There’s a strong tradition of farming being a family affair. And when you’re running a family business, you’re no longer just managing a farm; you’re also the custodian of an ongoing farming enterprise that must provide for future generations.
So it’s hugely important to take a long-term view when making business decisions about your farming business, and to put a serious amount of consideration into the impact of any changes you put in place.
And that’s why clear, well-informed planning is such a vital part of your farm management.
Plan to be profitable
Keeping the farm functioning will be your top focus as a farmer. Your time will be taken up with managing the practical, day-to-day elements of dealing with land management and animal husbandry. But, ultimately, you still have to turn a profit if you’re to survive and prosper.
The best way to improve your profitability is to work closely with your accountant and find the time to review your farm’s business model. With the right access to your accounts and key numbers, you can go a long way to reducing your costs and overheads, improving your cash flow and boosting the overarching profitability of the whole farm.
Plan to be tax efficient
Tax is one of the inevitable aspects of running any business. But there are multiple tax reliefs and incentives available to farming and agricultural business that can reduce the size of your tax bill.
Being aware of your tax liabilities, and understanding the tax reliefs that you can claim, is a fundamental part of planning your farm’s tax strategy. Sitting down with a tax adviser who specialises in the farming sector will get you up to speed and allow you to create a detailed tax plan that minimises your tax spending and maximises your farm’s profits.
Plan to have control of your finances
If you don’t have control over your farm’s key numbers, you can’t make informed decisions about the future direction of the business.
Having the ability to drill down into your accounts to see exactly where you’re making and losing money is a huge benefit when you’re aiming to create an efficient, profitable farm. Coding your transactions and setting up cost centres in your accounts for each enterprise in the business gives you increased control.
With enterprise accounts for each area of the farm, you can see exactly where you’re being profitable, and where one enterprise may be dragging you down.
Plan for the future of your farm
Succession planning is one element of your farm management that requires careful thinking, consideration and organisation. When it comes to hand over the reigns, who will you pass the farm on to? And what’s the most effective way to do this?
No-one likes to think too much about their own retirement, but it’s crucial to identify your farm’s successor early on. And that means asking yourself some important questions:
- Who within the family is the most capable successor – and do they have a genuine interest in carrying on the farm and securing its future?
- How will you buy out any partners in the farm – and do you have the ready capital to do this?
- Would a sale to a suitable buyer be a better option for you and your family?
- What would the different tax implications be depending on whether you opt for succession or a sale? And how could you manage this impact to create the best possible outcome in your retirement?
Helping you build a better future for your farm
At Saint & Co, our Farming Services team has been providing accounting, tax and business advisory services to local farmers for generations.
We know the hurdles you face when managing a farm, and we know the best ways to help you overcome these pitfalls and turn your farm into a profitable enterprise.
If you want to secure the future of your farm, please do get in touch with us to talk about how we can help you.
Contact your local Saint & Co office and arrange a meeting with one of our farming business specialists.