How to plan and set goals for dairy farm business success

Inheritance tax has brought into sharp focus the importance of having a business plan for the family dairy farm.

Setting a target yield, or specific herd size, then channelling all efforts to achieve such goals, is not a clear enough strategy for making a profit or growing a business that will allow children to come home.

See also: What is the business “sweet spot” for a dairy farm?

Planning is essential to deal with inheritance tax and the aspirations of the next generation, says business consultant Paul Bird.

While some farmers are happy to tick along in life without plans, he says that, once children arrive, things become more complex.

Having time flexibility and some wealth are features of life that are also relevant to dairy farmers.

“If you want to achieve things in life, you need a crystal-clear picture of where you are heading.

“So, if your lifetime goal is 13,000 litres a cow, go for it. But if you need to pay off debt and grow a business, you need to make profit – and equity growth – if you want to be able to bring your kids into the business,” says Paul.

“Good planning and goal setting involve a combination of self-awareness, strategic thinking, and continuous learning.

“By surrounding yourself with positive influences, focusing on your strengths, you can create a fulfilling and successful life.”

Farm plan

Cow numbers, milk yield and management system do have their place: in a detailed farm plan.

This sits alongside five-year and 10-year financial plans, plus annual budgets to monitor progress, says Paul.

Planning starts, however, with ideas and daydreams. Goals should align with your values and aspirations, and the planning process turns them into realistic and achievable targets.

© Tim Scrivener

Yet most people need some help to find what really motivates them.

Paul says ideas usually come from the five people you spend most time with, as they significantly influence your mindset and behaviour.

That is why it is crucial to surround yourself with positive, supportive individuals who inspire you.

It is also important to get off the farm, he says.

“Go on visits, to conferences or discussion groups. Spend time exploring different interests and experiences.

“Travel and meet new people. Take your time to clarify what you want to do – it provides valuable insights and helps you make more informed decisions.”

Visualise the future

Paul suggests one way to explore ideas is to visualise where you would like to be in 30 years’ time.

“Where are you and what are you doing? Write down what you would like and where you’d like to be [in terms of] cow numbers, who is around.

“Then work back from that to ask, can I actually get there,” he says.

A similarly effective technique to identify your values is to imagine your 90th birthday and consider what you would like people to say about you.

“These reflections can help clarify your priorities and guide your focus. Use other people’s experiences as inspiration to define what truly matters to you.”

Paul brings it together in a simple framework: “Have, Do, Be”.

This defines what you want to “have” in life (material goods, money, relationships, time); outlines what you want to “do” with your time (including activities and pursuits); and describes the type of person you want to “be” (focusing on values and character traits such as being helpful to others).

Look for opportunities

He explains that the activity of planning not only clearly defines objectives, it also serves to generate excitement about the ideas.

This, in turn, switches on the brain’s radar that tunes into opportunities and resources to fit in with the plan.

A key part of the planning process, however, is to involve family.

Paul thinks that everyone – spouse, partner, parents, children – should complete their own Have, Do, Be.

Doing this will highlight individual aspirations, as well as common goals that contribute towards the farming family business plan, he says.

Getting help from a farming family succession specialist early in the process (before children leave home or get married) will repay dividends.

Then seek professional advice for help with budgeting, putting structure around goals and ideas, and ultimately actioning them.

This may identify skills gaps such being able to write a cashflow budget or understanding cost structure.

Write it down

Paul finds that each dairy farmer comes up with a version of planning that suits their personality type and their level of complexity.

He says some people are happy with a picture of a farm stuck on the wall, others will have an A4 list of written goals, and detail-oriented people opt for a step-by-step traditional business plan.

© Tim Scrivener

“Research has shown that writing by hand connects to the brain and has an impact, so write your plan down on paper; a whiteboard can be rubbed off.

“Then hang it somewhere you will see it often – such as in the kitchen – and share a version with the farm team,” he advises.

Paul points out that a plan is only directional, not a fixed pathway.

A level of flexibility is necessary to adapt to any obstacles on the way.

“A plan simply starts you off in a direction. Resilience is very important, as it won’t all be smooth sailing,” he explains.

“But goal setting is not just about the destination; it’s also about enjoying the journey.

“Celebrate small victories along the way and take time to appreciate the progress you’re making. This positive reinforcement keeps you motivated and engaged.”