Feds make case for rural bank lending probe
Bankers have been making record profits in the last few years, but those aren’t the only records they’ve been breaking, says Federated Farmers vice president Richard McIntyre.
Waikato Federated Farmers was involved in a couple of seminars recently: Money Matters, a good presentation by KMPG consultants was attended by sharemilkers.
It's hard keeping an eye on farm finances with all the external distractions and onfarm duties. Often our future plans go on the backburner as we deal with the present. But whether the payout is good or not, stay focused and plan your equity.
Good payout years tend to hide business inefficiencies. Positive cashflow doesn't always translate into great business practice.
Farmers should have an alternative plan of action; the smart way is to document it -- write it down or save it on your computer desktop. Relying on passive thoughts after a few cold beers is not a business plan and you are likely to forget about it the next day. And business plans aren't merely monitoring cashflow or paying bills.
If you get sick or some unexpected event occurs you need a 'plan B' so that the daily business can continue without too much disruption. If you record and document a plan you will always be able to refer to it, to review or develop the original ideas you had.
Above all, you can give this information to your accountant, banker and staff as a point of reference for discussing upcoming obligations or plans. It also provides proof of your intentions.
No one likes doing budgets and there's no point having one sitting in the bottom drawer. You need to work out your turnover, actual gross and understand the significance of both.
Good governance is vital too. Ask the questions and see how the answers relate to your business plan. It won't work if you have a long term strategy but only a short term vision.
If you need help with your plan seek out advisors or experts involved in agribusiness and consider how often you want to see them and what expectations you have of them. Make sure they understand your business goals -- not their goals for your business.
Get in people who can add value to your business by helping you set up good, practical systems. Expect them to add value, and make sure they aren't just telling you what you want to hear. Good, strong advice might not always be to your liking but it is more likely to be relevant.
Your business off-farm is not mutually exclusive of your onfarm business. Well-run farms integrate both and understand the benefits technology brings to both.
You will empower yourself as you take time out, sit down and draft a plan containing goals to achieve.
• Chris Lewis is Federated Farmers Waikato dairy chair.
