Jen Smith and her husband Brad could only be described as resilient after the introduction they’ve had to being full time farmers. In 2012 they succeeded Brad’s parents Heather and David into a cattle and a sheep breeding enterprise. They have since purchased an additional property, and taken on a share farming arrangement with another beef breeder. Their business endeavours have also expanded to include trading stock, and utilising labour and machinery required for their core business in off farm contracting in their down times.
They had a cracking start with terrific seasons but have also had their share of challenges with consecutive years of drought and most recently devastating bushfires. Despite everything Jen and Brad have taken on every opportunity to learn new skills and get involved in their local farming community as a way of keeping themselves and their business in the best shape possible during difficult times. For Jen one of these opportunities was the Gippsland Young Farmer Business Bootcamp, which she enrolled in hoping to get a better handle on their farm finances.
Learnings from the Bootcamp
Since attending the Young Farmer Business Bootcamp in 2018 Jen has turned her enthusiasm and determination for running a successful business into action. She credits the bootcamp as being the catalyst for a journey which has seen her change accountants, trial two different book-keeping systems, and ask bootcamp facilitator Paul Blackshaw, “1000 questions” in the years since she completed the training. All of this has resulted in her developing a business management system that has a strong set of trackers, enterprise analysis tools and a clear chart of accounts.
For Jen this means a huge increase in capacity to analyse the performance of their business. She is now able to produce an accurate Gross Margin Analysis for each of the family’s different enterprises – something she says has greatly reduced the complexity of the way they make decisions. This is particularly important this year as the Smith’s two own farms and two share farms were burnt out on the same day in the 2020 summer bushfires. As a result they have had to destock – and the profitability of their business has been heavily impacted.
Despite facing one of the most challenging curveballs the Australian summer can throw at you Jen and Brad remain positive about how their business is placed to recover. She says that despite profitability not being where they want it to be, knowing the exact figures means she is able to know what levers they need to pull in order to improve things over the next year. Major decisions and actions such as when, and with what to restock their properties, and whether they need to apply for government concessional loans is much more easily informed by their business management system. Not only has Jen’s journey to better manage the financial side of their business put them in a strong position to manage risk and deal with the fallout of a disastrous fire season, they have learnt other valuable lessons along the way.
Jen has found that setting up a whole farm business approach to understanding and running their business has reminded them what they value most about being farmers. For the Smith’s – and many other farming families – farming is not only about making a living, but also about their passion for the land and the lifestyle that it offers. This means that farmers often have a unique set of factors to consider when they are making business decisions.
An example of this is the way the Smiths choose to equip themselves with machinery. While it may make more financial sense to use contractors instead of purchasing expensive machinery, they greatly value the capacity to get the job done when it suits them – rather than waiting for the availability of a contractor. The business management system they have in place allows them to accurately measure the cost and reward of these decisions and make moves to secure additional contracting work, so it stacks up both practically and financially. By understanding the full range of options available to them, and the financial implications of those options they are able to decide what holds true value for them.
This kind of decision making isn’t only about setting up their business to reflect the parts of their job they get the most enjoyment out of – it’s about building a lifestyle that works for their family in their current stage of life. With two young kids, Jen talks about weighing up the value of time spent together as a family and the importance of being able to maximise this while the kids are young. For their business, it means that they employ someone despite the DSE per labour unit not being financially justified – they decided that the added personal value of the extra time it will allow them to spend with the kids is worth it.
While Jen credits the business bootcamp as being the starting point for her journey, it is clear to anyone who has been involved along the way that her passion and drive to see the project through, and her willingness to continue learning along the way are the main reasons for her success. As a result, she now has a system for tracking and managing finances that she is confident will serve her and her family year on year – even if it requires some tweaking as her knowledge and skills continue to develop.
Reflecting on the experience
When asked about her biggest overall learnings from the experience Jen offers wisdom beyond the facts and figures. The most valuable thing for her about gaining control of their business finances is the ability to know exactly where you’re at and what you’re up against – while this knowledge might not always be good news it gives you a solid starting point. She also emphasises the importance of getting your accountant on board with your vision, making sure that your chart of accountants is best set up to serve you in analysing your business so that all your hard work delivers the kind of information you need to make better decisions.
In the Smith’s system Brad is primarily responsible for making decisions about what is practical and possible from an operations perspective, such as feed on offer and time available to get the work done. Jen is primarily responsible for weighing and measuring those decisions against cash flow and profitability factors. The knowledge, skills and system they have developed since attending the Young Farmer Business Bootcamp has greatly increased their capacity to make good decisions with greater speed, accuracy, certainty and co-operation between the two business managers.
On the whole, she says they still tend to make their decisions based on what they want when they weigh factors like family, land type, natural strengths and lifestyle. However, the ability to conduct a Gross Margin Analysis means their decision is better informed and they have a clear idea of what sort of financial trade-offs they are making.
Further Information
Register for our next Online Young Farmer Business Bootcamp starting Thursday 24 November 2020.
Any further questions? Contact Sarah Wallis (Young Farmer Project Coordinator) at [email protected] or on 0419 571 208.
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