SPECIAL REPORT • PLANNING FOR SUCCESS
Left: Planning involves two key parts, preparation of the plan and monitoring and taking action when plans change.
Top performing farmers know and take ownership of their budgets (what gets monitored gets measured). This means looking at budgets monthly, quarterly, or by GST period, reviewing and explaining variances and re-forecasting those variances. BUILD RESILIENCY Resiliency refers to getting your business to a point that allows you to ride out some downturns and tough years, but still have a viable business. Simply put, it is about being financially able to cope with the unexpected. Resiliency involves three key parts: everyday, rainy day and one day. A quote from one of her clients nailed it for her.
PLANNING TO SUCCEED
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lans are nothing, but planning is everything. It is the process of building, thinking through the possibilities, coming up with predictions and sometimes being proven wrong. When the plan changes, as it will, re-adjust the forecast. That is what developing and then monitoring a budget does for a farming business, says agri specialist accountant Amanda Burling. “2020 has to be one of the most bizarre years ever. Pressure has and still is coming at us from all different directions. In my role I am seeing ongoing financial impacts of severe drought, recovery of the business from drought and low payout and pressure on cash flow from bad years, flowing into high tax bills from good years. “Along with over expansion and over investment in capital and pressure from banks to repay debt and reduced promise of
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capital gains, farmers have regulatory issues around effluent and the environment and a struggle to find good reliable employees. “On the plus side there is a gently optimistic milk Amanda Burling. forecast and low interest rates that we are expecting to stick around for a little while.” So what can farmers do to be ready for change and ensure ongoing success? PLAN
Plan for the unexpected. Manage your farm as a business, build and grow financial awareness of your system, know your position and respond accordingly. Planning involves two key parts, preparation of the plan and monitoring and taking action when plans change.
“Knowing where you are (financially) means that you can spend more time looking at where you are going. Going forward, this means making financially informed business decisions faster, saving time and headspace. Hours and hours of unproductive thought is wasted on not knowing your financial position. It kills productivity and the ability to work efficiently.”
SO WHAT IS THE STARTING POINT? WHAT IS YOUR CURRENT POSITION?
Burling says your current position is not what your last financial statements showed you. This is not what is in your bank account today, but is a combination of all of it. It is how you did last year, how you are going this year and where you plan to finish.
Dairy Exporter | www.nzfarmlife.co.nz | December 2020
