Making your business deliver for you and your family

Creating a sound business structure for a modern dairy farm and managing it on a day-to-day basis creates a solid platform for the future.

We explored the topic at a workshop with strategic dairy farmer Dan Burdett, who runs an organic autumn block calving herd in West Sussex, and Andersons Business Consultant Tony Evans.

Planning at Cockhaise Farm

After recently taking on an additional farm, Dan’s short-term goal is to get back to an even keel since governance is different between the home and new farm.

He’d like to get more milk from forage, lower the cost of production and look after his soils and ecosystem. Longer term he wants to add value to our milk, add other livestock enterprises and engage more with the public as we know they enjoy speaking to farmers.

Making plans a reality

Tony suggests getting everyone together to a share the vision and write it down. Similarly, prepare a budget for the “normalised” year – not a cash flow statement, but simply your annual income minus any expenditure to ensure there is sufficient “leftover” to deliver for all involved.

New ventures normally take up to three years to become “normalised”. Banks will look to any existing business to carry the new ventures debt.

You need a champion, someone who’s going to make it work and has the time and energy to deliver the plan.

Big picture thinking

Dan has always been part of discussion groups which helps drive what he does – both strategically and day-to-day. He was lucky to do Nuffield Scholarship a couple of years ago, which gave him the inspiration and time for thinking. He said there is a danger of information overload, so the key challenge is to turn plans into reality and do what will work for your farm.

To do his big picture thinking, Dan leaves the farm with his team once per year to break the cycle. He sets an agenda, which is circulated in advance so people can come prepared with ideas. Most businesses are March year end, so Dan feels it’s vital to get a plan for the year ahead before the new financial year starts.

Succession planning

Becky Miles, AHDB Knowledge Exchange Manager suggested the main reason people don’t tackle succession it that they like cows and tractors rather than dealing with the people side of the issue.

It’s about taking small steps and being brave to start the conversation. As everyone has different life experiences, unless you ask people what they want, you will never know.

Set goals and put dates in the diary to review progress. Arrange a meeting where relevant parties, including partners, can sit around the table. Give everyone an opportunity to explain their position and their ambitions – remember it could be the first time people have expressed their feelings out loud. Talking and listening are key.

Take notes and agree an action plan with dates, and make sure everyone is sent a copy. The sooner you get thing sorted, the easier it is to make provisions for family members.

The business side of succession

Approach things like a CEO would, by understanding what the shareholders (i.e. the family) want and make the farm assets work hard to deliver. Remember to communicate regularly with shareholders and ask for their opinion.

Be commercial. Measure the balance sheet when you start to bring on younger generation as this helps when it comes to distributing assets fairly. And always be clear how you’re going to share profits each year.

Tops tips to manage the ‘under the bus scenario’

• Make sure bank transactions can continue
• Give access to software to ensure people know how to use it
• Make annual targets visible for the whole team so they know what’s expected
• Make sure people understand the budget
• Make sure more than one person knows how to do every task

Revisit your plan every year as it’s amazing how much can happen in that time. Start planning and conversations early and talk about the business, including the numbers. And finally, remember the farm staff. They don’t need all the detail, but it’s important to give them an overall direction of travel so they can make plans too.