The secret to farm business success: blue sky thinking meets financial planning
6th August 2020
Ambitious, out of the box thinking comes naturally to Leicestershire farmer David Haynes. Yet, 30 years ago, he hit a brick wall. The farm needed to progress and with the help of financial advice, he changed his farm practices in a brave move that’s still paying off today.
Ambitious, out of the box thinking comes naturally to Leicestershire farmer David Haynes.
Yet, 30 years ago, he hit a brick wall. The farm needed to progress and with the help of financial advice, he changed his farm practices in a brave move that’s still paying off today.
Mr Haynes scaled down his livestock enterprises, freeing up around 40 hectares of land for arable and began diversifying the business to develop new income streams. “Historically, rearing beef cattle had been a profitable enterprise but with increasing store cattle prices and volatile grain prices, the ongoing instability was too risky to continue on a large scale,” he says.
Business consultant Angus Bell initially worked with Mr Haynes to advise on the future direction of the farm business and strategic changes were made which provided long-term benefits. Subsequently, Mr Bell has joined Active Business Partnerships with Hamish Bichan and has been involved in advising Mr Haynes’s business on a wide range of developments.
“The initial business review revisited both Mr Haynes’s business and personal objectives and came up with steps to reduce volatility and capitalise on diversification opportunities, with the aim of improving profitability,” says Mr Bell.
“Over the years, opportunities to expand by purchasing some additional land have been achieved while also looking at ways to diversify the farm business,” explains Mr Haynes.
“Today we have many eggs in different baskets. I’m still a mixed farmer, but with pigs, arable, a small amount of beef cattle and many diversification income streams, including a wind turbine, solar panels, involvement in environmental schemes and building lettings,” he says.
According to Mr Haynes, an opportunity to contract-rear pigs provided the farm with an alternative enterprise which utilised the farms, men, machinery and buildings and also provided useful FYM (Farm Yard Manure) to maintain the farm’s arable soil fertility. Now, Mr Haynes has 4000 pigs, providing straw and husbandry.
As the business developed, escalating machinery costs led to the formation of a successful machinery joint venture which has reduced costs and allowed access to bigger more efficient machinery and better utilisation of labour.
The team at Active Business Partnerships (ABP), lead by Angus Bell and Peter Roberts, are a sounding board for Mr Haynes’s blue-sky thinking and they manage the business finances, which includes ongoing budgeting, performance monitoring and general business management. “Angus and Peter help to bring my ideas to life, introducing and facilitating many initiatives on the farm which I wouldn’t have been able to do alone, and their support is ongoing.
“The bank is more than satisfied with the budgets they produce and they do all the work I’m not qualified to do. If there are any sensible directions to go in, ABP often points the way,” says Mr Haynes.
Mr Haynes was keen to explore how the business could benefit from renewable energy generation and ABP carried out feasibility studies on AD Solar and Wind Turbines. The team reviewed all the options, and advised that the Wind Turbine was the best fit.
“We installed a wind turbine in 2012. ABP made the suggestion, looked at the costs and returns involved and co-ordinated the whole process. The consultants dealt with due diligence, planning permission, funding and the contract with the manufacturer and it’s been a lucrative addition to the farm with all of the energy generated going directly to the grid.”
Mr Haynes also has a solar roof-mounted installation on one his buildings and ABP managed this process, looking at costs and co-ordinating the venture.
The farm, like many others, has suffered a progressive increase in blackgrass which resulted in escalating herbicide costs, later drilling and lower output spring crops. “To help to tackle the problem, ABP advised that we consider ‘The Mid-Tier Environmental Scheme’ which includes an area of land dedicated to growing a legume grass ley mix,” he says.
“This is the second year we have been involved with the scheme and this option has generated a secure income and reduced the blackgrass whilst improving the soil’s fertility. We can rotate this round the farm and along with the other environmental options, this has created a new enterprise for the business,” adds Mr Haynes.
Business development management
Angus Bell, Active Business Partnerships director, says that business development is a journey, not a destination. “We work in a bespoke way with our clients, as each business is very different. Our mantra is active involvement, business focus and a partnership approach.
“With Mr Haynes, we are very much part of the management decision making process. We produce ongoing budgets we monitor performance against budgets and look at new projects,” he says.
Close support is provided through Peter Roberts: “The key to continued success is ongoing planning, monitoring and then reviewing results achieved. We are now in a position where are accommodating the next generation’s objectives in the overall forward plan,” says Mr Roberts.
“Working with Mr Haynes is fantastic, he’s endless with his ideas and is a very innovative, forward thinking farmer. We’ve worked together on mixed ventures to reduce costs and increase profitability, and now succession planning forms a key part of the ongoing management decision making process,” adds Mr Bell.
ABP is a rural business consultancy and a team of experienced experts, offering tailored business guidance.
The business provides farm management services, financial advice, continual monitoring and measurement over the financial year, diversification guidance – including renewable energy opportunities and strategic business development.
Visit www.activebp.com for more information.