News

Blog post by:

Planning is like a roadmap – it helps you navigate from where you are now to where you want to be in the future. A well-thought-out plan ensures you’re prepared for challenges and equipped to handle any issues that arise. While many farmers have a plan in mind, it often remains unwritten or unshared with the relevant parties. 

In not having a plan, we expose ourselves to: 

• Misalignment among party members 

• Frustration due to poor communication about the future of your business 

• Lack of documentation to guide decision-making and align with long-term goals 

• Short-term decision-making rather than strategic planning 

• Reduced flexibility to adapt and improve farming systems 

• Poor financial returns 

• Decreased medium- and long-term satisfaction 

You wouldn’t get into a car and drive aimlessly without a destination in mind. Instead, you plan your route, and if you encounter an obstacle or detour, you adjust your course while keeping your end goal in sight. A business plan works the same way – it provides a clear direction for your farm’s future while allowing for adjustments along the way. 

The planning process doesn’t have to be complicated. In fact, breaking it down into simple, manageable steps makes it more effective. At CMK Chartered Accountants, we use seven straightforward steps to create a business plan that sets your farm apart and positions you for long-term success in both business and life. 

1. Holding a Planning Session

A planning session is a great way to set your goals, strategies, and action plan with those who will support you along the way. The location of this session is crucial – it shouldn’t take place around the kitchen table, as discussions can sometimes lead to disagreements. Instead, choose a neutral, off-farm venue where everyone feels comfortable expressing their thoughts. Meeting in a controlled environment, free from interruptions, allows you to focus fully on the planning process and have open, productive discussions about the future of your business. 

2. Understanding Your Current Equity Position

At CMK, we believe that understanding your numbers is a fundamental business skill – one that every farmer has the potential to learn. Knowing your financial position empowers you to manage your business effectively, set a solid plan, and make informed decisions rather than leaving things to chance. 

When you truly understand your numbers, you can make timely adjustments to your systems and strategies to stay on track toward your goals. Numbers don’t lie. By working closely with your accountant to set goals, plan, and monitor your finances, you’ll have a clear picture of your progress simply by reviewing your financial statements regularly. 

Your numbers should not be something you adjust to “look good” for your accountant – they should be a tool to help you drive success, identify opportunities, and strengthen your business for the future. That’s how you plan for long-term success. 

To get a complete picture of your current financial position, you need to fully account for your assets, liabilities, and equity. For example, owning assets worth several million dollars may seem impressive, but if your liabilities outweigh them, your financial stability could be at risk. Understanding this balance is crucial for making sound business decisions. 

3. Understand Your Cash Position

We cannot stress enough the importance of creating a budget and regularly comparing actual figures against it—ideally on a monthly or bi-monthly basis. Aligning this with your GST cycle helps you stay in control of your finances and avoid any unexpected financial shocks at the end of the season. 

Many business owners avoid budgeting, citing reasons like fluctuating pay-outs or keeping figures “in their head.” However, not having a budget can lead to serious financial challenges, particularly when it comes to managing debt. 

Farming has changed dramatically over the past 50 years, with farm borrowings increasing from tens of thousands to millions of dollars. To maintain profitability, it’s essential to manage variables, prepare for pay-out fluctuations, and ensure the right lines of credit are in place to support your business operations. 

4. Set Realistic Goals

What are your aspirations for the next 30 years? Setting both short-term and long-term goals is essential, but they shouldn’t be limited to business alone. Consider your family, lifestyle, interests, and holidays – these elements bring balance to your day-to-day life and contribute to overall success. Write your goals down, knowing they will evolve over time. Keep them somewhere visible as a constant reminder of what you’re working toward, and most importantly, celebrate each achievement along the way! 

5. Set Up A Strategy

A clear strategy outlines how you will achieve your goals. For example, if your goal is to increase equity, a strategy could be to reduce debt annually by $1 per KgMS. This requires careful calculation, including understanding your breakeven point, pay-out fluctuations, and interest rates. If you need guidance, CMK can work with you to develop a strategy tailored to your business and financial goals.  

6. Write Down An Action Plan

Your action plan brings your strategies to life by breaking them down into manageable tasks that are easy to track and achieve. It should outline what needs to be done over a set period, such as the next quarter or 90 days. 

For example, an action plan to reduce debt could include: 

• Prepare a cash flow/budget 

• Review costs 

• Discuss options with a farm advisor 

• Assess feed inputs 

• Review feed costs with suppliers 

• Update cash flow/budget 

• Set up quarterly reviews with CMK 

Breaking your action plan into small, achievable steps makes the process more manageable and helps maintain momentum toward your goals. 

7. Be Accountable

Staying on track requires regular check-ins to review your plan, monitor progress, and hold yourself accountable for the strategies and action points you set. A 90-day review is ideal and should take place in a neutral environment to encourage open discussion. 

Key points to cover: 

• Review your numbers to date 

• Assess progress on previous action points 

• Identify any challenges or roadblocks 

• Set a new action plan for the next 90 days 

Regular reviews keep you focused, adaptable, and committed to achieving your long-term goals. 

It’s clear that there is a lack of both general and financial planning within the farming industry. By following the seven simple steps, you can set yourself and your family apart, creating a structured plan that provides clarity, direction, and alignment toward your goals. 

From our experience working with farmers across Taranaki and beyond, those who commit to this planning process gain long-term stability and confidence in their business. However, the key to continued success is regular review and adaptation. Business growth and development come from integrating planning into your routine and revisiting it every 90 days to ensure strategies and action points remain relevant. 

By making planning an ongoing part of your business, you’ll gain deeper financial insight, maintain a clear direction, and strengthen relationships with key stakeholders. The effort you put into planning today will lay the foundation for a stronger, more sustainable future. 

Contact CMK Chartered Accountants HERE.