New Financial Year – Charting a Course for Your Farm Business
Exploring new ways seems far from old hat in Australian agriculture, despite its early beginnings. Farm operators of today continue to use their imagination and will, reinventing themselves in the merge. When this process begins records made can be an important aid in charting a course. A business with no records can be likened to a ship out in the pacific somewhere that’s lost the use of its rudder and navigational tools. Hard to know where it has been, where it is going, or how long it will take to get there. Records can tell the operator where the business has been and whether it is on a path to making profits and creating financial stability. Records may not directly show where a business is going, but they can provide valuable information that can be used to adjust past decisions and to improve future decision making.
According to Duffy, Edwards and Kay, Farm Management Seventh Edition, six most common uses for farm records are:
- Measure profit and assess financial condition
- Provide data for business analysis
- Measure the profitability of individual enterprises
- Assist in obtaining loans
- Assist in the analysis of new investments
- Prepare income tax returns
Decisions, decisions
New information is vital for making new decisions and will often cause old management strategies to be reconsidered. Without decisions, nothing happens. Even allowing things to drift along as they are implies a decision, perhaps not always a good one, but a decision all the same.
A financial analysis of the business can provide information on the results of past decisions. ‘Making a profit’ and having a ‘profitable business’ are two different things and getting at core issues requires more than just preparing an income statement and balance sheet.
Acquiring and organising management information is needed to measure how well the business is doing in meeting it’s goals. Individual farm records are likely the single best source of information for decision making and sharing the findings with a trusted person eg your Rural Financial Counsellor, can be an excellent way of setting the course. an impartial analysis and
Even allowing things to drift along as they are implies a decision, perhaps not always a good one, but a decision all the same.
Picture Credit : Australian Explorer Len Beadell, OAM, BEM, FIEMS (Aust.)