Longer-term vision and profits (continued)
Owners should preferably be trying to ensure that they are considering the business and personal needs and expectations of family members some three to five years ahead, and implementing actions that will create the preferred future.
It is from this exercise that business strategies flow for which financial measurement and reporting is required.
It is the business which must deliver the profit flows that will enable personal expectations to be met.
Creating and implementing that long-term vision
Although past industry training effort has been put into encouraging and training primary producers to produce Business Plans, I have yet to come across a bank manager who has asked for one—be that from the weakest or the strongest businesses I have worked with.
As an accounting professional I am certainly not decrying the benefit to be gained from producing a formal Business Plan, but I suggest that owners need not be afraid of producing a relatively simple plan for fear that it doesn’t meet muster as a weighty document.
I suggest that a good plan is one in which:
- All family members have been given the opportunity to articulate their future needs and expectations in a non-confrontational way. These can be listed as dot-points under each member’s name, and ongoing discussion will be required where some requirements conflict
- There is a good understanding about the capacity of the business to meet those needs and expectations. Usually this means that a business is generating profits in most years, and is not carrying too much debt
(continued next month)
For more information, see Tree Fruit August 2015
