Never Has There Been A More Important Time! – Gerard Finnan (Sherborne)

‘Over the past five months, my milk price has increased by 5ppl, that should cover it ’……  This was one farmers’ answer to my query of how he was going to cope with volatile and inflationary price pressures on his business in the next 6-12 months.

One hour later after doing a simple annualised (not cashflow) budget for his business, he realised that he needed 6ppl milk price increase to break even based on current cost increases.  He had thought 4-4.5ppl would be enough but hadn’t factored in all costs which had above average inflation increases, e.g., Insurances (see other article this month from my colleague Andrew Jones)

This exercise may take you longer as an individual and depends how accessible up to date your financial data is.  If you have computerised management accounts, you should be able to print out the last 12 months nominal ledger (showing all transactions split under relevant headings).  Using this as a basis to budget, it will be 6-9 months more relevant than the March ’21 tax accounts which have just been finalised.  Once done, I would suggest you benchmark and highlight areas to improve efficiency or reduce cost. How much and how you use something in your business is within your control.

So, with up-to-date Data, a little Discipline and access to Benchmark figures, you will be a lot more Confident how your business will cope in 2022 or focus your mind to certain areas of your business where improvements can be made.

Contact Gerard at gerardfinnan@fcgagric.com or your local FCG Office, for assistance with compiling a simple budget for your business.