What does success look like for you? Is it as simple as just getting through the season with the bills paid, or is your road map for the future a bit more complicated? How long do you want to work or need to work?
Success may be stopping work at 60, or it may be still being able to work at 75. Success is subjective, and often it is a culmination of life experiences, family history, and current events. Regardless of what success looks like for you, if you do not define it, you cannot reach it.
Importantly, if you have a definition of success, do others know about it, and are they all in agreement? The next generation may want to take over, and whether this is sustainable is a key factor. Is your idea of success known by your advisors, those who work with you year in and year out? You may need to look at whether your business structures, which may have been created for asset protection or tax minimisation, are effective for transferring assets to the next generation. You may need to consider whether your plans allow for funding future family requirements, such as education, or eldercare.
Many businesses and their advisors prepare budgets and cash flow projections for specific seasons or asset purchases or undertake tax planning measures, where the saving of tax is the primary objective. While these are extremely valuable for a business owner, this does not always line up with the ultimate goal.
Farm Managed Deposits are a fantastic tool for the management of tax obligations for farmers and allow cash to be accessed if necessary. However, these must be managed to maintain tax advantage and unplanned withdrawal can lead to further tax issues.
Instant Asset Write Off has encouraged many people to invest in new plant & equipment, especially in agriculture. However, these tax gains are only temporary in nature. Over the long term, these investments must provide a return that contributes to your planned success, more than just compensating for the financial cost of the initial investment.
Even if success is defined, and all parties know, agree, and are working towards your goal, how is it being measured and when? Is there any point to have a goal and work towards it, but do not regularly check to see whether you are going to hit it? How many people have prepared a budget, and put it the filing cabinet, never to be seen again?
If your plan for success requires the investment in new assets, such as additional farm purchases, water licences or new machinery, the benefits of this investment need to be realised. And if not, why not? While no plans run smoothly, simply having a plan, reviewing, and adjusting to changes, can be pivotal to achieving your success.
HOW CAN RSM HELP?
Whatever you have defined as “being successful”, it is yours, but good advice along the way will help you get there. Contact your local RSM agribusiness expert for help.