL pass into new hands.

The question is:

Will you be ready?

Most farm owners avoid thinking about succession planning until it’s too late. They (understandably) don’t want to think about death or retirement so they put it off.

And as a result, the succession plan never truly gets sorted out, resulting in all kinds of headaches…

Kids left to untangle complicated finances that add so much stress to their lives.

People feel cheated out of what they feel is fair. Maybe one family member spent years on the farm, toiling away to build up the business, only to have their other siblings take a big share of it because there’s no real plan in place.

Sometimes family members stop speaking to each other altogether, tearing the family apart with no reconciliation in sight.

That’s why it’s so important to start thinking about succession planning NOW, even if you don’t think you need to yet.

And that’s what today’s blog post is all about. You just need to answer four simple questions to start a smooth succession process.

These 4 questions will help you even if:

  • You’re decades away from retirement
  • Your farm is a financial disaster right now
  • You have conflicting personalities within your family
  • You have no idea where to start with succession planning
  • You were handed a mess of a farm and your parents made huge mistakes with succession

There’s that old saying: “Only two things are certain in life: death and taxes.”

So let’s normalise this for a minute and get real about what will happen after you leave the farm, okay?

We promise, it’s easier than you think to get started. And your family will be unspeakably grateful you put the time into this now to keep things stress-free in the future. 

4 questions to make succession planning simple


1. What is your ideal outcome?

The first step is to get clear and specific about the best outcome you can imagine. 

Even if your dream feels very far from your current reality, that’s okay. Just think about the situation that would make you happy to hand over your farm. 

A few things to consider: 

How much money do you need to retire? 

At what age do you want to retire? 

Who will take over operations on the farm? 

Will your kids split the farm equally? What is the percentage breakdown? How much money do you need outside the farm business to make this equitable? 

Will just one of the kids take over the farm, with the others inheriting something else?

Will the farm be sold, so the family can split the money from the sale?

You want to ask all affected parties what their ideal outcome is, too. Don’t assume you know what your kids want! 

Too often, we see kids who don’t get what they want when their parents pass away. Either they secretly want to be part of the farm and are left out of the farm’s succession plan…or they secretly want to leave the farm and end up being responsible a farming business they aren’t passionate about. 

That’s why you need to ask anyone affected by succession what their ideal outcome would be. You may not be able to give everybody exactly what they want (and that’s okay) but it’s important to at least know what people want.
 

2. What does your current situation look like?

 

Next, it’s time to get realistic by looking at your farm’s numbers. Understanding your financial picture is an important step in smooth succession planning. 

Get clear on the key financial figures of your farm, such as:

What assets do you have? 

What are your fixed and operating costs? 

How much profit does the business make each year, on average? 

If there isn’t any profit, what can you do about it?

What is the current net worth of the farming business?

What kind of salary are you paying yourself now?

How much money do you have in any retirement accounts (or other assets or accounts that can

be sold to fund your retirement?)

If you’re not a finance guy, don’t worry. We’ve got a free cheat sheet on the 10 financial ratios you need to know for your farming business. 

>> Click here to download your free financial cheat sheet to get clear on your numbers

(We’ll also be sharing a heap of free education over the coming weeks to help you feel more in control of your finances. Click here to sign up for email updates to get these free tips delivered straight to your inbox.)
 

3. How can you bridge the gap?

 

So. You know where you’re starting from and where you want to go. 

The next step is to make a plan to get from here to your ideal outcome. 

This is where you make your PLAN. 

This doesn’t have to be a one-year, five-year, or even ten-year plan. It can be 30 years in the future, if that’s when you’ll be handing things over! 

It’s important to keep an open mindset while you’re creating your plan. If you catch yourself saying, “I’ll never be able to do that”…stop! Instead, get curious and say, “I may not be able to achieve everything I want. But how can I get as close to that ideal picture as possible?” 

Make sure to consider ALL your options here. It’s empowering to have a variety of choices, rather than feeling stuck with just one. 

For example, let’s say your farming business is in dire straits… 

One option is to spend the next 20 years getting the farming business to run like clockwork, so it’s ready to sell or hand over to your kids when you retire. 

Another option is hiring staff to manage the farm for you. Our clients Cheryl and Tim are doing exactly this and it’s working out great for them. Check out their story below: 

RELATED POST: How Tim & Cheryl are Creating a Freedom Farm 

A third option is to sell everything tomorrow. You could take some money for retirement and then hand over a traditional inheritance to your kids. That may be the best option for everybody involved, especially if your kids don’t want to take over the farm or if you’re not interested in working on the business side. 

This comes back to Step 1 and understanding whether your kids would rather have the farming business or have the money and freedom to walk away. They’ll appreciate having a choice rather than being handed something they may not want.
 

4. Have I communicated any updates with all affected parties?

 

This is a bonus step. Make sure to keep communication open continually. 

It starts with one conversation asking people what their ideal outcomes are.

It continues by sharing financial information, keeping people in the loop of how the farm is doing as things grow and change. 

It expands as you share your succession plan once you make it, so people know what to expect. 

Ongoing communication is THE #1 most important part of the whole succession planning process. You can avoid so much frustration, resentment, and stress by keeping communication open with your family. 

Even if not everybody gets what they want in the succession plan (you can’t always please everyone), they’ll respect how it happened because expectations were clear and spoken about in advance.

If you take nothing else away from this blog post, please let it be this: 

Don’t wait. Start thinking — and talking — about succession NOW. It is the responsibility of the current owners to make sure this is done properly. 

Start simply by asking your kids (and/or other people affected by succession) what their ideal outcome would be.

That’s it!

You don’t have to tell them whether their ideal outcome is possible. You just have to have an honest chat about what would be best for them. 

Once you’ve got that, you’ve already made a good start on Question 1 above! 

Remember, the best way to cure the succession issue is to give yourself enough time to create the succession you want. Start today. 

And if there’s anything we can help with, we’re only an email away at support@farmownersacademy.com.

 

The ONE thing that helped Greg 4x his turnover and 3x his profits

The ONE thing that helped Greg 4x his turnover and 3x his profits

Sometimes the smallest things in business produce the biggest results. 

Quick history lesson:


Back in 2013
, Farm Owners Academy co-founder Greg owned a vet business that was turning over $750K per year, $150K of which was profit.
 

Not bad, right?
 

But to make that money, he had to do EVERYTHING in the business himself.
 

He was working insane hours, 7 days a week — which didn’t leave much time or energy for the things he loved, including his three kids and consulting to farmers.
 

Sound familiar?
 

Greg wanted something different for his business and his life. So he joined a mastermind with a successful business coach to elevate his results.
 

And three years later…
 

After applying what he learned…
 

Greg grew his business to $3million turnover and $400K profit per year.
 

Now, that kind of financial transformation is pretty amazing. But what’s even more amazing?
 

He achieved those results without being involved in the day-to-day business. He did the hiring and firing, but basically, the business ran without him.
 

(That’s when Greg co-founded Farm Owners Academy with his business coach! Once he saw how powerful these business principles were, he couldn’t wait to share them with the farming community he devoted years to consulting.)
 

Here’s the important part:
 

Greg’s financial transformation — plus many of the transformations from our most successful clients — ultimately comes down to just one thing.
 

Yep…just one!
 

This thing is the biggest reason Farm Owner Academy Alumni members (the ones who complete the Platinum Mastermind Program ) get 4.6% higher Return on Assets Managed than the average farmer and have way more fun while they do it. (Given a $3 Million asset value, that’s an average of $108,000 more every single year, compared to the ABARES averages).
 

Want to know what that thing is so you can use it to grow your farming business?
 

Keep reading. 😉 We’ll share the secret strategy, along with 3 tips to help you apply it and start seeing results for yourself.
 

The ONE thing the most successful farm owners all have in common is…

They realise to get the things that successful farmer owners HAVE, first you need to BE (or think) the way successful farm owners think and then DO the things that successful farmer owners DO. This is the Be – Do – Have model.
 

At the top is what you want to HAVE — these are your results. (In Greg’s case, it was a $3 million turnover business that ran without him day-to-day.)
 

Beneath that are things you have to DO to achieve those results. These are your actions and habits. (Greg had to hire a coach, train new staff, redesign the business to run without him, etc.)
 

Beneath that is who you have to BE in order to carry out those actions. (Greg had to become a strategic, forward-thinking, and confident business owner in order to take the steps to grow his business. He couldn’t do it as a vet who was needed to do all the work himself and was afraid to let go of control).
 

And underneath all three of those levels is something very, very important:
 

The right MINDSET.
 

Your mindset is a set of beliefs that shape how you think, feel, and behave.
 

And without the right mindset, you’ll never become the person who takes the actions that lead to the results you want.
 

The problem is most people have it the wrong way around…
 

They think that if they HAVE what the successful farm owner has, then they will DO what the successful farm owner does…and then they can BE the person the successful farm owner is.
 

So they go spend money on things that don’t really matter, they take little action, and their thinking remains the same tomorrow as it is today….AND….nothing changes.
 

After coaching hundreds of farm owners, 95% of our clients say the biggest shift they made that led to their success was a shift in their mindset…95%!
 

And the sad part is, most people think working on their mindset is a load of fluff.
 

Have you ever thought that mindset stuff was a bit fluffy? We did when we first started out.
 

But the truth is, the right mindset lies underneath everything else. Ask any successful business owner and we guarantee they’ll have done some mindset work in the past.
 

The good news is that working on your mindset costs absolutely nothing. So it’s okay if you’re skeptical. It doesn’t have to cost you anything to try this out and see if it works.
 

Here are 3 simple but significant mindset shifts (and how to shift them) to become the world-class farmer you need to be to create the business and life of your dreams.
 

Mindset shift #1: Teenager to toddler mentality

I bet you’ve either raised a teenager or spent time around a teenager. So tell me…
 

Can you teach a teenager anything new?
 

No.
 

Do teenagers think they already know everything?
 

Yep.
 

Teens have a closed mindset that blocks them from learning new things. Unfortunately, many farmers also think like this.
 

They think they already know everything about everything and there’s nothing new they can possibly learn. And this blocks the opportunity to discover new habits, tactics, and strategies to create a high-performing business.
 

To grow as a business owner, the first thing we need to drop is our ego.
 

Because you may know a whole lot about being a technical operator on the farm. But you probably don’t know everything about… 

  • increasing profits
  • improving margins
  • creating a business model that delivers predictable results
  • developing systems and processes that give you more time

…and all the other elements of running a highly profitable farm business.

To be an open-minded business owner, you need to lose the “I already know that” teenage mindset and adopt a curious “what can I learn here?” toddler mindset.
 

Toddlers look at the world like everything is new. They’re constantly learning, watching others around them, and trying out different things to find what works best.
 

How to shift this mindset:
 

The next time you want to say, “I already know that” or “that won’t work for me,” say this instead:
 

“That’s interesting.”
 

You may not agree with everything you hear. But get out of the habit of discounting new or different information right away.
 

When you say “that’s interesting,” you can take a moment to consider how it might work for you…rather than simply assuming it won’t.
 

Top farm owners and successful business people always stay open to learning new things. If you can, too, you’ll take the first step in developing a winning mindset.
 

Mindset shift #2: “Failure” to “Feedback”

In sport, you’ve got the winning team and losing team, right?
 

And if you feel like you’re never winning (ex: if you’re always struggling to generate profits on the farm) it probably feels like you’re always on the losing side, like you’re failing.
 

But the way we see it, there is no losing. You’re either on the winning team or the LEARNING team.
 

Failure doesn’t actually exist. There’s just feedback.
 

If you try something and it doesn’t work out the way you expect, guess what? You just learned what doesn’t work…and that’s really helpful feedback! It gets you one step closer to what does work for your farm.
 

Look, succeeding in business involves trying new things and taking risks. And that inevitably means mistakes.
 

No business owner has a straight journey from win to win to win. There are always missteps along the way.
 

To be a profitable farm owner, you have to accept that mistakes will happen. But they’re not the end of the world, they’re just a step on your bigger journey.
 

How to shift this mindset:

The next time you make a mistake, remind yourself that it’s NOT a failure. It’s just a lesson.
 

As long as you remain open-minded (mindset shift #1) and keep participating…
 

If you look for feedback where you’re going wrong…
 

And if you apply that feedback to adjust your strategy and keep moving forward…
 

…It’s impossible to fail, in our experience. You’ll always find a way to win eventually.
 

Just think, “Okay, so now I know what doesn’t work. That’s great feedback.” And move on!
 

Mindset shift #3: Blame to ownership

After a bad season, most farmers will say things like…
 

“The bloody bank raked me over the coals.”
 

“My employee did a crap job and cost me a fortune.”
 

“The drought ruined my entire year.”
 

It’s really tempting to blame something or somebody else for your results, right? But that won’t help you grow a profitable farming business.
 

Because if it’s always somebody else’s fault, you’ll always be a victim without any control.
 

A stronger mindset is to take responsibility for the results on your farm. All of them.
 

And instead of blaming others, look for ways YOU can improve the situation:
 

“I could have done better negotiating my rates with the bank. I’ll learn more about negotiation and have another conversation with them.”
 

“I didn’t train my employee well enough. I’ll create some systems and processes to make it easier for them to do the job right in the future.”
 

“I chose to farm in this area and I know droughts happen. I need a better plan so I can still make profits even if the weather’s crap.”
 

RELATED POST: It’s How You React to the Drought that Matters Most
 

Can you feel the difference between blaming and taking ownership?
 

Blaming feels weak, right? Whereas taking ownership feels strong and powerful.
 

How to shift this mindset:

You need to start playing “above the line”…

 

Top farm owners take ownership, accountability, and responsibility for every outcome in their farm business. They act as if everything is within their control.
 

So they’re always asking, “how can I improve this? What are the SOLUTIONS I can create?”
 

It’s a creative, problem-solving mindset. And when you use it, you’ll continually find ways to improve your results.
 

Whereas struggling farmers often blame someone or something else, make excuses, and deny any role in the problem. That makes them powerless to fix the situation and they keep repeating the same patterns and getting the same results.
 

If you want to step up and be a profitable farm owner, you need to start playing above the line, in all situations. And it starts with a mindset of taking ownership.
 

In our experience, improving your mindset is the #1 most important thing you can do to improve results on your farm.
 

The right mindset fuels the right beliefs and the right actions to get the results you want.
 

And you can start right here, right now, by making these three powerful mindset shifts: 

  1. Adopt an open-minded toddler mentality
  2. Don’t fear mistakes and see failure as feedback
  3. Take ownership of everything on your farm

Your mindset won’t change overnight. But little by little, you’ll notice that you start to think differently. And when you do, it will have an incredible effect on your actions and results.
 

What’s coming next…

We’ll be sending lots of free education your way over the next few weeks.
 

Have a toddler mentality with this stuff! Keep an open mind and see how it can work for you, rather than automatically saying, “I already know it all.”
 

The information we’ll be sharing has proven to work for our farmers (remember, they’re making a 4.6% higher ROAM every year) so you’re bound to pick up some powerful tips for your farm business.
 

We’ll send these lessons straight to your inbox, so click here to sign up for free Farm Owners Academy email updates.

 

The 4 biggest tax mistakes that cost farmers thousands

The 4 biggest tax mistakes that cost farmers thousands

Ahh, that blissful feeling of finishing your year-end financials. 

You’ve totaled the bank balances.

Listed your income and expenses.

Painstakingly answered the 101 questions from your accountant.

And even though you’re breathing a sigh of relief because you’re finished for the year…

…You’re also probably wondering if you could have:

  • Saved more tax
  • Reduced your expenses
  • Made more money

If you’re like most farmers, the answers are most likely (unfortunately): yes, yes, and YES.

The truth is, there are a few common finance mistakes that cost farmers a heap of money every year at tax time. 4 of them, actually.

But there’s good news…

These 4 mistakes are really simple to fix, once you know what they are.

You don’t need to be a finance expert to understand the solutions.

And they’re easy…many can be solved in less than an hour. (One of them actually takes no time at all to do.)

So that next year, you’ll submit your taxes feeling completely confident that you’ve made and kept as much money as you possibly could.

Keep reading to learn the 4 year-end financial mistakes most farm owners make — and what to do instead…

Mistake #1: Buy a heap of stuff at the end of the year (because the tax man told you to)

This is probably the most common year-end tax mistake…and almost all farm owners tell us they’ve done it.

At the end of the year, many accountants suggest buying an expensive piece of machinery to reduce your profits on paper and save some tax.

You probably have a wish list of things you want on the farm, right? So this is a no-brainer. You buy a new harvester or a shed or a brand new ute (or maybe all 3) and think you’re making a good financial decision.

The problem is, this ends up COSTING you money, not saving it.

Sure, it might save you a bit of tax this year. But in the long run, it’s like spending $1 to make $0.30.

Here’s why:

Let’s say you bought your current harvester 8 years ago and it cost $200,000. It still works great and your plan is to sell it in 2 years, after 10 years of use.

But then your accountant tells you to buy something to save some tax. And there’s a good trade-in deal for your harvester this year. So you figure you may as well trade it in and get a new one.

But there’s a big hidden cost…

You just cut 2 years off the use of your harvester! So instead of paying $200,000 for 10 years of use (essentially a cost of $20,000 per year), you paid $200,000 and only got 8 years of use out of it ($25,000 per year).

You effectively just cost yourself $50,000 by replacing it 2 years before you needed to. (And it definitely didn’t save you $50,000 in tax.)

See? In the long run, this strategy can cost you a whole lot more than it saves.

Profitable farmer solution:

This one’s simple: Only buy new equipment when you truly need it.

Bringing forward expenses can be a good way to assist with tax planning but it must be done with careful consideration of the follow-on effects to the profitability of the business.

The most profitable farmers have a well-documented plan for equipment replacement — and they only deviate from that plan where there is a clear financial advantage to bringing forward investment in that equipment.

Remember: the more profitable your business, the more tax you pay. Be careful about focusing on short-term tax minimisation at the expense of long-term business profitability.

It’s often better to make more profit in the long run and pay a little more tax today than make expensive purchases before you need to.

Mistake #2: Accept your current rates

What’s one of the best ways to increase your profits?

Reduce your costs.

And one of the easiest and fastest ways to reduce your costs next year is by reducing your interest rates from your bank, fees from your selling agents, etc.

Most farm owners accept the interest rates given to them as gospel rather than seeking to reduce them.

But the truth is, your lender can almost always offer you a better rate…if you’re willing to ask for it.

Lenders want to make as much money off their loans as possible. So it’s in their interest to give you the highest rate that you’ll accept.

Read that again: Your lenders are currently offering you the highest rate they think you’ll accept.

What does that mean for you? There’s nearly always room to negotiate your rate down. Lenders would rather make slightly less off your loan than lose you entirely.

But lenders won’t just give you a lower rate. You need to ASK for it.

Profitable farmer solution:

Have conversations with each of your lenders to see if they can offer you better terms. Explain your need as a business owner to reduce your costs and ask them what they can do to improve your rates to keep you as a customer.

Here’s a tip if you want to negotiate your bank rates…

Speak to a lending broker who’s independent of your bank. They’ll share all the deals available in your position so you know what else is out there. (It’s often better than the terms you’re currently getting from your bank.)

Then, present those better offers to your bank manager…and ask if they can match them.

It doesn’t cost you anything to shop around and negotiate. But it could save you a whole heap of money next year at tax time.

 

RELATED POST: Click here to access a FREE negotiation skills training session from Farm Owners Academy

Mistake #3: Store your money in FMDs

Many farmers put loads of money into FMDs (Farm Management Deposits)…and it’s one of the biggest mistakes you can make.

An FMD is a holding account where you can store your income and defer paying tax on it to a future date.

And FMDs can be useful…

Especially if you farm in a risky area where your income is quite variable. In the good years, you can essentially store money in your FMD and then dip into that pot to get you through future, poorer years. 

…But you always end up paying the original amount of tax eventually. It’s just spread out over years instead of all at once.

Using FMDs isn’t a tax minimisation strategy…it’s a tax delay strategy. You’ll save some money today but create a future tax obligation for yourself.

And here’s why it’s such a costly mistake (if you’re not in a high-risk area or you have your account maxed out for extended periods):

The money in an FMD hardly earns any interest (often less than inflation). It just sits there, like keeping a pile of cash under your bed.

…When that same money — if used differently — could be working for you and making you even more money.

Profitable farmer solution:

Unless you live in a high-risk area, you’re often better off paying the tax now and investing the remaining profits to grow your wealth.

There are so many ways to make your money work for you rather than have it sit in an FMD doing nothing.

Those are all much smarter uses of your money because you’ll make it work for you, instead of sitting there earning minimal interest in a FMD.

Let’s look at an example:

Say your average tax rate is 30%.

If you have an average of $500,000 sitting in FMDs for 5 years earning you 0.45% interest, it’ll be worth $507,925 in 5 years time. At that stage you withdraw the money and pay $150,000 in income tax. This leaves you with $357,925 after tax in 5 years.

But if you took that same $500,000, paid the $150,000 tax immediately, leaving you with $350,000 and put it into an investment that earned you 8% compound return over the next 5 years (say, the share market) it would be worth $489,625 in 5 years!!

That’s an extra $131,700 for doing absolutely nothing!

The table below lets you see how the numbers play out…

RELATED POST: How to create wealth off your farm and generate money while you sleep

Mistake #4: Make financial decisions by your bank balance

Most farm owners make financial decisions by asking, “Do I have enough money in my bank account? If yes, I’ll buy this. If no, I won’t.”

But that’s the wrong way to manage your business choices.

Because when you make decisions by your bank balance alone, you miss the big picture.

It’s much smarter to base your financial decisions off of a cash flow forecast.

A cash flow forecast is an estimate of your income and expenses each month, based on where you want to end the year.

Think of it like a household budget for your business…

Imagine you’re saving for a holiday in June that costs about $5,000. In February, you get two speeding tickets that cost you $2,000, thanks to your lead foot.

Does that mean you can’t take your holiday? Not if you adjust your decisions!

If you know where you’re at relative to your budget, you can make some changes over the next few months to cut back and still afford your holiday. You certainly wouldn’t buy a new TV just because you see $1,000 sitting in your bank account, right? Because that money is earmarked for your holiday.

That’s why having a 12-month cash flow budget is so important.

Knowing your baseline of what to expect each month allows you to change your plan depending on what happens as you go. It’s a much smarter tool to make financial decisions from than your bank balance.

Profitable farmer solution:

Create a 12-month cash flow budget with predicted monthly revenue and expenses.

The most profitable farmers then benchmark their budget, allowing them to know exactly what financial result they will achieve if they follow the plan.

You want to create a cash flow budget that helps you maximise profit, given the circumstances that may play out. It’s not just about minimising costs!

We recommend that all farm owners develop a production model for their business, based on their assumptions re: predicted production outcome, costs, and income for the year.

Then stress test that with different price and season assumptions and prepare a monthly cash flow budget from your most likely outcome for next season.

Knowing what you will do differently in a top 20% season to maximise profit — and in a bottom 20% season to minimise the downside — are also keys to effective cash flow budgeting.

To help you get started, we’ve got a template to create your 5-year cash flow forecast. Just click here to download your free cash flow forecast template.

RELATED POST: The 3 key financial figures profitable farmers track

And there you have it: the 4 year-end financial mistakes most farmers make:

  • Making big purchases at year-end to “save tax”
  • Not negotiating with their lenders for better rates
  • Dumping a heap of money into FMDs
  • Not using a cash flow forecast to make financial decisions

Each of those four areas will enhance your profits in a unique way. If you focus on making those four changes this year — or even just one, honestly! — you’ll feel confident next June that you made smart financial decisions and made (and kept) as much money as possible.

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