The impact of last winter’s weather on farming businesses, economic and regulatory change coupled with the more recent uncertainty in the economy as a result of Covid-19, has reinforced the need to be business-minded - now more than ever, writes Phil Goscomb from the food and farming team at Savills Taunton.

From recent conversations with clients, it has become clear that there is a real need for farmers who are not currently assessing their future cash requirements to do so swiftly.

Successful business managers tend to plan their business meticulously and monitor every enterprise on a regular basis. Whereas those that come unstuck are usually those who pay little attention to it. This year’s pandemic has served as a timely reminder of the fine balance between success and failure.

For some, Covid-19 has had a profound effect on markets and, bizarrely, for others it has opened up new and exciting opportunities. The food supply chain, for instance, has adapted quickly and responsibly to the issues raised by the pandemic and fears of empty shelves and food shortages were ill founded.

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As we move into the final months of the year we have compiled a list of points to consider when reviewing business strategy and cash flow management.

1. Look at your business cash flow for more than 12 months at a time: budgeting and cash flow forecasting typically prepares 12 month forecasts in line with financial year ends. Now is a good time to ignore accounting years and to think about your farming years. Be thorough and be honest.

2. Be realistic in your forecasts: plan for the worst and hope for the best. We know commodity prices can be volatile so only use cautious yields and pricing when planning a long way ahead. If you can forward sell or play the markets with your commodity then consider that as part of your marketing but whichever way you chose understand your business.

3. Challenge every aspect of your spending: buying groups and other farmer cooperation groups can offer real discounts on purchases of many inputs. But moreover is there a completely different way of producing that commodity? Can you get ahead of your competitors by making radical changes to your spending patterns?

4. Communicate with your bank: communication is a two-way street. Prepare fully reconciled cash forecasts to highlight where the difficulties might arise in the future. If you encounter a problem along the way be open and be ahead of the problem. Bank managers don’t like nasty surprises.

5. Seek out alternative funding: speak to your suppliers about trade credit schemes and ‘time to pay’ options. Trade suppliers are not banks and are increasingly acting accordingly with long-term customer debt.