With a tough season on the cards for many across Victoria, being on the front foot in your business will be key, heading into 2025.
Although a poor season can no doubt feel discouraging, it’s important we as managers don’t let a single season define, compromise or undermine our decision-making and long-term business goals.
Hindsight thinking is helpful for knowing what levers could be tweaked next season but can become dangerous if you find yourself constantly dwelling upon decisions made earlier in the season.
Often, most would say they would do the same, if presented with the same scenarios this year, so beating yourself up for decisions that haven’t panned out, won’t help anybody.
If you are a leader in your business, it’s your role now to take charge and engage with your advisor’s, to prepare a strategy on how you are going to overcome this setback and tackle next season head on.
With business cashflows expected to be pressured for many next year, here are some key steps in how to prepare yourself and your business for 2025:
Organise
- Document the season and impacts, both good and bad, that affected the business this season. (i.e. moisture stress, frost, commodity price movements, late autumn breaks, strong spring lamb prices, good sub-soil moisture at sowing).
- Organise your records and take note of key outcomes as they come to hand, especially the likes of crop yields, lambing and calving % and wool cuts/hd for example.
- Complete a stock take at years end to know if you have product on hand already for next season i.e. do you have money sitting in the shed in the form of chemical, fertiliser or fodder that you won’t need to purchase next season?
- Identify what stocks (grain, livestock, wool or otherwise) that you will have to sell across the next 12 months.
- Split out the expenses you had in your business into the key buckets, so you know where all your money went. These include operating, finance, machinery repayments, personal, tax and capital expenses.
Analyse
- Analysis the impacts you faced this season and identify how they impacted the financial result.
- Identify if you could have controlled, managed or mitigated these impacts or if these are an uncontrollable risk we naturally face as farmers each season.
- Focus with priority on implementing change to those you can have the greatest control over.
- Analyse the key income and expense drivers this season and know exactly where you made and spent your money. Knowing where it’s going and coming from is critical to know where attention should be given.
Plan & Implement
- Produce a comprehensive 2025 production season cashflow budget, to project what your peak working capital needs will be next year and when you will need them. Getting finance requests to your bank early will ensure you are organised well before you need the money and before an influx of requests from other farmers who may be less prepared hit their desk all at once.
- Identify within this cashflow document the key changes you are implementing off the back of the 2024 season, to mitigate risk and set the business up for success in 2025. Banks like to see you proactively managing your business and demonstrating how you plan to recover from a poor season.
- Analyse the profitability of the 2025 season to make sure your business knows what to expect as a profit figure in an average yield average price scenario. Knowing this will give you guidance on what you can afford to spend on capital items in 2025 and if a loss event is predicted, you will have time to make changes to the program and workshop ideas that could improve the projected profitability position.
Adopting the steps above, will ensure you head into 2025 informed and with the key information you and your key stakeholders will need to help you plan well, make good data driven and early decisions, and head into next season focused upon what’s ahead vs trying to grapple with what’s occurred.