Taking a professional approach

Taking a professional approach


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Kristy and mother Jayne Buck on-farm working with Warren Vogel, Rural Finance.

Kristy and mother Jayne Buck on-farm working with Warren Vogel, Rural Finance.

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HAVING young farmers returning to the family property as employees has its challenges, but Rural Finance's Warren Vogel says being professional determines its success.

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HAVING young farmers returning to the family property as employees has its challenges, but Rural Finance's Warren Vogel says being professional determines its success.

Carving a role within the farm business can be a difficult process but Mr Vogel says communicating as a valued employee rather than a family member leads to a better business transition.

He said keeping diary records, reporting activities and recording daily hours worked was important for business management and succession planning meetings with the family.

"People keep production records but they don't keep a diary of what they actually do each day in terms of the intensity of their labour - it might come in handy 10 or 20 years down the track," he said.

"Young farmers have a passion for farming and they put in a lot of time and effort.

"It is important to record this time so it is recognised as well as used as a reference to on-farm events, such as time of lambing, and to provide a historical record of seasonal issues and how they were handled."

Understanding the farm business and its viability to support more than one family also needs to be assessed.

"It is worthwhile considering splitting the income and expenses (between parent and young farmer) so they have a say in the business and it shows them how lumpy cashflow can be throughout the year," Mr Vogel said.

"Money doesn't grow on trees so it teaches issues like the marketing impact to revenue and that it is easy to spend money but not as easy to earn it, and it gives them a sense of ownership in the business which ultimately boosts productivity because they're more motivated."

He said younger generations should work off the home farm if possible to gain operational experience in other businesses.

Mr Vogel recommended setting expectations early and working for cash or equity - "don't work for just promises", he said.

"Share the risk with established operators - you provide the intensity of labour and management so take the opportunity to build up your own stock as compensation," he said.

He said younger family members should have a plan and review it regularly.

"By having personal goals - whether it is production, expansion, increasing stocking numbers or farm ownership goals - actually understanding personal aims and what they want to achieve from the business allows them to plan to work towards it," he said.

"Often the drive from the younger generation results in a lift in motivation in the older generation and can see productivity increase."

He said they should exercise close management of their personal budget, limit spending on depreciating assets such as vehicles and fancy equipment, and be focused on increasing productive assets such as land and stock.

"You don't have to own the latest and greatest equipment so spend your money where it will bring money back in," he said.

While he said it was important to aim for profitability, younger farmers needed to be prepared to pay tax.

"The older generation have their asset backing and investments sorted, but for the younger generation profit maximisation needs to be the focus," he said.

"Build up working capital and equity as quickly as possible.

"There's the old saying is 'cash is king'.

"It allows something up their sleeve as working capital for investments or help through tough times if seasonal conditions don't go their way."

An overriding theme throughout Mr Vogel's advice was the need for clear communication between young farmers, managers and families, which he said was integral to the success of business transition through succession.

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