Planning ahead to stay ahead

There is a strong correlation between farm profitability and strategic business planning, and farms that write a long-term business plan benefit in a host of ways, including reduced accountancy bills, and a better understanding of the key contributors to the businesses’ bottom line, allowing for more informed decision making, and ultimately, peace of mind.

David McFarlane, managing partner at DMC North accountants, works with agricultural consultancy Active Business Partnerships (ABP), and believes that investing in expert assistance on a strategic business plan means a high return on investment.

“If agricultural businesses work collaboratively with their accountant and an agricultural advisor it ensures that everyone is on the same page and pulling in the right direction. Going over the accounts and budgets together gives everyone a good feel for the direction of travel and allows time to deal with any issues ahead.”

“Farming is increasingly about getting the absolute most from resources sustainably, with razor thin margins,” he says.

“There are many benefits to having a business plan and at the same time an accurately run farm accounts package. These include reduced accountancy bills, tax efficiency, more borrowing potential, and the ability to invest resources with more confidence. A detailed business plan is something SMEs do as standard, and although it’s relatively new in agriculture, we are seeing more uptake as farmers see the benefits.”

“It’s becoming more of an information-driven industry, and where historically banks would need to know what your asset base is worth, now they need a plan to see that you can service the debt you have with them. A farmer without a plan or business workings behind them is a problem,” says David.

“We work closely with Active Business Partnerships (ABP) who’s clients have strategic plans with organised and accurate bookkeeping systems and management accounts, and this helps us a great deal.”

“We find that farmers who have an agricultural advisor have a high ROI and feel more prepared for the future. The best farms in my view get extra advice,” adds David.

Hamish Bichan from ABP says that writing your ambitions down is one of the most successful ways to visualise what you want to do and so make it happen.

“While on the one hand we have never had so much uncertainty, on the other hand there has never been more of a need for a realistic and detailed forward plan. And a means of assessing progress toward the financial targets set is crucial, whether it be cash or profit.”

“Tax increasingly needs careful planning as it is often payable a year or so after the profit is generated and so can cause issues when profitability is variable,” he says.

Hamish goes on to underline that farm businesses have always been exposed to weather and price risks so COVID 19 is just another factor that we now have to contend with. “An accurate business plan at the beginning of the year is one way of helping manage these risks and it helps provide assurance when things outside our control go off track.”

“Ways of benefitting from a detailed plan are to gain an understanding of the components of your business and the key contributors to your bottom line, to determine the overall profitability and cashflow targets to establish how much wriggle room there is, given variables over the year. Compiling a business plan from the basic components of each enterprise enables the key success factors to be identified which allows clients to focus on the priority areas of their business,” says Hamish.

Natalie Dixon, finance manager at ABP, adds: “Having a close link with your accountant and their team, and ensuring the bookkeeping system is updated to agree with the annual accounts is a key element to achieving an efficient transition to statutory accounts at the year end.”

“Also, by introducing more details into the bookkeeping software during the year such as nominal codings to suit the business, volumes and litres, enables all reports to give a more accurate picture of the business in real time. All of this and the more detail added assists in reducing the accountancy time and costs. Working with accountants to keep correlation between the accounts and the financial statements creates an accurate start to the financial year, and a more productive working relationship with the accountancy team,” says Natalie.

Active Business Partnerships (ABP) is an agricultural consultancy based in Newark, Nottinghamshire, and has clients all over the UK. To find out more about their expertise in strategic business planning, contact the team by calling 01636 705817 or emailing, or visit for more information.

DMC North provides accounts and business advisory services to owner-managed businesses and have specialist staff working with the agricultural sector. Visit

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