Getting down to business

02 September 2016

MLA's BusinessEDGE course continues to be rolled out across southern Australia with delivery of the two day program scheduled for Armidale, NSW, Hamilton, Victoria, Mt Gambier, South Australia, and Launceston, Tasmania, in September and October, 2016.

The aim of BusinessEDGE is to develop better skills in livestock enterprise owners and managers in understanding the health and overall long term sustainability of their grazing business.

Producer participants will be upskilled in how to use the three pillars of business performance.

Business EDGE presenters and agricultural consultant Dr Phil Holmes, who will run the three upcoming courses, said the three pillars were:

  • the income statement
  • the cash flow statement, and
  • the balance sheet

The income statement provides information about earnings before interest and tax after variable and fixed expenses, profit and loss, as well as reflecting changes in inventory.

The cashflow statement is important as it describes liquidity, which tells you about the ability of the business to meet day-to-day expenses, while the balance sheet sets out the business’s assets, liabilities and therefore the owner’s overall equity in the business.

Phil said, for a healthy, sustainable business, equity should be at 85% or higher.

With these three pillars in place, the business owner will be able to assess strengths and weaknesses as well as trends in profit, cash flow and equity for a period. A business in a healthy position will be able to demonstrate strong cashflows, good profits, and growing equity.

The response from the participants of the Victorian launch of BusinessEDGE at Bairnsdale earlier this year was extremely positive, confirming how valuable this knowledge is to owners of grazing businesses. For example, Jane from Stratford responded “thanks so much for organizing the course. I’ve learnt more about finance in the last two days than in the last 20 years”, and another from Leo from Nicholson, “…I just wanted to let you know that it’s the best money I have ever spent and thanks”. All elements of the workshop evaluation were rated in excess of nine out of 10.

If you are managing a grazing business and want to ensure that the business is capable of providing you, your family and partners with a reasonable rate on return on your valuable capital investment, rather than just a busy job, you can register for the next BusinessEDGE course in your area.

The Setting Directions module of MLA’s More Beef from Pastures is also a great place to obtain some clear and concise information about how producers can set clear business objective and the strategic direction of a grazing enterprise.  This module also has some great tools including business plans, partial budgeting, and a cost of production calculator.

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