Planning crucial when times get tougher

Economy and water levels are low with a drought formally declared in Northland.
Unfortunately, I cannot offer you a crystal ball to see what happens next. So what can you do?
The old adage "Fail to plan, plan to fail" comes to mind. If your first thought is "no one can plan for events of this nature", then to a certain extent you are correct. I look at things a little differently. Everyone has the same opportunity in business, the difference between success and failure is often simply the four-letter word PLAN.
You need a business plan that is a living document supported by a budget or cash flow, not something jotted on the back of an envelope and thrown in the drawer never to see daylight again. Then when forces outside your control occur, you have the knowledge of the current position of your business.
This knowledge is truly the power that gives you the advantage of being able to identify options, and the supporting budget can be adjusted to clearly demonstrate the financial impact of those options on your bottom line.
Examples of this would be buying in feed to keep production or weight gain on target, where the impact of not buying in that feed would equate to a financial loss greater than the cost to purchase the feed. Your plan and budget review will mean you have the confidence to discuss your thought processes with your bank manager.
This will include how and why the decision is the best fit for your business going forward and you will be able to demonstrate the all important financial impact and when repayment or reduction of debt may be manageable.
And the result, a more positive and supportive reaction from your bank as you have shown you know your business and have thought it through - not just put your hand out. Planning will essentially allow you to be proactive rather than reactive and reduce or negate the impact forces outside your control can have on your business and livelihood.
There is a fantastic rural support network out there so, if you have not done so already, then I suggest you get connected with it.
Go to www.DairyNZ.co.nz to find out about discussion groups and support available in your area.
It is important to talk to others within the industry to ensure you are aware of all your options and that you do not lose sight of the big picture, which can easily happen when you spend a lot of time working in and not on your business. Keep up the good work as there is light at the end of the tunnel.
Steve Sudbury is director of Sudbury's chartered accountants and business development specialists.