Finance with Don Fraser Fraser Farm Finance

These thoughts and my life experiences may help you improve your future farming business decisions.

• Do not starve your business of working capital.
If you spend all your available working capital on non-producing things, such as holidays, tractors, etcetera and you run out of cash, you are starving your business. Ensure you always have surplus working capital available.
• When in doubt about a potential employee do not hire them.
Wait and regroup and rethink. A bad hiring decision can have a huge detrimental impact on not only your business, but your family and your head.
• In all matters, if in doubt don't.
Go with your gut feeling and avoid talking yourself into something that did not really seem right. You can talk yourself in or out of anything.
• If you strike a major problem, disengage from everything else and focus ruthlessly on the problem.
Ring-fence the problem, then get top advice to help you solve it. Many people are conscious they have a problem, but are far too slow to put the blow torch on it and sort it.
• You must stop the bleeding very early on. If you are losing money, if things are not right, if your milk is downgraded, get it sorted now. Do not let the issue sit.
• You run two businesses on a farm.
There was, and remains, the wealth creation with land and buildings. Then, there is the cash flow side of your business from livestock or milk sales, which allows the wealth and assets. This supports the assets.
Focus on making an annual profit and the rest will follow.
• When you are at the top of an economic cycle, you cannot see the bottom of the cycle coming. Conversely, when you are the bottom of the cycle you cannot see out because everything is on top of you. The lesson here is that yes, it is tough now, but eventually it will turn around and bailing out now may not be the best decision.
I remember the 80s well, when things were really rough, many bailed, but those who hung in there prospered very well on the upswing.
• Be an optimist, because there is no use being anything else.
To me the glass is usually half full – if the tides goes out the optimist will focus and sort it quickly; a pessimist on the other hand, will procrastinate. Which one are you?
• Brutal facts demand brutal decisions. Brutal decisions have to be made by you and you only. Don't try to delegate them.
You own the problem, you sort it and you stand solid on your decisions.
• When people have to leave farming they often feel they are a failure. Sometimes extrication is the best and most logical decision. If you have to go, look for pride and sale with dignity because there is life after farming. I acknowledge Pita Alexander from Christchurch again for his thinking and my own lifetime in the farming industry. Remember to focus on what is important and forget the rest.

These are the opinions of Don Fraser of Fraser Farm Finance.
Any decisions made should not be based on this article alone and appropriate professional assistance should be sought. Don Fraser is the Principal of Fraser Farm Finance and a consultant to the Farming Industry.