YRPS Insight: Edition Eight - Flipbook - Page 13
CREATING A POSITIVE
GAME PLAN
KEY ELEMENTS IN MORE DETAIL
OBJECTIVES
Set out your objectives for you and the business.
Farm Business Consultants, Alex Olivant
and Peter Roberts from Active Business
Partnerships, make the case for developing
a detailed farm business plan…
These can be short, medium or long-term:
• Retaining cash and reducing debt.
• Reinvesting cash into the business.
• Preparing for the next generation.
GOALS
Set yourself realistically challenging goals so that if they are
achieved it genuinely represents a good result. With crop yields
as an example, typically the five-year average represents a good
baseline. Goals should also be SMART:
Farming by its very nature is a long-term business, so
decisions today can have long reaching impacts in years
to come. You could be forgiven for thinking with all these
fundamental variables why bother making a plan at all?
Specific - Measurable - Attainable - Relevant - Time Bound
FINANCIAL PLAN
Alex Olivant explains “While on the one hand we have never
had so much uncertainty, on the other hand there has never
been more of a need for a realistic and detailed forward plan
before setting off on the next financial year.”
Ownership
Own your financial plan, and get others involved to such as farm
managers and agronomist so they all know the targets aims and
objectives for the business.
KEY REASONS FOR PRODUCING A PLAN
Better visibility
Gain an understanding of the components of your business
and the key contributors to your bottom line.
Try not to lump the data together, If you can, split the income
and costs into the different business departments. If you have
several enterprises it will help you gain an understanding of what
contributes what to the bottom line and importantly split apart
production profit from non-farming profit.
Determine the overall profitability and cashflow targets to
establish how much wriggle room there is, given variables
over the year.
Identify the key components that are critical to achieving
the results.
Once you have knocked it around and are happy with it,
adopt it as your target for the year.
At the end of the year, review the plan to celebrate success
and also identify areas to improve.
Peter Roberts underlines that business planning should not be
viewed in isolation, but as part of a continual improvement
process:
Detail
The more detailed the building blocks of the budget are the more
realistic it will be.
The team at Active Business Partnerships
recommends that in very broad terms a
good business plan should incorporate the
following key elements:
OBJECTIVES
• Plan
Update your business and own personal
aims and objectives.
• Do
GOALS
• Review
• Improve
“Apart from the obvious benefit of knowing where your
current plans are going to end up, this process is useful
at identifying areas to improve on and also, not to be
underestimated, the psychological benefit of being able to
celebrate success when targets are achieved and adversities
have been overcome,” says Peter.
Alex Olivant | aolivant@activebp.com
Peter Roberts | proberts@activebp.com
A narrative outlining your planned
achievements for the year.
FINANCIAL PLAN
Incorporating detailed financial and operational
targets showing profitability and cash generation.
Use all available sources to pull together the latest information for
your business.
BUSINESS PLANNING
SHOULD NOT BE
VIEWED IN ISOLATION,
BUT AS PART OF
A CONTINUAL
IMPROVEMENT
PROCESS
Stress testing/breakeven pricing
• Identify critical numbers within your business plan.
• Vary these critical numbers to assess the impact on profit to
assess the vulnerability of the business.
• Breakeven prices and yields are useful guides to how robust your
business is to changes.
Budget Review
• Take a step back
• Once the budget is complete, take a step back and revisit your
original objectives to see if they are being achieved.
• Actual results v plan
Don’t put your plan away in the bottom drawer and forget it until
next year. Monitoring progress allows adjustments to be made
throughout the year to help keep things on track.
www.activebp.com
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