Real-Life Decision Making -- Solution
You buy the additional land.
It can be tempting to buy more land, even if it means more debt. After
all, more land means more vegetables, and more vegetables means higher potential
earnings.
But you've only been in business for two years. You don't know how typical
your second year in business was. Many factors outside your control can greatly
reduce your revenues or increase your expenses. By expanding too quickly,
you've put yourself in a vulnerable position.
"The one thing that leads to most failure of farms is debt," says small
farm owner Craig Rogers.
"Unfortunately, there are too many 'acts of God' that affect your business,
[such as] bad weather in particular, that can change your revenue so dramatically
that as soon as you have a loan that requires monthly payments, if it's based
upon your good years, well, when you have a bad year, you're in trouble."