2020 was an interesting year for farmers. When Covid initially hit there was significant uncertainty as to the impact on soft commodities, it would be fair to say that things did not play out anywhere near where most market commentators thought or feared, myself included.
Early estimates of a significant retrenchment in Dairy prices were well wide of the mark and even though venison, lamb and beef went backwards, they still didn’t plunge the depths that some might have feared.
Being prepared for all eventualities is a smart thing as a year seems to be a long time in farming and economic cycles these days.
For those of you that managed to get away, we hope you’re well rested and fired up for the year ahead. For those of you yet (but about to) to take a break, we’re now jealous!
As we step into 2021, we thought we’d put out some of the keys to success when dealing with your bank. All designed to ensure you remain in control of your banking process and get the best possible interest rate. This is not an exhaustive list but will get you started in 2021.
1. Get motivated and inspired about your business.
Some of the growth that we’ve had in the past via step changes in asset value is now harder to come by - but there are plenty more and better ways to measure growth in your business. If you want to get inspired, have a read of this earlier article from Tom Laming: The game might have changed but the opportunities for growth haven't
2. Have a clear and well-articulated strategy that focusses on what you’re good at and manages your blind-spots.
If you’ve got a great business, show why.
If you haven’t got a great business, show how you’re going to get one (and the steps you’re going to take).
It’s not good enough to only have this in your head, or to not cover off the impact of your plan on all stakeholder needs (including your bank).
The best businesses have a clear and well thought through plan with everybody on board. For the keys to a successful strategy- see this article here: Don't let others set your strategy get excited about it and own it.
3. Have a great budgeting and reforecasting process.
Budgets are living and breathing things that inform most parts of your business decisioning.
Where you started in May 2020, will now be much different to where you sit now.
But do you know what the change is? And what are you going to do with that change?
Now is the time to revise a case study in the power of re-forecasting your budget
Don't just dump your budget with the bank.
4. Continue to challenge your bank for the best interest rate
But don’t do it in a misinformed way. There are some really great interest rates being offered to farmers at present but accessing them is more difficult.
For the most successful and professional way of achieving this, have a read through these two articles:
So you want-a better interest rate?
Are you getting what you deserve?
5. And lastly, surround yourself with great people.
At NZAB, we help farmers stay in control of their business, their bank relationship and their future. Find out more about us on our website nzab.co.nz or contact anytime on 0800 NZAB12 or email on info@nzab.co.nz.
We’d be delighted to listen to what you’re trying to achieve and how we can help you. Or we can put you in touch with one of our many customers that can talk about what we’ve done to help them.
Happy 2021!