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Introduction to strategic planning

Plan, Prepare Prosper

Farm business planning

Strategic planning overview


Department of Agriculture and Food, Western Australia: Plan, Prepare, Prosper

Acknowledgments

This document is part of the Plan, Prepare, Prosper program that was developed under the Pilot of Drought Reform Measures (‘the pilot’), a joint initiative between the Australian Government and the Western Australian Government. The program aims to support businesses to prepare for drought, climate variability, financial and other challenges.

Plan, Prepare, Prosper is a strategic planning process that will help businesses to assess their business and determine the best course of action in response to known and projected challenges to business performance.

The Department of Agriculture and Food, Western Australia would like to recognise and thank the Rural Business Development Corporation, Curtin University, the Centre for Entrepreneurship, Agknowledge®, Farmanco, Plan Farm, David Koutsoukis, Greg Barnes and others for their contributions in the development of this program and permission to use their intellectual property.

Adaptation of material for Strategic Planning Overview was undertaken by Kylie Cutten and Susan Dawes, on behalf of the Great Southern Institute of Technology, in consultation with Kelly Flugge, Karlee Bertola and Dale Sutton, Department of Agriculture and Food, Western Australia, from base material prepared by Nancye Gannaway, Department of Agriculture and Food, Western Australia.

IMPORTANT DISCLAIMER

The Chief Executive Officer of the Department of Agriculture and Food and the State of Western Australia accept no liability whatsoever by reason of negligence or otherwise arising from the use or release of this information or any part of it.

Copyright © Western Australian Agriculture Authority 2012



Contents

The business of land managment ............................................................................... 7

Why are we doing it? ................................................................................................... 8

Why strategic planning? .............................................................................................. 9

What is a strategic plan? ........................................................................................... 10

What is strategic planning? ....................................................................................... 10

Developing goals ....................................................................................................... 11

Where are we now? .................................................................................................. 12

Understanding Risk .................................................................................................. 13

Communicating and Understanding Each Other ....................................................... 15

Click! Colours ............................................................................................................ 16

Human Resource Management ................................................................................. 17

Workforce Planning & Development Model ............................................................... 19

Delegation ................................................................................................................. 20

What tasks may require delegation within your corporation? .................................... 21

Essential OHS Policy Areas ...................................................................................... 22

Progression Planning ................................................................................................ 23

Balancing Business and Culture ................................................................................ 25

What drives a successful land management business? ............................................ 27

Business performance analysis ................................................................................. 29

Developing strategies to improve profitability to increase the returns and flow on benefit to your Community ........................................................................................ 30

Enterprise Profit Drivers – Land Management ........................................................... 31

What are the priority areas to improve profitability via Land Management and Leasing Options? .................................................................................................................... 32

Enterprise Profit Drivers – Business Managment ...................................................... 33

What are the priority areas to improve profitability via Business Management?........ 34

How will the financial management of each farm be monitored? ............................... 35


Continuous Improvement Cycle ................................................................................ 36

Work Life Balance ..................................................................................................... 37

Knowing your stress symptoms ................................................................................ 38

Striking the right balance for you .............................................................................. 40

Making a plan for health............................................................................................ 41

Roles and Responsibilities ........................................................................................ 43

Developing Our Vision .............................................................................................. 44

References .......................................................................................................... 45

Appendix .......................................................................................................... 47

Appendix 1: Developing goals ............................................................................... 48

Appendix 2: Extra Information on SLOT’s ............................................................. 49

Appendix 3: Analysing Business Performance ..................................................... 50

Appendix 4: Summary of the behaviours and characteristics of the Top 25 Farmers54

Appendix 5: Instructions for My Wheel of Life Usage ............................................ 55

Appendix 6: More Information About Click Colours ............................................... 56

Appendix 7: Sample Vision Statements ................................................................. 60

Appendix 8: Sample Strategic Planning Summary Template .................................... 55

The following concepts will be covered:

Strategic Planning

Risk Management

Work Life Balance

Workforce Planning

Effective Communication

Business Drivers



The business of land management

Sustainable management of the land is a responsibility that is integral to Aboriginal Culture and has been successfully achieved for thousands of years. In today’s world land managers need to wear two hats — the land management hat and the business management hat. Both hats working successfully together can create sustainably managed land that will benefit the Community, reinstating the land to its role as a fundamental core for Culture, as well as providing potential financial income.

The purpose of this workshop is to foster the awareness of strategic planning for Culture and Business to operate successfully within the same sphere and deliver benefits to the Corporations Community.

This workshop can be followed by the five day Plan Prepare and Prosper program.


Why are we doing it? Let’s stop and ask ourselves “Why we are doing what we are doing?” When we clearly answer this question it provides us with focus and future direction – the essence of strategic planning. As already mentioned sustainably managed land is vital to Aboriginal Culture. It can also provide income sources from potential business activities such as agriculture, tourism and/or leasing contracts. All opportunities require the land to be managed well to optimise the potential income that is possible. This income can then be used to benefit the Community. How will it benefit your Community? Are we all on the same page?



Why strategic planning?

A strategic plan is a road map for success. The purpose of a strategic plan is to provide direction and focus for all members of a corporation.

Strategic planning is a tool that corporations regularly use to:

Guide their enterprise

Monitor progress

Identify and manage problems

Plan? What plan?

Statistics showing what effects business plans had on 756 small-to-medium businesses.1

% of enterprises Exceeded

targets %

Met targets %

Undershot targets

%

August 2008

Had a formal plan 32.6 56.9 10.5

Didn’t have a formal plan

8.2 18.9 72.9%

February 2007

Had a formal plan 37.0 59.0 4.0

Didn’t have a formal plan

13.6 55.2 31.2


Vision

Goals

Strategies

Actions

What is a strategic plan?

A clear picture of the vision and the goals of the enterprise and the major steps by which it proposes to reach its goals.

It should include targets and timelines and nominate people to take responsibility.2

What is strategic planning?

Strategic planning is a process. Through the process, you will ultimately ask and find the answer to three key questions (3):

Where is our corporation now?

Where do we need to take it?

What do we need to do to get there?

Your Farm Plan will have

1 Vision: This is your statement of what the future will look like for your enterprise.

4-8 Goals: These are what you must achieve to make the vision happen. SMART

Strategy: This is the best pathway to follow to accomplish each goal. At least one strategy per goal

Many Actions:

These are the activities or tasks that make up each strategy.



Timely Timetabled Time limited Trackable Tangible

Appropriate Achievable

Agreed Assignable Actionable

Vision

Goals

Strategies

Actions

Developing goals The purpose of a goal is to inform your strategies and actions.

A goal is a broad, long-term aim that will accomplish your vision.

Your goals should be SMART (4).

Specific:

What do I want to accomplish?

Why we need to do this? What are the benefits or purpose of the goal?

Who is involved? Where will it be—what location?

What are the requirements and constraints?

Measurable: How much?

How many?

How will I know when it is accomplished?

Attainable:

How can this goal be accomplished?

Relevant: ‘Does this seem worth the time and effort?’

Time-bound:

When?

What can I do today or in six weeks or in six months?

See appendix 1 for more detail.

Meaningful Motivational Manageable

Realistic Results

Resourced Rewarding


Where are we now?

A SLOT analysis will assist to provide focus and clarity on how to maximise or minimise each.

About SLOTS

● Strengths: the characteristics of the corporation or project team that give it an advantage over others.

● Limitations: the characteristics that place the team at a disadvantage relative to others.

● Opportunities: external chances to improve performance (for example make greater profits) in the environment.

● Threats: external elements in the environment that could cause trouble for the business or project.

Strengths Limitations

Opportunities Threats

As a whole group identify two big Strengths and Limitations.

This will be captured on the wall poster and added to throughout the workshop.



Understanding risk –

choosing the events that you will influence

Risk is the possibility of adversity or loss, and refers to ‘uncertainty that matters’. Risk management involves choosing among alternatives to reduce the effects of risk. It typically requires the evaluation of trade-offs between changes in risk, expected returns, and other variables. Understanding risk is a starting point to help producers make good management choices in situations where adversity and loss are possibilities. (5)

Risk Matrix – tool for identifying and determining degree of risk.

Note: There are many different tools that could be used, it is important that you use the same version consistently.

Source: AUSTRAC, Risk management, a tool for small-to-medium sized businesses 6

Lik

eli

ho

od

Ve

ry lik

ely

Medium High Extreme

Lik

ely

Low Medium High

Unlik

ely

Low Low Medium

Minor Moderate Major

Impact


Who is involved in your business right now?

Have you ever stopped to think how much your business depends on other people?

One of the most important considerations when developing your strategic plan is the other people in your business and who your business affects.

Person Role Required Skills

1. Does each person have the skills, knowledge and time

to carry out their role?

2. Are there any gaps?



Communicating and Understanding Each Other

One way to understand people better is to use the ‘Click! colours’ tool.

Work through the Click Colours activity with your facilitator.

Left brain Right brain

BLUE

Analysers

✓ Explain the logic behind your words

and actions, and back it up with data if needed.

BE LOGICAL

YELLOW

Players

✓ Make it fun, exciting and energetic for

them.

MAKE IT FUN

GREEN

Safekeepers

✓ Be clear, organised and punctual,

and take into account possible risks.

BE ORGANISED

RED

Carers

✓ Be friendly and genuine, express

your feelings, and show empathy for others.

SHOW EMPATHY

Four Click! ColoursTM characters or sub-personalities that make up every individual

Source: Barnes and Koutsoukis, Click Colours 15

See appendix 6 for more detail.


Click! Colours

Which Click! Colour are you most like? Why?

What Click! Colours are your family members?

What Click Colours are your work team members?

Which Click! Colour are you least like? Why?



Source: Adapted from Huzefa Moti, Performance Management Systems 12

Vision

Goals

Strategies

Systems & Processes

Performance Management

Actions & Behaviours

Results

Vision

Goals

Strategies

Actions

Human Resource Management

We know that effective Human Resource Management is important to our Corporation but how does it fit into the strategic planning process?


Human Resource

Management

Workforce Planning

Recruitment

Work Conditions

Welfare

PayMotivation

Discipline & Grievance

Procedures

Training & Development

Organising Work

Human Resource Management

Source: Ahmad Bedewi, Human Resource Management Overview 13



Workforce Planning & Development Model

Source: Perry, Workforce Planning 14

Review & Evaluation

Outcomes of the planEvaluation &

Implementation monitoringReview & monitoring

Gap Analysis & Closing Strategies

Areas for action -gaps and issues

Priorities / Risk Rating

Workforce Development

Strategies

Resources and responsibilites

Future Workforce Profile

Scenarios Critical job rolesDemand v's

SupplySkills &

Competencies

Current Workforce Profile

DemographicsSkills &

CompetenciesIssues /

ChallengesCritical job roles

and gaps

Context & Environment

Timeframes, methodology

and toolsWhy?

Strategic Objectives and

Scope

Internal / External

Environment

Consultation & Communication


Delegation

Delegation can be defined as “appointing someone else to act on your behalf”. It means you are asking another person to do something that is normally part of your responsibility.

It can be a useful tool to reduce your workload and/or when you do not have the required skills to complete a task.

When delegating you must give the person three things:

Accountability for completing the task

Authority to make necessary decisions and take appropriate action to complete the task

Freedom to complete the task properly in their own way.

You do not delegate responsibility. What you delegate is authority to act.

When delegating it is very important that everyone involved understands their:

Role

Responsibility

Reporting

Monitoring

Does the person have the skills, knowledge and time

to carry out the delegated task?



What tasks may require delegation within your corporation?

What is the Task / Work?

Who holds the responsibility for the task?

Who will it be delegated to?

How will it be monitored & reported?


OHS Responsibilites & Obligations

Hazardous Substances

Training & OHS Information

Manual

Handling

FireEmergency Evacuation

Accidental

Injury & Disease Reporting

First Aid

Essential OHS Policy Areas Source: Commonwealth of Australia, Workplace Safety Policies 7



Progression Planning

Planning for all of the factors that need to be in place to ensure that the business would continue operating well if you were suddenly and/or temporarily not a part of it.

It is an essential business activity.

It is a good work–life balance activity because it also means that you can comfortably leave the business in the hands of others if you need a break.

Here is a sample checklist for progression planning.

Progression planning checklist

Do I have this in place? Yes No Last

reviewed

Bo

ard

Everyone has a clear idea of their role in

the business operation and management,

and knows all of the tasks that form that

role.

The Board goals for the business are

clear.

Fin

an

cia

l

We have Key Man Insurance (covers the

cost to employ a temporary manager if

required).

The right people in the business have

access to all the bank accounts.

We have a business plan and/or a

strategic plan.

We have wealth statements (a snapshot of

the current financial position of the

business is available).


Do I have this in place? Yes No Last

reviewed

Le

ga

l

We have the right business structure

decided on and in place.

We have enduring power of attorney (a

trusted person or people have been

appointed to make financial and property

decisions on our behalf).

We have enduring power of

guardianship (authorises a person of your

choice to make important personal,

lifestyle and treatment decisions on your

behalf should you ever become incapable

of making these decisions).

We have an advanced health directive

(enables you to make decisions now about

the treatment you would want—or not

want—to receive if you were sick, injured

and incapable of communicating your

wishes).

The right people in the business have

access to legal documents (mortgages,

land title documents etc).

There is a clear understanding of who

makes the decisions in the business.

Succession Planning is the process of planning the long-term ownership, leadership and success of your corporation with a view to the older generation one day retiring or leaving the farming business. There are four important parts of process: 1. Prepare

2. Plan 3. Implement 4. Review & Amend



Balancing Business and Culture

CULTURE

Traditional concepts

Family Elders

Responsibilities

BUSINESS

Ability to make money

Efficiencies

Effective decision making

Cultural / Social benefis


Can you merge the two successfully?

Culture Business



What drives a successful land management business?

In traditional business models the ability to generate profit is what drives a successful business.

The more profit generated means more resources are available to reinvest in the business and/or benefit the community.

Profit in land management is generated from the equation:

Outputs – Inputs = Profit

Profit = Community Benefit

Remember: Land that is able to generate higher yields can be leased for higher amounts.

Some Components of profit:

Outputs Inputs

Leasing income Property improvements

Quality and quantity of yield (factors include rain, soil etc)

Fertiliser

Weed control

Consultants

Which part of the profit equation do you have the most influence over?


Source: Covey, The Seven Habits of Highly Effective People 8

Write down in these circles what your concerns are and what you can influence, e.g. where would you put ‘weather’?

Where do you spend your time and energy? _____________________

Where should you spend your time and energy? ___________________

Circle of Concern

Circle of Influence



Business performance analysis

Whatever your situation, understanding your business goes a long way in helping you to succeed.

You need to gather some information about the different aspects of your business before you sit down to analyse it.

The information needed to achieve this is:

Production records (3–5 years)

Cash flow statement showing the actual income and expenditure for the production year (3–5 year summary)

Statement of position (3–5 year summary)

Key financial ratios (trend over 3–5 years)

This data will allow an objective analysis of the performance of your business over time.

A three to five year analysis provides an understanding of trends and recognition of the financial impact of prices and seasonal variation. This workshop does not cover this process.

Do you want to know more?

1. The business performance analysis is covered in the DAFWA Plan, Prepare and Prosper five day program.

2. Further explanation of the process

can be found in Appendix 3 of this manual.


Developing strategies to improve profitability to increase the returns and flow on benefit to your Community

We have discussed the components that contribute to profit:

Outputs – Inputs = Profit

Profit = Community Benefit

The key to improving profit on a farm is productivity.

Improving productivity means improving the margin between the input and the output.

The potential for individual farms to improve productivity (and hence profitability) is often underestimated.

Analysis of the top 25 % of farmers often shows not that their land is better but that their productivity is higher (high yields and

low input costs).

Such farmers tend to:

identify best practice and key performance indicators (KPIs) associated with it

study examples of best practice at field days, study tours and in discussion groups

offer their farm for small trials and welcome the opportunity of working with research personnel

trial new approaches before proceeding to large-scale adoption

undertake an economic appraisal where necessary before adopting new practices

engage a farm management consultant(s) and crop consultant(s).

Source: Blackburn A & Ashby R, Financing your farm 9



Enterprise Profit Drivers

Land Management Hat

Property/Infrastructure Environment Production

Leasing agreements Property monitoring: Soil pH

Insurance Soils Nutrient mapping

Fencing Weed identification Yield records

Water storage Water security Cost of production

Roaded catchments Vegetation Fertiliser

Property improvements

Erosion Weed control

Salinity Stocking rates

Compaction Stock feed

Revegetation Stock birthing percentages

Protection of natural or

cultural sites

Remember: Land that is able to generate higher yields can be

leased for higher amounts

What things can you most easily work on to improve profit by at least 1% using the “Land Management Hat”?


What are the priority areas to improve profitability via Land Management and Leasing Options?

Item Priority Number

Who would do it?

Who would monitor it?

Any adjustments to your business should be assessed carefully against a range of criteria. Most importantly the cost of the change and the likely return to your business.



Enterprise Profit Drivers

Business Management Hat

We have been focussing on a lot of Business Management strategies today. What other Business Management strategies may be useful for our Corporation?

Strategies covered today Other Ideas

Strategic planning

Risk management

Human resource management

Occupational Health & Safety policies and procedures

Progression planning

Business performance analysis

What things can you most easily work on to improve profit by at least 1% using the “Business Management Hat”?


What are the priority areas to improve profitability via Business Management?

Item Priority Number

Who would do it?

Who would monitor it?



How will the financial management of each farm be monitored?

Monitoring tool and/or report

How often will the tool and/or report be monitored?

Who will collect and compile the tools and/or reports?

Who will monitor the tools / reports?


Continuous Improvement Cycle

‘Continuous Improvement is about doing 100 things 1 per cent better, not one thing 100% better’

Source: Cole, Management theory and practice 10

Plan: The new activity, change or improvement. Begin by gathering

information through systematic evaluation and processes to identify opportunities for change.

Act: Implement the new activity or change. This includes planning, trialing, refining as well as implementation.

Reflect: Monitor the new activity you have undertaken, collect information on impact and review the effectiveness of the improvement activity

Conclude: Determine if the improvement activity has been successful and should be continued. Or if unsuccessful or partially successful – restart the cycle.

.

Remember! Continuous improvement often requires change

and people often resist change.



Work Life Balance

What is the Cost of poor work-life balance?

We must learn to identify our personal warning signs that we don’t have the balance right, and respond.

What are your symptoms?

Work Life

Wellbeing


Knowing your stress symptoms

Everyone reacts differently to stress. It’s good to learn about your own stress symptoms and have coping skills ready to use.

My stress symptoms

I feel out of breath all the time

I get a sore neck and

shoulders and seem to

be clenching my

muscles a lot more

I lose my temper more

easily

I get a bit hyperactive

and talk a lot more

I withdraw and don't

talk to my family and

friends as much

I think my blood

pressure goes up

I feel far less confident

than usual

I get sad and feel

really down

I have difficulty

concentrating

I get upset really easily

I sweat a lot more

I can’t remember all of

the things that I need

to do and forget some

of them

I don't seem to make

the best decisions

I grind my teeth or

clench my jaw in my

sleep

I have broken sleep or nightmares

My heartbeat seems to

get more rapid



I get really negative

and pessimistic

I find myself worrying

about things I don't

need to worry about

I put off doing

important things and

they never get done

I drink a lot more

alcohol

I smoke a lot more

cigarettes

I eat a lot more

I eat a lot less

I get a bit anxious

My thoughts race

around

I can’t get to sleep

I feel constantly tired,

even when I have had

plenty of sleep

I find myself telling

people that I am

stressed

What do you do to relieve stress?


Striking the right balance for you

Work–life balance is all about what satisfies us. There is no magic formula or recommended balance.

My wheel of life 11

It is a quick and useful way to have a look at the things that are important to us, and whether or not we have the right balance.

Let’s identify the areas presenting the biggest gaps.

1. _____________________________

2. _____________________________

3. _____________________________

Our needs also change over time. The right balance for you today will probably be different for you tomorrow.



Making a plan for health

Here is your opportunity to have a look at your own health indicators and plan some improvements.

My plan for health

Health indicator X

I visit my doctor for regular general health ‘check-ups’.

I do not smoke cigarettes.

I stay in a healthy weight range.

I get my blood pressure checked at least once a year.

It is rare for me to have more than two standard drinks per day.


I very rarely feel stressed.

I get at least 20 minutes of moderate exercise every day.

I get plenty of unbroken sleep on most nights.

I eat five vegetables and two fruits every day.

I eat mainly low-fat foods.

Source: Concept adapted from Royal Australian College of General Practitioners

What do I want to change?



Roles and Responsibilities

What are some of the Roles and Responsibilities that you have?

Role Responsibility Priority


Vision

Goals

Strategies

Actions

Developing Our Vision

Your vision will project the future for your business.

Your vision will be audacious!

Your vision will be motivating!

Your vision will be inspiring!

Your vision will be unique!

Things to remember

What do you want to be doing in

10 years’ time?

What will your business look like in 10 years’ time?

What do you want your finances to look like in 10 years’ time?

What can you see around you in 10 years’ time?

Facilitator to read out sample visions from Appendix 7 and facilitate a group visioning exercise.



References

Many references were used to inform and develop the concepts in this manual. Some references will be quoted exactly; others have been interpreted for this work. Superscripts are used in the text to identify specific references below.

1. Price Waterhouse Cooper, 2008, 2007–08 Research into the health of private businesses, Private Business Barometer, edn 04, pp. 27.

2. Anderson D, Johnson R, Milligan B, 1999, Strategic planning in Australian universities, Commonwealth of Australia, ISBN 0 642 23905 3.

3. Bailey JN, 1981, Strategic planning: lead your association with a plan for tomorrow, Leadership magazine, Spring 1981, pp. 26–29.

4. Doran GT, 1981, ‘There's a S.M.A.R.T. way to write management's goals and objectives’, Management review, vol. 70, issue 11 (AMA FORUM), pp. 35–36.

5. Harwood J, Heifner R, Coble K, Perry J & Somwaru A, 1999, ‘Managing risk in farming: concepts, research, and analysis’, Agricultural Economic Report no. 774, US Department of Agriculture.

6. AUSTRAC, 2006, ‘Risk management, a tool for small-to-medium sized businesses’, Australian Transaction Reports and Analysis Centre. Melbourne.

7. Commonwealth of Australia, Workplace Safety Policies, 2013, viewed 2014, https://nationalvetcontent.edu.au/alfresco/d/d/workspace/SpacesStore/529c922d-e51a-4256-9f7a-340545a076c3/ims/unit_psc/concepts/psc_0102.htm

8. Covey S 1989, 2004, ‘The Seven Habits of Highly Effective People’, Turtleback books, United States of America.

9. Blackburn A & Ashby R, 2006, Financing your farm, 4th edn, p. 190

10. Cole K, 2005, ‘Management theory and practice’, Pearson Education Australia.

11. Mindtools, Wheel of Life, 2011, viewed 2014, http://www.mindtools.com/pages/article/newHTE_93.htm

12. Huzefa Moti, Performance Management System, 2011, viewed 2014, www.hrutilities.com/2011/05/performance-management-system-development/performance-management-diagram/

13. Ahmad Bedewi, Human Resource Management Overview, 2011, viewed 2014, http://businessshortcuts.blogspot.com.au/2011/02/human-resources-management-overview.html

https://nationalvetcontent.edu.au/alfresco/d/d/workspace/SpacesStore/529c922d-e51a-4256-9f7a-340545a076c3/ims/unit_psc/concepts/psc_0102.htm

https://nationalvetcontent.edu.au/alfresco/d/d/workspace/SpacesStore/529c922d-e51a-4256-9f7a-340545a076c3/ims/unit_psc/concepts/psc_0102.htm

http://www.mindtools.com/pages/article/newHTE_93.htm

http://businessshortcuts.blogspot.com.au/2011/02/human-resources-management-overview.html

http://businessshortcuts.blogspot.com.au/2011/02/human-resources-management-overview.html


14. Perry W, Workforce Planning, 2013, viewed 2014, http://workforceplanningtools.com.au/tag/workforce-planning/

15. Barnes G and Koutsoukis D, Click Colours, 2008, viewed 2014, http://www.clickcolours.net/about-us/19

http://workforceplanningtools.com.au/tag/workforce-planning/

http://www.clickcolours.net/about-us/19



Appendix


Significant Stretching

Simple

Timely Timetabled Time limited Trackable Tangible

Appropriate

Achievable Agreed

Assignable Actionable

Appendix 1: Developing goals The purpose of a goal is to inform your strategies and actions. A goal is a broad, long-term aim that will accomplish your vision. Your goals should be SMART(10).

Specific: The goal must be specific rather than general. Your goal must tell your team what is expected, describe its importance, indicate what will be happening and who will be involved. When trying to be specific you should be able to answer:

What do I want to accomplish?

Why we need to do this? What are the benefits or purpose of the goal?

Who is involved? Where will it be—what location?

What are the requirements and constraints?

Measurable: You must be able to measure the progress you make towards the goal. This is intended to keep you and your team on track. A measurable goal will usually answer questions such as:

How much?

How many?

How will I know when it is accomplished?

Attainable: A goal should stretch you and your team but it should still be obtainable with effort. When you document the goals that are most important to you, you begin to find ways you can make them come true. The key question is: How can this goal be accomplished?

Relevant: Your goal should be something you are willing and able to work towards. You need to believe that it can be accomplished. The key question is: ‘Does this seem worthwhile?’

Time-bound: By committing to a deadline you will focus on the completion of your goal on or before the due date. This allows you to prioritise while still managing day-to-day problems. This will also create a sense of urgency. The key questions are:

● When?

● What can I do today or in six weeks or in six months?

Meaningful Motivational Manageable

Realistic Results

Resourced Rewarding



Appendix 2: Extra Information on SLOT’s

Thinking about Opportunities and Threats – external elements

Most opportunities and threats to your enterprise will fit inside one of the elements of PESTEL. PESTEL is often used by enterprises to take a snap shot of the external environment in which their business operates in.

PESTEL

Political factors are how and to what degree a government intervenes in the economy.

Economic factors include economic growth, interest rates, exchange rates and the inflation rate.

Social factors are the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety.

Technological factors include technological aspects such as R&D activity, automation, technology incentives and the rate of technological change.

Environmental factors include ecological and environmental aspects such as weather, climate, and climate change, which may especially affect industries such as tourism, farming, and insurance.

Legal factors include discrimination law, consumer law, antitrust law, employment law and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products.


Appendix 3: Analysing Business Performance

Tools used to measure and monitor farm business performance

Figure 1 shows information flows and what data is used to monitor and measure farm business performance.

Figure 1 Information used for analysing farm performance

Measuring and monitoring farm business performance

Enterprise gross

margins

Whole farm cash flow

Production history Livestock Crop

Analysis using financial ratios and industry benchmarks

Statement of position

Operating surplus

Paddock plan or enterprise plan

Previous year’s actual cash flow

Budget V actual’s

monitoring tool 1

3

2

Profit & loss Statement

Net profit



The Meaning of Financial Terms

1. Whole farm cash flow

The whole farm cash flow budget estimates your income and expenditure for each month and calculates your operating surplus. It tells you how much money you have on hand or available to draw on to stay in business while you are becoming profitable. You can analyse the cash flow to identify when your peak debt occurs and to determine the limits on your seasonal borrowing.

The important uses for the whole farm cash flow budget are:

● Monitoring Budget v. Actual data—how far does actual performance deviate from your plan?

● Calculating farm operating surplus

Identifying when peak debt occurs (not such an issue for dairy).

2. Profit and loss statement

This statement gives the actual profit (or loss) generated by your business yearly. It takes into consideration non-cash costs like depreciation and is mainly used by government to assess your taxable income.

3. Statement of position

You may know this as a balance sheet or as an assets and liabilities statement. The statement of position states the type and value of assets owned by the business and the amount of debt owed. Net worth or equity, usually expressed as a percentage of assets is calculated using the information in this statement.

We will discuss the statement of position in much more detail later on in the day.

Enterprise gross margins

All the income generated by your business and any additional revenue sources is called gross income.

Subtracting your variable costs from your gross income gives you gross margin.

Formula: Gross Income – Variable Costs = Gross Margin

When using gross margins remember to compare apples with apples but be aware of their limitations:

They are only an annual comparison of enterprises.

It is difficult to consider capital investment required using gross margins and some enterprises will require more than others.

The rotational benefits are difficult to account for.

The interactions between enterprises are often lost.


Calculating operating surplus

Experts have generated a whole language around business management, created exclusive jargon and developed benchmarks and guidelines. Figure 2 introduces some of the industry terminology that most people will be familiar with and shows how it is used to calculate one of the most important numbers for your business—operating surplus.

Operating Surplus is the same as operating profit, net margin, net cash flow and earnings before interest and tax (EBIT).

Figure 2 Calculating operating surplus

Gross farm income

Minus

Variable Costs (45%) GROSS MARGIN

Minus

Fixed Costs (20%) OPERATING SURPLUS



The meaning of …………

Gross farm income is:

Yield x Price

Gross farm income is sometimes called Total farm income but there is a small difference.

Gross farm income is your income BEFORE any costs are deducted.

Total farm income is your income AFTER some costs, such as grain freight and levies, are deducted.

To arrive at gross farm income, MULTIPLY yield by price.

Variable costs

Are incurred when something is produced or grown; they are readily allocated to an enterprise and disappear when nothing is produced.

Fixed costs

Also called overhead costs are still there if nothing is produced on the land, for example rates and utilities are fixed costs.

Operating surplus

Also known as Operating profit, Net margin, Net cash flow or Earnings before interest and tax (EBIT).

Is required to pay for other discretionary expenses like personal expenses, loan repayments or finance costs.

The cost of finance might not seem like a discretionary expense, however it is a product of the decisions the business manager has made around the level of borrowing i.e. purchasing land.

Operating efficiency

Operating efficiency is total operating costs expressed as a per cent of Gross farm income.

● Variable costs PLUS Fixed Costs = Total operating costs

● Total operating costs DIVIDED by Gross farm income x 100 = Operating efficiency

This is a KEY ratio for growers. If it is too high, (> 75%) it means there is not enough operating surplus to allocate to personal, finance and capital costs.


Appendix 4: Summary of the behaviours and characteristics of the Top 25 Farmers

From interviews with the top farmers, seven managerial characteristics clearly emerged.

1. Focused on profit—The top farmers used rational decision-making to analyse whether a practice was possible and they stuck to budgets. They understood risks and consulted with multiple specialists before changing their business plan. They did not consider themselves early adopters, but took a ‘wait and see’ approach. As an example, they did not rush in to new varieties and often took two to three years to make a change.

2. Planned—The top farmers sowed 35 per cent of their crops dry; about 30 per cent higher than the average farmer. The ability to sow a significant portion of the farm dry was due to careful planning to ensure effective weed control.

3. Prepared—The top farmers made most decisions outside the high stress periods of sowing and harvest. They usually only changed about 20 per cent of their program in response to seasonal conditions. In general, rotations were kept in place to ensure weed control and income.

4. Timely—Timeliness was noted as one of the top practices needed to ensure production. This included the timeliness of spraying, fertiliser application and sowing. Importantly, sowing time was nominated as the key practice to maximise profit.

5. Committed—The top farmers were not distracted by other issues after a decision was made. Few decisions were made that resulted in substantially negative effects on profit in the years that challenged the profitability of most other businesses.

6. Positive—The top farmers were positive about the future. This was shown in a desire to learn more and succeed; and their passion for agriculture.

7. Connected—To farmer groups, consultants and researchers. Approximately 69% of the top farmer group have a mentor or close friend they bounce their ideas off as part of their decision making process.

McConnell G 2011, ‘Bridging the Yield Gap Survey of High Profit farmers’, Department of Agriculture and Food, Western Australia.



Appendix 5: Instructions for My Wheel of Life Usage

The ‘wheel of life’ is a quick and useful way to have a look at the things that are important to us, and whether or not we have the right balance. This then reveals to you the areas that require a conscious focus in order to strike a better balance. Follow these steps to get under way:

Step one

Start by coming up with a list of things in life that are important for you, or feature heavily in your daily life. Different approaches to this are:

● The roles you play in life. Are you a husband/wife, father/mother, manager, colleague, team member, sports player, community leader, friend, etc.?

● Areas of life that are important to you. For example: Do you play sport, belong to community groups or public service organisations, have a positive attitude, develop your career, continue your education, love having family and friends around, desire financial freedom, enjoy physical exercise, know what gives you pleasure, etc?

● Your own combination of these (or different) things. What are your priorities in life—being creative, reading, etc. Think of the things that bring you most pleasure.

Step two

Now circle or highlight the 6–8 items above which are the most important to you or which feature most prominently in your day-to-day life. When you have come up with 6–8 items, transfer them to your wheel-of-life template. You can position them at the end of each ‘spoke’ in the boxes provided.

Step three

Consider each ‘spoke’, and score on a scale of 1 to 5 the amount of time, effort and focus you are currently putting into each of these areas. Highlight them by shading the square on the scale. ‘1’ represents no time effort and focus and ‘5’ represents complete time, effort and focus.

Step four

Now consider each ‘spoke’ and tick the point in the scale to represent the amount of time, effort and focus you would like to be putting into each area.

Step five

Take a highlighter pen and mark the line between where you are and where you would like to be.


Appendix 6: More Information About Click Colours

How to build great relationships quickly

The following article was written by David Koutsoukis, co-author of the book, ‘Why you click with some people and others drive you crazy!’ David is a director of Click! Colours International—a company that shows you how to build relationships quickly, by understanding what makes people tick.

Do you find there are some people you get along with straight away? Are there others you find very frustrating or annoying? And have you ever wondered why you ‘click’ with some people and others drive you crazy? Read on and find out why.

Most people would agree that good relationships create the foundation for success, but how do we build relationships with people we don’t seem to get along with? In the words of Stephen Covey, we need to: ‘Seek first to understand, then to be understood’.

Human behaviour is very complex but in simple terms psychologists have been able to identify patterns of behaviour. Recognising these patterns helps us to understand what makes people ‘tick’, and what we need to do to communicate effectively with them.

These patterns can be represented as four colourful characters that guide our behaviour—a bit like the devil and angel on each shoulder that ‘whisper’ in our ear. One or two of these characters ‘shine’ more brightly than the others and becomes our dominant sub-personality. You ‘click’ with people like you, and those who are not can drive you crazy! Knowledge of these characters within yourself and others will help you understand what makes them ‘tick’.

Human behaviour is, of course, much more complex than four colourful characters, but the Click! ColoursTM are a great start to help you build relationships and boost success by understanding people who are not like you.



Using Click! Colours as a tool in your business?

We hope you’ve had fun with Click! Colours as a tool to talk about the different ways people think and communicate. The authors have identified some ‘Red Flags’ you will need to watch for when using this tool.

The authors of Click! Colours have noted that ‘Everyone has four sub-personalities, with some colours ‘shining’ brighter than others’. They mean that although your bank manager or your partner may seem to lead with one colour preference over another they may also be using the traits of the other colour types.

Stereo typing and generalisations

Most of us are going to be a mix of all four colours—you may have realised this already but be warned by making generalisations or stereotyping someone else (“You’re such typical Yellow!”) you may miss something important.

External factors also influence behaviour and decision making

Seems obvious—but sometimes we all need to draw on our traits and behaviours that are not represented in our preferred Click! Colour. Work situations, family, friends and peer group expectations can lead us to behave and communicate differently in specific situations.


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Appendix 7: Sample Vision Statements

Non-agricultural examples:

We’ll put men on the moon before the end of the decade

(President John F. Kennedy)

Our Vision is for cricket to be Australia’s favourite sport

(Cricket Australia)

Solutions for a small planet

(IBM)

To develop a perfect search engine

(Google)

Agricultural examples:

My farm enterprise is drought proof, profitable,

environmentally friendly and easy to manage.

My business is strong, successful, sustainable in all

climatic and economic environments, and will continue to

grow.

Our business is viable for the long haul. It provides a healthy,

well-balanced lifestyle for us and our children.

My business is profitable, flexible, responsive to seasonal opportunities and financially sound.


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Appendix 8: Sample Strategic Planning Summary Template Strategies and actions are the details of your goal. A strategy outlines the pathway or route you will take to achieve the goal. Actions are the steps or tasks undertaken in order to achieve the goal.

Vision

Financial management Work life balance Production Natural resources

Risks

Goals

Strategies

S1

S1

S1

S1

S1

S1

S1

S1

S2

S2

S2

S2

S2

S2

S2

S2

S3

S3

S3

S3

S3

S3

S3

S3

Actions

Strategy 1

A1

A2

A3

Strategy 1

A1

A2

A3

Strategy 1

A1

A2

A3

Strategy 1

A1

A2

A3

Strategy 1

A1

A2

A3

Strategy 1

A1

A2

A3

Strategy 1

A1

A2

A3

Strategy 1

A1

A2

A3

Strategy 2

A1

A2

A3

Strategy 2

A1

A2

A3

Strategy 2

A1

A2

A3

Strategy 2

A1

A2

A3

Strategy 2

A1

A2

A3

Strategy 2

A1

A2

A3

Strategy 2

A1

A2

A3

Strategy 2

A1

A2

A3

Strategy 3

A1

Training

Strategy 3

A1

Training

Strategy 3

A1

Training

Strategy 3

A1

Training

Strategy 3

A1

Training

Strategy 3

A1

Training

Strategy 3

A1

Training

Strategy 3

A1

Training


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Sample Strategic Plan Summary

Vision

Our enterprise is profitable, flexible, financially sound and environmentally sustainable. We are healthy, have minimal stress and have time for our other interests. We have helped our children successfully establish themselves.

Goals

Financial Management Work–Life Balance Natural Resources Business/Production

Gross margin to increase above 55% by 2012

Increase Equity to above 60% by 2014

Establish and achieve benchmarks for total well being within 2 years

Reduce losses through erosion

Drought proof farm Increase meat production Increase our gross margin

Strategies S1 Reduce input costs S1 Reduce debt S1 Establish health

maintenance program S1 Maintain critical pasture cover levels (minimum 50%)

S1 Increase on farm fodder supplies

S1 Improve grazing system S1 Reduce costs

S2 Improve production S2 Redistribute off farm assets

S2 Find time to pursue other interests

S2 Revegetate and protect waterways.

S2 Improve water use efficiencies

S2 Increase on farm fodder storage

S2 Improve soil fertility

S3 Increase profit S3 Maximise returns in off farm investments.

S3 Build succession plan S3 Expand and protect remnant vegetation.

S3 Improve water supplies S3 Manage extreme seasonal variations

S3

Actions Strategy 1 Input costs

A1 Review purchasing strategies to reduce costs. Incl., bulk purchasing.

A2 Increase efficiency input applications. Jun 2012.

Strategy 1 Reduce Debt.

A1 Review debt with bank manager to develop strategy to increase debt reduction each year. A2 Reduce capital tied to debt

Strategy 1 Health maintenance

A1 Annual health checks.

A2 Improve diet.

A3 Join local health club.

A4 Implement farm safety program.

Strategy 1Maintain cover

A1 Establish feed lotting paddocks.

A2 Develop destocking plan for extreme dry conditions.

Strategy 1 Fodder supplies

A1 Improve pasture.

A3 Implement silage production (on farm fodder store.

Strategy 1 Grazing systems

A1 Trial kikuyu pasture. A2 Implement rotational grazing.

A3 Use pastures in space tool.

Strategy 1 Gross Margin

A1 Implement GPS system to tailor fertiliser applications to soil type requirements.

A2 Expand areas for hay production.

Strategy 2 Production

A1 Increase number of steers turned off annually to 900 head.

A2 Increase carrying capacity –in pasture productivity.

A3 Increase carrying capacity –land -leasing.

Strategy 2

A1 Review off farm investments to identify assets to sell for debt reduction . (A2 Sell off farm identified investments /assets by Dec2012.

A3 Pay lump sum $300 K on to debt.

Strategy 2 Other interests

A1 Establish defined business roles through planned business meetings.

A 2 Prioritise farm tasks and work conditions.

A3 Each member to have personal time commitment.

Strategy 2 Waterways

A1 Survey and identify boundaries for waterways.

A2 Fence waterways.

A3 Revegetate waterways.

Strategy 2 Water use efficiencies

A1 Implement stubble retention in paddocks.

A2 Monitor soil health.

A3 Plan and implement strategic wind breaks.

Strategy 2 Fodder storage

A1 Cost and analyse storage options for fodder (on farm silage, grain silos).

A2 Implement best bet storage systems for fodder.

Strategy 2 Agronomic management

A1 Review management with agronomist annually.

A2 Improve weed strategies.

A3 Implement soil surveying, gps fertiliser application.

Strategy 3 Increase profit

A1 Increase quality carcass sold – fat to muscles ratio/ optimal weight for market.

A2 Identify and develop alternative markets for livestock.

A3 Develop marketing plan for product.

Strategy 3 Off farm investments

A1 Reinvest remaining funds from debt reduction activities into investment portfolio.

A2 Develop benchmarks for annual review – return on investments.

Strategy 3 Progression plan

A1 Employ consultant to facilitate succession plan.

A2 Draft and complete family members wills.

A3 Identify and purchase most appropriate life insurance for family members.

Strategy 3 Remnant vegetation

A1 Fence remnant vegetation- June 2012.

A2 Weed control plan implemented for remnant vegetation May 2012.

A3 Revegetation plan implemented 2011.

Strategy 3 Water supplies

A1 Assess water supplies, quality, supply and reliability.

A2 Establish movable water points system.

Strategy 3 Seasonal extremes

A1 Establish destocking guidelines and expanded market opportunities.

A2 Increase fodder on farm.

A3 Improve water supplies.

A4 Expand off farm employment opportunities.



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