The busy farming year continues despite the national lockdown we have all been experiencing since March. The extremes of the British weather and the uncertainty of future agricultural policy have been at the forefront of many farmer’s minds over the last few months. However, day to day farming operations continue as normal including the culmination of the spring sowing campaign, lambing, calving, and grassland management to name just a few. It’s sometimes difficult to think beyond this year’s harvest or the immediate annual livestock cycle however having a well-developed long-term plan for your farm is vital for business success.
One of the first questions I ask clients when reviewing their business is “what are your objectives”? The answers I receive help to shape the strategic advice we provide. Planning for the future has never been so important, not least because of the forthcoming agricultural policy change on the horizon and the reduction in direct support payments but also because being able to achieve your objectives can only be possible from careful planning and carrying out detailed business analysis.
My advice is to find the time and sit down with the farm team and discuss your short, medium, and long-term business aims and objectives. Also, make time to fully understand your farm’s financial and physical performance. Analyse your accounts, but also, and importantly, prepare an annual budget including a cash flow forecast so you fully understand the availability of cash during the year. Think also about the assets that you have available, whether it’s land, buildings, machinery or labour, and how well they are utilised within your business. Furthermore, benchmark your farm’s performance at an individual enterprise level and fully explore why your results, good or bad, are different from other comparable farms.
Fully explore the opportunities to improve business performance. This doesn’t always necessarily result in a major business restructure but may mean making lots of small changes so your business can benefit from a cumulative impact of marginal gains. If you do decide to make a significant structural change, make an investment, or plan to start a new income stream, having a well-developed plan together with detailed financial analysis to support it will help you enormously in ensuring success. Before you develop and grow your business make sure your core business is strong and without problems as these will only become greater as you grow. Detailed forward business planning will also help you obtain, if necessary, the required finance and bank support for your project and will also allow you to more easily access grant funding when available.
It’s often said that if you fail to plan you plan to fail, I would agree with that, but I would go further and say if you fail to plan you will also fail to react. Being able to react quickly and intelligently when a business opportunity presents itself or as the agricultural industry goes through significant change will be the key to business sustainability.
There will be, without doubt opportunities for farmers in the future who are well prepared, can react quickly, and have a business that is strong and able to adapt to the changes ahead. Start planning now!
For advice on forward business planning please contact Elliot Taylor at George F. White on 07590 445301 or click here to send an email.