Upbeet Produce made the Wall Street Journal! Read the article below!
Game Plan: Financial Advice for a Small Farmer Looking to Expand
Jesse Veek left the business world to become a farmer. A financial pro offers advice on how to grow the business and bolster his finances
By Chris Kornelis
Sept. 10, 2019 10:01 pm ET
After studying business in college and working a number of jobs after graduation, Jesse Veek decided office life wasn’t for him. So, two years ago, he decided to try his hand at farming, growing crops on 2 acres in Edgerton, Wis., that he leases for $175 a year, per acre.
Upbeet Produce, his community-supported-agriculture (CSA) farm, generates most of its revenue from subscribers, who pay for deliveries of vegetables and fruit from June through October. The most popular plans are $240 for biweekly and $415 for weekly deliveries.
In its first year, the farm grossed roughly $11,000 in sales. This year, Mr. Veek anticipates $16,000 in sales and hopes to break even. He’s confident that his 2 acres are capable of producing $40,000 worth of crops annually.
“As I get further past the learning curve,” he says, “I’m able to spend more time on things that are more profitable.”
Mr. Veek files his taxes as a sole proprietor, and says his personal and professional expenses often overlap. He makes deliveries, for example, in his 2003, paid-off Toyota Corolla.
His monthly expenses include $175 for gas, $200 for groceries, $160 for health insurance, $25 for car insurance, $20 for Netflix and Spotify and $75 for “entertainment,” which includes dining out. Mr. Veek lives rent free in the farmhouse on the land he leases in exchange for keeping up the property. He spends about $120 on utilities, and $50 for his phone.
The farmer has spent $3,000 from cash savings and cashed out $4,000 in stock since starting the business. He has about $1,500 left in stock, $5,000 in various 401(k)s and a whole life insurance policy with a $2,000 cash value. His only debt is $1,800 in student loans, which are in deferment.
Mr. Veek wants to grow his business, plan for retirement and one day start a family.
ADVICE FROM A PRO: Nate Kublank, a certified financial planner at Aspiriant in Milwaukee, applauds Mr. Veek’s ability to live on a shoestring budget while pursuing his passion.
He says the next few years are going to be critical for Mr. Veek. Once he starts making money, he should resist the urge to splurge and focus on building up his savings—aiming for three to six months of expenses in an emergency account—and reinvesting in his business.
Mr. Kublank advises Mr. Veek to consult with a local tax attorney who has worked with farmers to help him maximize his tax deductions, and start keeping his personal and professional expenses separate. He also should review whether there are tax implications to living rent-free in exchange for property maintenance.
If he starts to increase his sales and generate profits, “he’s going to want to make sure his records for income and expenses related to the business are very tight,” Mr. Kublank says.
While Mr. Veek’s income is low, it would be a good time to roll his 401(k)s into an IRA, and then convert it to a Roth IRA so he can make withdrawals tax-free in retirement, Mr. Kublank says. Mr. Veek also should consider selling his stock and cashing out the insurance policy to pay off his student loans if the tax ramifications are minimal. The remaining money could be put into the business.
Mr. Kornelis is a writer in Seattle. He can be reached at firstname.lastname@example.org.