Is your balance sheet lazy or hardworking? Here’s how to tell (+ build more wealth!)

Is your balance sheet lazy or hardworking? Here’s how to tell (+ build more wealth!)

Is your balance sheet lazy?

For many farm owners we meet, the answer is “yes”.

And that’s a huge problem…

Because a lazy balance sheet is a clear sign that you’re leaving money on the table.

Money that could be used to:

…Or the million and one other things that make life fun, fulfilling, and meaningful.

So today, let’s agree to kill the lazy balance sheet once and for all, shall we?

Because life’s too short not to enjoy the money you’ve worked so hard for.

In this week’s blog post, we’ll talk through what a lazy balance sheet is, how to tell if you’ve got one, and the antidote to make your money work for you so you can grow your wealth…

…Instead of it sitting around doing nothing inside a lazy balance sheet.

First up: what exactly is a Lazy Balance Sheet?

This is what we at Farm Owners Academy call a balance sheet that’s not leveraging your money very well.

Basically, if you’ve got a business that’s really profitable, but you’ve got very high or 100% equity (so little to no debt), that’s a lazy balance sheet.

Why “lazy”?

Because your money’s just sitting there…when it could be PUT TO WORK.

Something rich entrepreneurs do well (and most farm owners don’t) is turn their existing money into more money. They reinvest profits into the business or in outside investment opportunities.

Why? Because at the moment, debt is cheap.

As recently as the 1980s, we were seeing 23.5% interest rates…which is nuts! But today? Rates from the bank are more like 3%. That’s nothing!

Considering you can make 7, 8, 10% returns elsewhere, it’s often smarter to put your profits into a high-yield investment today, rather than pay down debts.

RELATED POST: The Best Ways to Grow Your Wealth…Safely

Let’s play a quick game…

Pretend you’ve made $500K in profit this year. You can…

Option A: Put it all in a savings account or FMD.

Option B: Use it all to pay down your loans, which have a 3% interest rate.

Option C: Invest it in the share market, that’s currently giving about 8% returns.

(NOTE: Of course, that 8% return isn’t guaranteed and there’s risk in the share market…but there’s also risk in the property market — which is what farming land is! Most of the risk in the share market is if your investment horizon is short-term. If you invest your money long-term, the risk is low and returns more dependable.)

Which option would you choose?

Let’s look at what each option would give you…

Option A: Put it in an FMD at 0.45% interest: makes you $2,250 p.a. Basically no benefit — that’s what we call “lazy” (note you will need to pay tax on this at some point).

Option B: Pay tax (assume 30% tax rate), pay down your loans (3% interest rate): paying $150K tax, paying off $350K of your loan saves you $10.5K. There’s a small benefit there, but still — pretty lazy.

Option C: Pay tax and invest it in the share market (yielding 8% returns): you pay $150K tax, earn $28K off that $350K investment. What could you use the extra $28K for? Just think about it!.

(Even if you don’t make 8% returns, you can invest in the share market in a way that will give you a stable dividend yield. Irrespective of what happens with the capital value of the shares, you still get the dividend and are still better off).

^^ Ding ding ding! We have a winner!

Do you see how in Option C, your money works for you?

That’s why we call it a “hardworking” strategy, rather than a “lazy” one.

3 investments to grow your wealth

If you’re running a Lazy Balance Sheet — with high profitability and low or no debt — your money could be better spent building your wealth in other ways.

When it comes to investments, we always advise our farm owners to start with these 3:

1. Expand your farming enterprise 

If you have a profitable farm enterprise, it could be a great idea to reinvest your profits back in the business in order to grow it (and see higher profits as a result). 

You could:

  • Hire employees to do the $25/jobs for you
  • Buy the farm next door
  • Invest in capital improvements that increase efficiency or production
  • Purchase more land, livestock, or machinery
  • Enrol in business education that will expand your skills and help you make more money (might we suggest Farm Financial Framework? 😉)

2. Invest in the share market 

Another great way to grow your wealth is to invest in the share market, which currently returns about 8%.

We love this option because it provides relatively stable returns. Plus, it’s easy to sell your shares if you ever need to access that capital quickly, like if interest rates increase.

RELATED POST: Investing is Just Like Planting…and There are Lots of Opportunities Right Now

3. Invest in (off-farm) property

A third option is to buy residential or commercial property. Many wealthy businesspeople grow their fortunes through property investing, because the property market tends to grow over the long-term.

There may be ups and downs (as we saw in the 2008 financial crisis). But if you’re willing to play the long game, property will pretty much always increase in value — often quite significantly.

You can also rent out your properties and use the rental income to make mortgage payments. This allows you to essentially own your investment for free!

RELATED POST: Covid-19 and the Property Market

2 clear benchmarks to take on debt SAFELY

How much debt is too much debt?

That’s a big question people have when they start thinking about investing.

Because yes, debt is cheap. But even at cheap rates, too much debt can still sink a business. So let’s talk about how to make sure you’re taking on debt in a safe, low-risk way.

Quick Disclaimer: What we’re about to share is for educational purposes only. It’s not personal professional advice; you should always consult a financial advisor for your specific situation. 

But for the purposes of learning, here are two benchmarks that help you take on debt safely…

1. 80% equity (or greater)

The benchmark we like to use in the farming industry is to aim for an equity level of more than 80%.

That means you need to own 80% of your assets.

Having most of your assets owned gives you a certain level of security. But it also gives you some room to play, by leveraging that extra 20% to put into higher-yield investment opportunities to grow your wealth.

2. Finance Cover Ratio of (at least) 3

Your Finance Cover Ratio is a measure of how easily you’re able to cover your debts.

If, for example, the interest on your debts cost you $100k per year, we want to see your Net Profit covering those interest costs by at least 3x — meaning you’d need to see a Net Profit of at least $300K that year.

Net Profit = Total Revenue – Total Costs

As long as you’re making a Net Profit of at least $300K, you could take on debt that costs you $100K each year without much risk.

So before you use any profits on a new investment, always make sure:

  1. You have a sustainable equity level
  2. You can cover your interest payments by at least 3x each year

…Then you can invest in a safe way, giving you security and peace of mind.

How to turn your Lazy Balance Sheet into a Hardworking Balance Sheet


Now you’ve seen how the right kind of (safe) debt can actually be a good thing…and an incredible way to grow your wealth.

What do you do if you’re currently running a Lazy Balance Sheet, and have too high an equity level?

Enter: The Hardworking Balance Sheet.

On a Hardworking Balance Sheet, every dollar is being put TO WORK — either to keep your farming operation running and/or grow your wealth. No dollar sits unused.

Here are 3 things a Hardworking Balance Sheet will include:

  • Equity hovering around 80%
  • Net Profits that are 3x the amount of any interest payments on your debts/loans
  • Investment(s) that return a higher % than your loans cost you (see section above for our top 3 investment picks)

If your equity is higher than 80% and you’re ready to take on a bit of debt to grow your wealth, the next step is to have a chat with your bank and financial advisor.

As long as you’ve been paying off your loans, they’ll likely be able to offer you more money that you can start investing with. Just make sure you don’t go much below 80% equity across all your debts and that your Finance Cover Ratio stays above 3!


I hope today’s post helped you get out of the matrix of “always pay down debt first”…because that’s not necessarily the right default mode to have.

You don’t want to just be working hard for your money. You want your money working hard for you.

If you find that you’re storing all your money in savings accounts, FMDs, or under your mattress, you’re missing out on massive opportunities to grow your wealth.

Luckily, there are heaps of ways you can invest your money to create more money in a safe, low-risk way.

But the longer you wait, the longer you allow your balance sheet to be lazy, the less time you have to accumulate wealth. So take a look at your balance sheet today and brainstorm some ways you could turn it into a Hardworking Balance Sheet instead.

As always, we’re here to help! If this blog post piqued your interest and you want to learn more about building long-term wealth, let’s have a chat. Just send us an email at and we’ll get it sorted.

Want to learn more about finance? Join our free training.

If you’re loving what you’re reading and want to learn even more about how to apply pro finance lessons to increase profits on your farm, join us for our upcoming free training.

We’ll simplify farm finance and give you plenty more ideas for how you can make more money (ie: reduce your inputs and increase your outputs) without working more hours.

Click here to register for our free finance webinar.

Our top 4 tips for higher gross margins (and hence…higher profits!)

Our top 4 tips for higher gross margins (and hence…higher profits!)

Last week, we talked about where most farm owners go wrong in trying to grow their profit.

Most people focus on reducing costs (through things like minimising taxwhen what they really should be focusing on…

Is increasing revenue.

As this study from the Wimmera region of Australia shows… 

The top 20% most profitable farms spend a bit more than average (blue bars)…but they make significantly more in income (black line).

Put another way, they’re putting in slightly more input for significantly more output.

Inputs are what you put into your farming operation: time, effort, and resources.

Outputs are what you get out: the quantity and quality of what you produce and sell (whether that’s grain, sheep, etc.)

The simple recipe for growing your profits? Keep your inputs as low as possible while maximising your outputs.

Today, let’s dig deeper into this topic and explore the 4 best ways to do this.

Specifically, we’ll focus on a key financial figure called your Gross Margin.

Don’t worry if you don’t know what that means! We’ll tell you what it is and how to calculate it in a minute.

There are 4 simple ways to increase your Gross Margin and we’ll walk through each one, giving you a clear example so you can see exactly how this might play out in your farming business to grow your profits.

FYI: This lesson is pulled directly from our Farm Financial Framework course, where farm owners learn the language of finance to increase profits and build a more sustainable business.

The info was too good to keep it just for our members — we wanted to give you a sneak peek inside the course!


Quick finance lesson: What is Gross Margin?

Gross Margin is one way to measure business performance.

In simple terms, it’s the amount of revenue that’s left over after you account for the Variable Costs incurred to produce that revenue.

Variable (or Direct) Costs are the costs that go up and down, depending on your level of output.

A few examples of Variable Costs in a sheep enterprise are:

  • Shearing
  • Ear tags
  • Drenches
  • Supplementary feeding

…You get the drift.

All of the above will vary based on the size of the sheep enterprise.

Another type of cost you may hear us talk about is Fixed (or Overhead) Costs. These are not dependent on the size of the business or production levels. They are costs you incur regardless.

An example of Fixed Costs are your council rates. It’s the same whether you run 1,000 sheep or 10,000 sheep on the same area.

…But you don’t need to worry about Fixed Costs for today’s lesson. We’re just sharing that for your information!

Here’s how to calculate Gross Margin:

Gross Margin = Revenue – Variable Costs

Your goal as the farm owner is to optimise Gross Margin for each enterprise, to the point where profit is maximised. You do that by maximising the outputs while minimising the inputs.

There are 4 main ways to do this and EVERY farm can apply these lessons. Let’s dig into each one now:


Strategy #1: Optimise Investment

The first way to increase your Gross Margins is by optimising your Investment — tweaking things to make the time, money, and/or resources (the investments) you put into the business create even more revenue.

To do this, you’ll add in a bit more inputs to create a large amount of extra output.



Put another way: What’s something you can add to your operation (that costs only a bit of time and/or money) that will produce a BIG growth in revenue?

Example of Optimising Investment: Culling on performance in a Merino wool flock.

If you start measuring the fleeceweight and fibre diameter of your Merino flock, you could then select them based on their measured performance, which would result in a big increase in outputs.

By spending a little more money on the cost of measurement and a little bit of time on measuring (both of these are investments), it can produce a significant increase in your income by keeping only the best performing animals.

That’s the idea behind optimising Investment: investing slightly more inputs to create significantly greater outputs.


Strategy #2: Optimise Efficiency

The next way to increase your Gross Margin is by increasing the efficiency within your business.

Your goal here is to put in the same amount of inputs to generate significantly more outputs.



Put another way: Where can you “work smarter, not harder” in your business to produce a BIG growth in revenue?

Example of Optimising Efficiency: Use a more efficient fertiliser.

Fertilisers with similar costs can vary quite a bit in terms of their analysis. You could buy a different fertiliser at a similar price to what you’re paying now, that puts out significantly more N-P-K-S onto the pasture.

That would lead to higher growth of pasture and livestock that graze there.

You’d use the same inputs (cost of fertiliser) for greater outputs (pasture and livestock growth). That’s increasing efficiency!


Strategy #3: Optimise Focus

In this strategy, you’ll use far fewer inputs to create only a small amount of lower outputs.



But wait…doesn’t reducing outputs seem counter-productive to increasing profit? Not necessarily.

Optimising Focus means reducing your costs quite a bit, but having it result in only a tiny bit lower revenue.

Let’s say your original inputs were $20 and the output produced was $40, giving you $20 Gross Margin. If you reduce your inputs to $10, which as a result reduces your output to $35, that leaves you with $25 Gross Margin…which is an increase in the profit you keep!

See how that works? As long as you reduce your inputs by MORE than your outputs, you’ll make more profit.

Example of Optimising Focus: Change your ewe replacement policy.

Let’s say you’re buying in external ewes at $250 each for your composite flock. Instead of selling all your composite ewe lambs at $150— like you usually do — you could keep a percentage of those lambs. Then instead of buying expensive new ewes, you can use those lambs as replacements.

In this way, the input costs (cost of replacement ewes) can be dramatically lowered, by around $100 per animal. And you’ll only end up with a slightly lowered return as a result. That means higher profits!


Strategy #4: Optimise Waste

The final strategy to increase your Gross Margin is to optimise waste by putting in significantly fewer inputs for the same level of output.



Put another way: What should you stop spending time and/or money on, because it’s not growing your revenue?

Example of Optimising Waste: Stop spending money on licks and blocks.

We know from experiments done by CSIRO and other departments of ag that there are situations where licks and blocks are not very effective for the sheep they’re fed to, the same production effect could be achieved by purchasing and feeding more cost effective nutrients.

The cost of the licks and blocks can be quite significant but there’s not much production benefit.

So…you could stop buying them (significantly lowering your input) without really affecting the sheep (the same amount of output). That’s how to optimise waste to create higher profits.


Bringing it all together

Ideally, to increase Gross Margin, we’re looking for a combination of all 4 strategies above.



The goal is to use significantly less inputs to create significantly more outputs → that’s how to generate consistently high profits.

The sum of the parts here is bigger than the individual components. If you can find one way to apply each of these 4 strategies, you’ll see massive increases in your farm’s profits this year.

As always, we’re here to help! If this blog post piqued your interest and you want to learn more about how you can increase Gross Margin on your farm, let’s have a chat. Just send us an email at and we’ll get it sorted.


Want to learn more about finance? Join our free training.

If you’re loving what you’re reading and want to learn even more about how to apply pro finance lessons to increase profits on your farm, join us for our upcoming free training.

We’ll simplify farm finance and give you plenty more ideas for how you can make more money (ie: reduce your inputs and increase your outputs) without working more hours.


Click here to sign up for the free finance training — it’s free!

The big secret rich farmer owners know (and average farm owners don’t)

The big secret rich farmer owners know (and average farm owners don’t)

An insider secret rich farm owners know that the rest of us don’t?

Focussing on cutting costs in your farm business is probably keeping you broke. 

Okay, maybe its not keeping you broke-broke…but it’s very unlikely that it is making you rich.

It’s counter-intuitive, I know. And we’re not saying reducing costs is bad and to be avoided!

But focusing on this method over the long run is undoubtedly different than what rich farm business owners do.

When you understand this, you’ll shift your thinking to maximum profit rather than minimum cost!

Here’s an example to show you what I mean…

My friend’s farmdog had a nasty case of pancreatitis earlier this year. To save the dog’s life, the emergency vet put him on a strong dose of steroids.

The steroids did the trick and the dog’s health improved.

Now, those steroids saved the dog’s life, no question about it. But that medicine won’t help him achieve better long-term health. In fact, if he continued with steroids long-term, it would actually degrade his health, as the medicine has some nasty side effects.

It was a short-term fix, not a long-term one.

In order to live a long, full life, the dog needed a new healthy diet. My friend saw a different vet who specialised in nutrition to come up with a food plan that would keep her dog on the right path.

The two vets were equally qualified and equally important to the health of her dog…but they had different goals and methods.

The emergency vet focused on the short-term: saving the dog’s life. The nutrition vet focused on the long-term: maintaining good health for years and years.

Think of cutting costs like the emergency vet…

The goal is to save money this year but miss the opportunity that is in front for higher profits year on year.

Put another way: Your decisions to cut costs may save you $1 this year, only to cost you $10 in the long-run.

If you want to maximise profit, you need to shift your focus a bit… 

The secret rich farm owners know (and average farm owners don’t) 

If you want to build true wealth…

You’ve got to stop thinking like about cutting costs (a little windfall this year)…

And start thinking like a rich business owner (who aims for big wins over the long-term.)

The most successful farm owners know it’s better to increase revenue than cut costs.

They ask “How do I maximise profit?” rather than “How do I minimise cost?”

Put another way: “How can I use what I have to make more money in the long-term?” Vs. “How can I save a couple bucks this year?”

When you focus on increasing revenue, it can have a multiplying effect on your profits…and that effect doesn’t happen when you just reduce costs.

Here’s an example to show you how this works:

If you make $1.00 in income… 

  • $0.30 of that income might go to your variable costs — things that increase/decrease depending on how much you produce, like labour, seed, animal health, etc.
  • $0.30 may be fixed or overhead costs — things you have to pay regardless of how much you produce, like plant and equipment, council rates, repairs and maintenance, etc.
  • …Leaving $0.40 (40% of your income) as profit


OPTION 1: If you reduce your fixed costs by 10%… 

  • Your income remains $1.00
  • Your variable costs will stay the same ($0.30)
  • You’ll save 10% ($0.03) on fixed costs (new total: $0.27)
  • Now you’ll keep $0.43(43%) as profit


OPTION 2: If you increase your revenue by 10%… 

  • Your income increases to $1.10
  • To achieve that 10% increase, your variable costs might have increased by 10% too (to $0.33)*
  • Your fixed costs likely stayed the same (still $0.30)
  • …Leaving $0.47 (47%) profit 

See how that works?

You’ll keep $0.07 (70%) of that extra $0.10 income as profit…compared to only 40% profit that you made originally and 43% when you cut costs. 

*NOTE: There are lots of examples where an increase in income can be achieved without an equivalent % increase in variable costs! Click here to find out how.

It doesn’t sound like much when we’re talking about $1. But when you multiply that out over a million dollars, it’s a fair bit.

The important takeaway: an increase in income doesn’t scale up proportionally! Your profit line grows quicker when you increase your revenue by a percentage than if you decrease your costs by a percentage.

That’s why rich farm owners focus on growing revenue, rather than cutting costs.

RELATED POST: The 7-Step Plan to Higher Profits on the Farm 


The proof is in the pudding 

Don’t take our word for it that you’ll make more money by increasing revenue than decreasing costs.

Check out this study from the Wimmera region of Australia…

For croppers, the top 20% profitability farms have higher costs (blue bars)…but significantly higher income (black line): 


And it gets even more interesting when you break it down further… 

When you look at costs as a percentage of income — Total Farm Costs Ratio in the chart above — the top 20% farmers have much lower ratios than the average farmer (around 75% vs. 90%).

This may be counter intuitive as in the first graph we showed you that the top 20% businesses had higher costs but they have a lower cost ratio. Why is this happening?…Overall they are producing more output. They are using that slightly higher cost base to drive considerably more production which results in those costs being spread out over more units of production (or income).

What this means is that they have a lower cost of production (the cost per unit of output).

AND you can see their net profit ratio — which is profit/income — is also much, much higher.

So the best performers may spend a bit more…they have a lower cost of production…but they also make a lot more overall!

That’s why rich farm owners focus more on increasing revenue than decreasing costs. If you want to be a top producer, that’s what you should focus on as well.

The way that you start is by getting the right business model that delivers better profits.

The good news?

You’ve just completed your first big 3 finance lessons!

  1. Most farm owners rely on what their parents taught them for advice on their business…and now you know when you should (and shouldn’t) heed their suggestions.
  2. Most farm owners think cutting costs is the best strategy to keep more money in their pockets…and now you know that can cost you in the long run.
  3. Most farm owners think decreasing expenses is the best way to grow profits…and now you’ve seen the math on why growing revenue is a more powerful strategy.

The #1 most important thing you can do as a farm owner is to know your financial numbers…better than your accountant does.

Not sure where to start?

We’ve got something to help you master your financial numbers to grow your profits… 

FREE TRAINING: Learn The Fundamentals Of Farm Finance…And Pump Your Profits This Year

Join us for our free upcoming webinar to get a crash course in finance, so you can learn the basics of farm business finance.

Click here to register — it’s free!

As always, we’re here to help! If this blog post piqued your interest and you want to learn more about increasing your revenue on the farm, let’s have a chat. Just send us an email at and we’ll get it sorted.

Why most farm owners are wealthy on paper but not rich in their bank accounts…

Why most farm owners are wealthy on paper but not rich in their bank accounts…

When I ask you to picture the wealthiest 1% in the world, who comes to mind? 

Jeff Bezos?

Gina Rinehart?

Bill Gates?

What if I told you that YOU are part of that elite group? 😳

Even if it sounds completely insane, it may very likely be true!

Many of the farm owners we know fit the financial criteria to be part of the top 1%. (We’ll tell you the exact criteria in just a minute.)

But if so many farm owners are in the top 1% — or even the top 10% or 20% — why don’t they feel like it?

Why do they spend their days stressed about money and losing the family farm…

Working themselves to the bone, 7 days a week…

Yet still have barely any money in their bank accounts?

There’s this disconnect happening because most (or all) of your wealth is likely in non-cash assets — land and equipment, mainly — rather than your bank account.

Even if you own $100 million in land and you’re running the farming business on it, if your business isn’t turning a profit or paying you a salary, you might not have a cent in your bank account.

Most farmers are asset rich (which makes them wealthy on paper) but cash poor. So it doesn’t feel like money at all.

I don’t know about you…

But if you’re part of the wealthiest 1% of the world, I say you deserve to feel and live like it!

You should ENJOY your money and all the fun things that come with it…

Feel calm and at ease, knowing you’ve got a solid financial net beneath you…

And know that you’re building a legacy of dependable wealth for future generations.

Whatever your cash situation right now, I guarantee there’s a way to leverage your assets better to live a richer life.

Today’s blog post will explore the 3 options in front of you to make the most of your wealth (whatever level you’re at), so you can start living like the rich business owner you are on paper.

Are you part of the top 1%?

According to The Conversation, an individual net worth of $1,295,825 AUD makes you among the world’s 1% richest people. If it’s you and your partner at home, that’s a combined household net worth of $2,591,650.

(Note: That amount is wealth, not income).

Net worth is the total of every asset to your name — bank balances, property ownership, farming equipment, share portfolio, superannuation balances, etc. — minus any debts.

Basically, if you sold everything and levelled any debt to your name tomorrow, how much money would you have? ← That’s your net worth.

According to ABARES statistics the average farm owners net worth in Australia is in the order of $5.8 million, mainly in land, livestock and plant and equipment.

Are you in that bracket?

If so — you’re in the top 1% wealthiest people on the planet. (May I get you some caviar and champagne to celebrate?)

Even if you’re not in the top 1%, I bet you’re hovering somewhere above the wealthiest 20% of all people on the planet. That’s such a powerful place to be!

So what should you do with that wealth, in order to make the most of it?

The 3 wealth benchmarks you should be seeing on your farm

If you’re in the top 20% (and I’m willing to bet you are), we have certain benchmarks we like to see our farm owners hitting.

These are signs of a healthy business AND a healthy personal life. (Because you deserve to live a rich life for all the hard work you put in day in, day out!)

Every farm business is different so these benchmarks aren’t exact. But they’ll give you a rough idea of where you want to be tracking.

If you’re NOT hitting these benchmarks, don’t worry. We’ll give you 3 options in a minute for how to improve your situation.


Benchmark #1: Your business should be returning to you in profit (after paying yourself a commercial wage – see Benchmark #2) at least what you could lease your land out for (currently around 3-5% of asset value).

The market lease rates in Australia at the moment are around 3-5% of land value — so that’s what you could make if you stopped farming and leased your land to someone else. Other than being paid the lease payment, there is no risk to this strategy.

To determine if you’re hitting this benchmark, you need to calculate your Return on Assets Managed (ROAM). This is a financial ratio that tells you how your profitability compares to the assets used to generate that profit.

Here how to calculate ROAM: 

=     Net Profit
      Asset Value

Note: Net Profit is your income, minus all your expenses (excl. tax, leases and finance costs). The expenses include allocating a proper wage for all owners and family working in the business (see Benchmark #2). 

For example, if you had a Net Profit of $100K last year and your Asset Value is $2M… 

= $100K    =    5%
    $2M         ROAM

If you’re not currently seeing 3-5% return on assets managed (ROAM), you might as well be sitting on a beach somewhere and leasing out your land — you’d make the same amount of money and be taking on less risk!

(If you want to learn more about the healthy financial farm benchmarks like ROAM, click here to download our free cheat sheet!)

Benchmark #2: Pay yourself (the principal owner) a salary of $115K and full-time family workers $70K.

Too many farmers don’t pay themselves a proper wage. You’re highly skilled and should be paid accordingly!

$115K (incl. super and on costs) is the bare minimum for what you deserve as the farm owner. Often our farm owners enjoy salaries much higher…but $115K is the minimum you should be seeing on a healthy farm business. If you had to pay someone full time to manage your farming business and run it well, this is at least what you would have to pay.

In a similar vein, full-time family working in the farming business deserve to make at least a $70K salary (incl. super and on costs), to compensate them for all their hard work.

A healthy farm business can easily work salaries like this into their operating expenses.

Benchmark #3: Keep your Equity Percentage around 80%.

Equity Percentage measures the value of ownership in your farm (land, plant and livestock) and is basically the breakdown of assets YOU own, versus how many are owned by the bank or other lenders. A healthy farm business owns the majority of those assets — around 80% is ideal.

Here’s how to calculate Equity Percentage:

= Market Value of Your Farm — Farm Debts
        Market Value of Your Farm

For example, if your farm is worth $1M, you owe $200K on your mortgage and have $100K in other debts…

= $1M — ($200K + $100K)      =     $1M — ($300K)     =   $700K      =        70%
                 $1M                                         $1M                     $1M        Equity Percentage

(If you want to learn more about the healthy financial farm benchmarks like Equity Percentage, click here to download our free cheat sheet!)

It’s okay if your Equity Percentage is lower than 80% from time to time, as long as the business profitability can sustain it and you have a clear plan to return it to a higher level. It shouldn’t be way higher than 80% though, as this has the potential to create a lazy balance sheet and means you’re missing out on other income-producing activities. 

As the chart above shows, most farm owners’ equity levels have increased dramatically recently because land prices have gone up. If you aren’t taking advantage of this (and the low interest rates right now) to build wealth over time, you may be missing a big opportunity.

Maybe you’re hitting all three of those benchmarks already. If so, you can click out of this blog post now because you’re already killing it! Keep up the good work, mate. 😉

But more likely, you’re lagging behind on one, two, or all three of those benchmarks. That’s okay, and most farm owners are in the same boat.

The next step is to explore your options, whatever your current financial position. You’ve got this big asset base and you’re highly employable and skillful…don’t accept a situation where you’re not living like a wealthy person!

3 options to ENJOY your high level of wealth


1. Sell everything (if you love farming don’t do this…)

Let’s start with the most controversial option, shall we? 😏

You’ve always got the choice to make a clean break: sell all your assets, pay off your debts, and enjoy the money left over.

This may be the best option if you don’t have a strong business, don’t have a passion for farming, aren’t interested in learning about business, and/or you want to leave the industry.

(If you don’t have a strong business but DO have a passion for farming, reach out to us at Farm Owners Academy — we can help!)

Most of our farm owners want to stay in farming. But don’t discount this option without considering it first! It’s powerful to explore all the opportunities in front of you.

This option might be for you if:

  • You’ve lost your passion for farming and want a clean break from the industry
  • You don’t have a strong farm business and don’t want to work on it
  • You’re passionate about something else (work or personal) and want a big lump sum of money to fuel that passion
  • Your children don’t want to stay in farming and would rather have money than inherit the farm ← this is why communication in succession planning is so important!


2. Lease your farm

Another option if you’re not passionate about farming is to lease your farm. This is a great choice if you’d like to do something different but you don’t want to sell the farm and lose it entirely.

Like we said above, the current market lease rates in Australia are in the order of 3-5% of land values — which means if you leased out your land to someone else, they’d pay you 3-5% of the value of those assets to do so.

So if you’re not currently making 3-5% ROAM from your farm, you may want to seriously consider this option because you’d probably make more money NOT working on the farm than you do working now!

Farm Owners Academy members Tim and Cheryl are doing a version of this and it’s working out incredibly well for them — click here to read their story.

Seriously, it’s up to you:

You can get up at 4am and slog all day in a roasting-hot paddock for 16 hours…or you can sleep in until 10am, put your sunscreen on, and lounge on the beach until dinnertime…and at the end of the day, make the same amount of money.

This option might be for you if:

  • You don’t want to work in farming day-to-day
  • You’re not ready to sell the farm
  • You’re currently making less than 3-5% ROAM and are not committed to improving your business performance
  • Your kids want to take over the farm someday but you don’t want to work it now

3. Run your farm business better

Most of the time, it’s not lack of wealth that’s holding our farmers back; it’s lack of education about how to USE that wealth.

If you’re not hitting the benchmarks above, don’t want to sell your farm, and still want to work in farming, your best option is to learn how to make your business more profitable.

…And that starts with an education in finance — the language of business. Once you understand how money truly works, you’ll be able to make the most of the assets you have to generate as much profit as possible.

That’s exactly what happened when Farm Owners Academy member David got serious about finance and business. He had his most profitable year on the farm AND worked 50% less — all because he knew how to leverage his assets in the smartest, richest way possible. Click here to read David’s story.

This option might be for you if:

  • You love farming and want to stay in the industry
  • You want to work on the farming business every day as your job (note: we said working ON the business, not IN the business; they’re very different things!)
  • You believe in the potential of your farm and of you as the farm leader — and you know with the right education, you could do better

RELATED POST: 6 Steps to Take You from Family Farm to Well-Run Business

So there you have it — 3 great options for high net-worth farm owners who don’t feel very rich right now:

  • Sell everything (and enjoy the money)
  • Lease your farm (and enjoy the money)
  • Transform your farm into a profitable business (and enjoy the money)

There’s no right answer, only what’s right for YOU.

So take some time to think about what you most want out of your farm — both today and in the future — and explore all your options to make the best choice for you and your family.

As always, we’re here to help! If this blog post piqued your interest and you want to learn more about making the most of your farm, let’s have a chat. Just send us an email at and we’ll get it sorted.



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