You can create a plan that achieves your personal and business goals and ensures buy-in and ownership from everyone in the team by following these simple steps.
STEP 1 Get together with the team who manages the farm. It’s the people in your team that will make your plan succeed or fail. For this reason they need to be involved early in the planning process. On a family farm that involves both partners!
STEP 2 Review and analyse the past year. Work with your team to review the last year. Discuss what went well, what could be done better or just differently. Discuss how external factors like climate or economics have affected your farm over the last year and what impact these may have over the next twelve months.
STEP 3 Set your goals for the next business year. Start your planning by creating some high level goals. Then set targets for the profit you want to achieve. This high level plan doesn’t need to be detailed and can be subjective.
STEP 4 Create a month by month estimate of your income and expenditure. Now you need to add detail. Worksheets are an ideal tool and should list as much information as possible along with clear comments for future reference.
Use the same codes in your plan that will be used later in your accounts – this will make monthly revision much easier.
STEP 5 Experiment with options. Once you have a draft forecast, experiment with options that might increase the surplus and evaluate the results.
STEP 6 Take your budget to an advisor for review. When you have a plan you like, discuss the draft plan with a trusted advisor. A good source for advice is your bank manager (explain this is just a draft for their comment – they will be impressed to be asked), but it could also be a professional consultant.
STEP 7 Get agreement from your financier, and then engage managers to make the plan happen.
Now that you have a cashflow forecast you like, get agreement for seasonal finance arrangements from your financier. Your biggest challenge now awaits you – ensuring that the plan is implemented!