Planning for success
Business success relies on sound business planning for all aspects of the enterprise, and there’s never a perfect time to start.
Business plans can be used for more than guiding business and investment decisions, they are also a tool to allow family enterprises to sit down and have important conversations. What are your strengths? What are your weaknesses? What can you improve? What’s your timeline to take action?
Everyone has competing demands for their time, but developing a plan focussed on what’s important for your business and family sustainability and resilience is important. It’s important to note that a plan isn’t something you can “bust out over a weekend”. It can take 8-12 months to fully develop.
TIMEFRAMES
Ensure the goals you set are attainable for your business, ask how they add value to your business, and set out a timeline of when you’ll achieve your actions.
When setting goals, include how you will measure progress and how long it might take you to achieve it. For longer term goals, your timeframe might include set dates for completing phase 1, phase 2 and so on.
SPECIFIC AND MEASURABLE
When setting goals for a business, SMART is a useful acronym to ensure you’ve got a way forward with goals that are Specific, Measurable, Achievable, Realistic, and Time-bound.
SMART goals can include having a succession plan, having a will, planning for retirement, or including family holidays, but the key is specific and measurable.
For example, as a goal “improve the business”, could take you anywhere, or nowhere.
- But “improve the business through investment in plant, equipment and infrastructure that improves efficiency, safety and profitability” gives you:
- a specific goal
- options as to how to measure your progress (less breakdowns, reduced maintenance costs)
- is achievable at a scale suited to your business
- is a realistic goal (again, at a scale suitable to your business), and
- with a schedule, time-bound. For example, you could tie with this goal to an annual review of plant and equipment to assess maintenance costs and consider upgrades, replacements or retirement.
Another R to consider is Relevant. Don’t make plans better suited to a multi-national ag business, or your neighbour, or your cousin down the road (who’s in a different industry anyway).
THINK BEYOND
These plans need to be about more than just physical infrastructure investments. Succession planning, will making, retirement planning, and even family holiday planning are also important aspects of a resilient business.
Bush Agribusiness Director Ian McLean says it’s important that producers don’t use the planning process to grade themselves on where they are now.
“Use this to set your objectives going forward,” Mr McLean said. “What are the things you want to be able to tick off? What do you want to achieve?
“When you look back, what do you want to see from your successful business? Is it healthy landscapes, improved family communication, profitability, and/or a positive legacy?
“The top performers are people always looking for ways to improve, demanding evidence before making major changes, focussing on their profit drivers and most all, they’re not getting distracted from their goals.”
Mr McLean says there are some key questions to judge the current position of your business.
- Does the total business return meet or exceed cost of capital?
- Can the business fund all operating expenses and operational capital expenditure from internally generated working capital?
- Does the business renumerate its owners (and family) adequately for their management expertise?
- Does the business have the capacity to repay debt principal in a timely manner?
- Does the business have a safe level of equity (and what is a safe level of equity for your business)?
- Does the business have sufficient operating scale?
- Can the business and family both survive succession?
- Can the business fund the independent retirement of its owners?
- Can the business achieve all of the above and improve, or at least maintain, the environment in which it operates?
“Don’t necessarily use this list to grade yourself, but to set your objectives going forward. Only the top 25% of producers can tick every box, and sometimes not every year,” Mr McLean says.
RECORD KEEPING
Record keeping is a key part of a successful plan, and one of the free tools that can help graziers is Ag360™, an online tool that can help graziers across Australia keep farm records, make use of locally specific weather forecasting, and carry out livestock feed budgeting.
SQNNSW Innovation Hub Armidale Node Manager Lu Hogan said , hosted by UNE, offered the ability to capture animal husbandry and feeding records, animal weights, paddock movements and more.
“And drawing on data from the Bureau of Meteorology global weather forecasting models, the Ag360™ platform can predict livestock and pasture performance up to six months ahead. The BoM data is customised by Ag360™ to reflect conditions within five kilometres of any chosen point,” Ms Hogan says.
Through support from the Australian Government’s Agricultural Innovation Hubs Program, Ag360™ will soon be available as a free mobile app, on Android and iOS, to allow for in-paddock recording. The current Ag360™ desktop version is also free to use.
“Tools such as Ag360 are an important part of livestock business planning, allowing you to not only prepare and plan based on weather forecasts, but also provide relevant husbandry data during audits,” Ms Hogan said.