Geez Louise the weather events at the end of last year made it tough. Apart from indulging in a few choice expletives to vent, there was nothing more anyone could do other than put it behind them and move on.
This involves clarifying priorities and planning to make more of what you’ve got for maximising your returns and minimising downside risk. In this article I’d like to share the approach I use with my agri-business clients for identifying priorities and managing other matters that may be important, but not as urgent as your key goals.
There’s an endless list of jobs in any farming business and the first step is to write them all down. No doubt the list will be long and if you let it, you’ll be overwhelmed by the man-hours and cost involved in getting it all done.
Step one is to prioritise, starting with identifying the top three items that must be attended to before all else.
By definition, priorities need to be done first. Despite there being important matters that aren’t necessarily urgent and while they should be considered they could be set aside for another time.
While it sounds simple enough, for many of my farming business clients the task of deciding on what’s a priority and what’s not, can be lost in the sheer volume of what needs to be done.
That’s where I step in, offering an arms-length evaluation and perspective.
Generally speaking, the top three priorities include farm fundamentals such as maintenance, and having the equipment and supplies you need to get the job done; family needs that might include education fees that must be factored into cashflow; and debt management which at this time of year typically includes shoring up finance and/or freeing up cash for working capital.
I’ve spoken about my one-page ‘Client Goals’ document before.
Divided into six boxes it aims to group goals according to when they are to be achieved i.e. year one, five or 10+ years.
Adjacent to these are goals that are important (but not necessarily urgent) including retirement, succession of the family farm and getting estate matters in order.
The point is, identifying and then acting on these priorities is the key to setting up your farming business so you can move forward efficiently with clear short, medium and longer term goals.
It does however need to be said, things happen and at times you may need to amend your goals and priorities to suit changed circumstances or opportunities.
If spending a dollar can deliver a worthwhile outcome, then it should be added to the mix.
It’s a little cliché, but the fact is you really do need to spend time working ON the business.
In fact, getting bogged down working IN the business tackling endless jobs is exactly why I strongly encourage my clients to priorities and set their goals and review them at least annually.
In terms of working on your farming business, I often walk my clients through a documented called a Task Cycle.
It has proved helpful for many clients to know what they need to do and at what stage of the year.
Again, designed to provide practical support that starts with an annual ‘Evaluation’ that moves on the tasks to be completed at the beginning of the ‘Production Cycle’.
It then lists the jobs that need to be completed ‘Each Month’ and at the ‘End of the Season’.
It also makes a strong point of listing the ever important task around ‘Tax Efficiencies’.
Let’s face it, you don’t want to pay a dollar more tax than you have to!
The purpose of establishing priorities, goal setting and implementing a task cycle is to create a succinct business plan that will guide your future, business and personal, and can be shared with your lenders and suppliers so you have the support you need when you need it to achieve your goals and dreams.
If you would like to discuss agri-business planning and lending requirements, please contact me on 08 8253 2906 or email firstname.lastname@example.org
Phillip Dibben is an Authorised Credit Representative of Riverland Lending Services Pty Ltd, ABN 37 145 814 080 ACL 391825, an accredited P2P Agri adviser and an accredited mediator under the National Mediator Accreditation System (NMAS).
He is also a financial adviser at Active Financial Management. Active Financial Management and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306.
This information does not consider your personal circumstances (including taxation) and is of a general nature only. You should not act on the information provided without first obtaining advice specific to your circumstances.