RSM Australia

How Is Your Budget Going?

Agribusinses Insights

“Why bother to budget, it never goes to plan…”

It’s a phrase I have heard many times.  Ironically for most businesses, this is the reason why they should budget.  Yep, nothing goes to plan, but that is the point - we know there are costs/expenses that need to be paid at some point, and just because things are not going to plan doesn’t change that fact.

Many farming families have prepared budgets for numerous reasons.  Often this is for financing reasons that have been forced upon a business, and as such it is not an expense they have wanted to incur.  Hence, if this budget has been prepared for financing, it is important to think about whether the long-term goals of the family and business as a whole have been considered. Is it based on a more medium-term cycle of the business, or was it to purely to get through the season?  Have considerations such as retirement been factored into your budgeting, as this is not a once-off item, but a long-term investment for the next generation. Further, to those who have prepared their budget with longer-term interests, have you looked at it again recently and compared it to reality?  If it is still sitting in the bottom drawer, collecting dust, it’s time to do something about it.

complex_illustrations-16-technology_and_management_consultancy_rural_business_agriculture - Copy - Copy.pngA budget should be reviewed, a live document that can be adjusted as time progresses, because nothing goes to plan.  In the preparation of a budget, by looking forward and planning when expenses must be paid, whether that be loan repayments, including those large balloon payments people often forget about, or insurances, fertilizer bills and school fees, you can see in advance where your finances will be ahead of time.  If the season is better than planned, then maybe you might be able to use the extra money to invest in the business.  If it is worse than budgeted, perhaps you will be looking to source funds before your bank balance enters the red.  Decisions can be made with good information and you have lead time to approach your bank.  Moreover, given the fall-out from the banking royal commission, obtaining finance will become harder and take longer to achieve. 

If we have a budget and use it, then we can review the assumptions we are making each season.  We can learn from our mistakes.  Most farmers are very good at learning from the production results from a season, but are we learning from the financial result?  The budget will not always go to plan, but in some respects, that is the whole point of it.


The key to implementing a successful growth-ready farm strategy is to plan ahead.
Seeking professional help in formulating a suitable tax plan ensures your overall equity and wealth position is maximised.

If you need further assistance regarding any topics around developing a growth-ready farm, please do not hesitate to get in contact with your local RSM Agribusiness expert >>