We see people with such complicated lives and complicated businesses and you wonder how they cope. In fact, many don't. They often get completely overrun with everything which can lead to ill health, heart attack and so on.
A great friend of mind had a small farm in the South Island. He ran some breeding ewes and kept replacements. He grew wheat, barley, white clover seed and rye grass seed. He reared calves and fattened them. He bought extra cattle and sold them. He had all has own gear and did everything himself and yes a great operation, but on top of his own chooks, a house cow and five dogs his life was "chocka".Oh, and let's not forget the 50 weaner pigs, and fattening them on grain etc., plus he also took in winter grazing.
After much discussion, he realised that, yes, a lot had to go and now he is down to a more simple system and is able to get away on holiday. At the peak he was suffering from anxiety, depression and overload. His poor wife!
What was driving him was also fear. Fear of not having enough to do and fear of not enough money. Once he slowed down and simplified the operation and trusted himself and the universe, everything started to come right.
I often found with people in financial trouble frequently had crazy mixed up and complicated finances. Their left hand would hardly know what their right hand was doing. I often struggled to understand how it all fitted together and clearly they had little or no idea as well.
Often they would pass me their set of accounts with the comment "I have not got a clue how these all work". With that going on it is easy to see why they were in financial trouble. They just spent up to their income which resulted in them basically running out of money.
They needed to keep it simple so they understood their own business
It is the same with ownership structures on the farming business. Have you got Trusts, Companies and partnerships, and how do they all fit together? Try to keep it as simple as you can. Companies can be very complicated and hard to understand. If you are not comfortable with them say so at the outset. Maybe have the farm in a Trust. Then have the stock and plant in a Company or partnership and pay rent to the Trust. Keep it simple.
Some people have incredible "money-go-rounds". Goodness knows how they understand their accounts, let alone how their Accountant does.
On the dairy farm, have simple systems which you can notate and keep a track of. This might include having 32 nearly equal sized paddocks so you can fit your rotation around those 32 days, i.e.: 32 days is your summer rotation and all multiples from there.
In the avocado orchard (now sold) we identified the five essential things that needed to be done to produce a good crop and focussed on those five things successfully. We only had a small amount of gear and kept it simple.
We are now building a new home. We have got a good team in designer and builder and I keep reminding them to keep it simple. An example here is that the roof has one long gable. Boring you may say, but sometimes simple form and style is best.Interestingly, the builder showed me an architecturally designed house that he did not want to even quote on. It had more roof breaks and triangular walls than you can imagine.
Spending less than you earn or conversely earning more than you spend is a simple philosophy. Keep it simple and know where you are financially.
So, I could go on and on here, but the message is simple, 'keep it simple'. Avoid convoluted complicated processes and systems and the benefits from a less cluttered business are all yours.
Disclaimer – These are the opinions of Don Fraser of Fraser Farm Finance. Any decisions made should not be based on this article alone and appropriate professional assistance should be sought.
Don Fraser is the Principal of Fraser Farm Finance and a consultant to the Farming Industry.
Contact him on 0800 777 675 or 021 777 675A disclosure document is available on request.
A great friend of mind had a small farm in the South Island. He ran some breeding ewes and kept replacements. He grew wheat, barley, white clover seed and rye grass seed. He reared calves and fattened them. He bought extra cattle and sold them. He had all has own gear and did everything himself and yes a great operation, but on top of his own chooks, a house cow and five dogs his life was "chocka".Oh, and let's not forget the 50 weaner pigs, and fattening them on grain etc., plus he also took in winter grazing.
After much discussion, he realised that, yes, a lot had to go and now he is down to a more simple system and is able to get away on holiday. At the peak he was suffering from anxiety, depression and overload. His poor wife!
What was driving him was also fear. Fear of not having enough to do and fear of not enough money. Once he slowed down and simplified the operation and trusted himself and the universe, everything started to come right.
I often found with people in financial trouble frequently had crazy mixed up and complicated finances. Their left hand would hardly know what their right hand was doing. I often struggled to understand how it all fitted together and clearly they had little or no idea as well.
Often they would pass me their set of accounts with the comment "I have not got a clue how these all work". With that going on it is easy to see why they were in financial trouble. They just spent up to their income which resulted in them basically running out of money.
They needed to keep it simple so they understood their own business
It is the same with ownership structures on the farming business. Have you got Trusts, Companies and partnerships, and how do they all fit together? Try to keep it as simple as you can. Companies can be very complicated and hard to understand. If you are not comfortable with them say so at the outset. Maybe have the farm in a Trust. Then have the stock and plant in a Company or partnership and pay rent to the Trust. Keep it simple.
Some people have incredible "money-go-rounds". Goodness knows how they understand their accounts, let alone how their Accountant does.
On the dairy farm, have simple systems which you can notate and keep a track of. This might include having 32 nearly equal sized paddocks so you can fit your rotation around those 32 days, i.e.: 32 days is your summer rotation and all multiples from there.
In the avocado orchard (now sold) we identified the five essential things that needed to be done to produce a good crop and focussed on those five things successfully. We only had a small amount of gear and kept it simple.
We are now building a new home. We have got a good team in designer and builder and I keep reminding them to keep it simple. An example here is that the roof has one long gable. Boring you may say, but sometimes simple form and style is best.Interestingly, the builder showed me an architecturally designed house that he did not want to even quote on. It had more roof breaks and triangular walls than you can imagine.
Spending less than you earn or conversely earning more than you spend is a simple philosophy. Keep it simple and know where you are financially.
So, I could go on and on here, but the message is simple, 'keep it simple'. Avoid convoluted complicated processes and systems and the benefits from a less cluttered business are all yours.
Disclaimer – These are the opinions of Don Fraser of Fraser Farm Finance. Any decisions made should not be based on this article alone and appropriate professional assistance should be sought.
Don Fraser is the Principal of Fraser Farm Finance and a consultant to the Farming Industry.
Contact him on 0800 777 675 or 021 777 675A disclosure document is available on request.
