Planning for the future
Any work to health-check a business or adapt to a more resilient system could be rendered a waste of time without a long-term plan in place. This might consist of ‘back of an envelope’ figures and a rough outline of where you want to get to, or it might be a detailed 10-year business plan. Either way, it is important to put the work in at an early stage and engage with others to make sure you get buy-in for the vision. It will involve setting targets and monitoring progress.
Michael Ritch, Aberdeenshire, Scotland
I came home to work full-time on the family farm near Inverurie six years ago, and now the business involves myself, my father, grandfather and one employee.
As anyone in agriculture knows, farming is such a long-term game that knee-jerk reactions will leave you always changing course and never getting to where you want to be – meaning a long-term plan is important.
Since I came home our plan has been to maximise productivity from the land and resources available to us and to produce top quality beef, lamb and malting barley that meets the consumer spec as efficiently as possible. This would, in turn, maximise the profitability of our business.
One of my main goals is for the business to be profitable without subsidy and we want to do this by expanding our numbers to increase output, while lowering our inputs and labour to lower the cost of production. This is very easy to monitor but not always so easy to achieve.
I think the hardest part about setting out targets and goals in farming is the volatility of the markets. The price you get for your produce can swing so much from one year to the next and there's really very little you can do about it – so we try to focus on our inputs and making sure we are getting to the end product as efficiently as possible. We want the stock to do the work for themselves.
We have two meetings a year with bank manager to discuss our plan, as well as the business direction, cash flow and any changes we’re going to be making. As part of our expansion work we have recently taken on a contract farming arrangement with a neighbouring farm. As part of this, to help ensure we’re taking the right steps in protecting our business, we have been involved with some land agents. For the past year they have been advising and helping us get that set up.
Naturally, we have regular discussions within the business and, between the four of us, we check the business is on track and meeting the targets we’re setting.
Our targets are aimed at maximising the profitability of the business, which in turn will ensure the wellbeing of ourselves and other people involved in the business by providing work, income and stability.
I think it's very important to have a plan of some description to give the business direction and something to aim for. We all know even the best laid plans often go awry. That is only to be expected. But having a plan in the first place can help get things back on track and moving forward again.
- HSBC advice on forward planning for agricultural businesses
- AHDB advice on business planning, writing business plans as well as Brexit advice and future trade
- NFU Mutual Insurance succession planning information
- Nationwide Mutual Insurance succession planning information
- Farmers Connect signposting service for farm business skills training in Wales
- QMS farm business management guidance
- Scottish Farm Advisory Service information on land management plans
- Gov.UK guidance: Business help and support (UK), Agricultural relief and inheritance tax (UK) and Agricultural tenancies (England and Wales)
- For younger people/successful planning: Barclays business advice for younger people in agriculture, Prince's Countryside Fund signposting service to farm business skills training, Scottish Farm Advisory Service information for new entrants, DAERA succession planning information and Farmers Weekly ‘Know How’ page on succession planning.
- Farmers Weekly ‘Know How’ page on finance
Enjoy in the comfort of your own home or listen-on-the-go as James Daniel, founder of Precision Grazing, considers how sheep systems could look in the future and the importance of using tools to develop a plan and monitoring points to make sure you are on track. James has worked with sheep farmers and technology throughout the UK and New Zealand.