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OFFICE: 24 Mecca Lane, Bungendore, NSW, 2621
MAIL: 24 Mecca Lane, Bungendore, NSW, 2621
MOBILE: 0409 816 433
Our independence underpins out service, and as such the integrity of our recommendations is not compromised by product sales. All recommendations are supported by evidence based science. Detailed agronomic planning and an in-
Enterprise planning | Budgeting & cash control | Development proposal financials | Risk analysis & control
Good enterprise selection and management are key to a resilient and profitable farm business. It involves a complex mix of farm suitability factors, market access, as well as farmer skills and preferences. It is uncommon on a farm that a single enterprise will remain highly profitable for many years. Usually the most profitable long term enterprise plan involves two or three enterprises, allowing risks to be spread and synergies to be gained between enterprises. Fat lambs, steer trading, and hay making may suite one farm / farmer, whereas for another farmer on lighter soils, a merino breeding with older ewes joined to border Leicester rams for 1st cross ewe production may be the best combination. It requires careful planning and budgeting, analysis of synergies, and both historical projected performance.
How many farmers do not prepare a budget or effectively manage cash flow? Chances are that most farmers don’t have a current budget and even fewer monitor cash flow against the budget on a regular basis. To be able to afford this, there either needs to be luxury amounts of cash in the bank (inefficient), or so little risk taken that there will never be a chance of achieving a good return. Remember, “Risk = Reward”, with the other side of that coin being “Little risk = Little Reward”.
A lot of graziers would say that most commonly faced risks on a livestock property relate to overgrazing due to excessive stocking rates. My comment to that is that unless stocking rates are high enough, pastures will consistently be undergrazed, lose quality, and less stock will be able to be run or fattened. Below are some rules of thumb to follow:
1. Have the best possible pastures, that have the potential to optimise pasture growth.
2. Fertilise adequately to get nutrient levels into the ideal ranges.
3. Be prepared to push the system fairly hard with reasonably high stocking rates.
4. Have a Plan B, well thought out and ready to enact.
In order to run a profitable business, decisions need to be made in a timely manner and based on accurate information. Key performance indicators (KPIs) should be chosen so that your farms production can be regularly compared to industry benchmarks. If not performing adequately then you should be finding out why, and what can be done to improve performance. The focus should be on regular monitoring and continuous improvement. We can help to monitor your farm business and enterprises performance, and provide comparison to the best operators in farming. Ask about the Agri-
Is your farm business exposed to unnecessary financial risks? Here are a few questions that might clarify the situation. Are you comfortable with debt levels? Have recent farm expenditure provided good returns? Is machinery in need of replacement but there is never enough money. If the answers are “No” or “I don’t know”, read on. One of the most tangible benefits of carefully working through your financials is the peace of mind that it allows, due to having the figures organised and presented clearly and concisely. When you know the numbers and you understand the risks, you are then in a position to make the make the necessary arrangements to avoid a cash crisis. Even if the figures are not expected to be good, it is always better to know how bad a situation is than to ignore it. If it is possible to turn your business around today to be able to have it in a highly profitable situation in 3 years, why wait another 2 years to start that process? Debt and stress are generally cumulative. 2 years may be too long.
Maybe you are just not sure whether the business is performing adequately and need some quick feedback. In that case a quick analysis of the past 3 – 5 years tax returns could be carried out. However, if you do need a full financial plan with the view of evaluating business changes to explore their impact on whole farm profitability, we can help you with that too.