Our Insights

The NZAB Growth Story Continues

Jul 29, 2021 8:06:47 PM / by Scott Wishart posted in Debt, Action, Planning, Budget, Banking, Strategy

0 Comments

 

We're rapt to announce that Jordain Adams has joined our Canterbury team alongside Nathan, Nick, Cam and Cameron. We've been able to work alongside Jordain in her previous role with a local corporate Agri-banking team and her work ethic and style really impressed us, so we are delighted she has chosen to join our team for the next stage of her career. Read below for a bit of Jordain's background.

Jordain joins Charlotte, Grant and Cam Blain in filling new roles created this year so far to meet the increasing demand for our services.

It's an exciting time for our company as our customers are really seeing the financial benefits of the hard work and careful planning that has been central to our strategy over the last few years. It gives us confidence to continue to invest in our people, our technology platform and our customers to ensure that we remain the leaders in our field. 

We're still on the hunt for more of the best people. We are creating roles across New Zealand and would love to talk to more likeminded professionals who want to know more about what we do and why it makes a difference.

Read More

Trust: The Fertiliser for Outstanding Business Succession

Jul 16, 2021 7:47:21 AM / by Tom Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

0 Comments

 

Every few months another ‘most trusted” survey hits the media headlines, providing a bit of fodder for office and talkback conversations.

Most trusted brand, most trusted New Zealand celebrities (past winners including such luminaries as Suzanne Paul and Richie McCaw!), and most trusted professions (politicians not typically well represented!).

In a world of fake news, consumerism, brands and ideologies built around personalities, genuine trust is as valuable as ever.

Last week Andrew wrote a great article on succession, focusing on inter-generational businesses that have the quality, diversity and profitability to appeal to family and support positive succession outcomes. Without these dynamics, successful succession outcomes are hard to come by.

This week I would like to focus on a few other elements that will support succession, with a central focus around trust.

 

I read an article recently that described the three core elements of Trust.

The article was focused on what breeds trust in organisations, but the principles can be applied to any situation where trust is critical to a positive outcome or experience. The elements were:

  1. A mindset built around genuine benevolence – that is, that you feel that the party you are dealing with has your best interests at heart. That doesn’t mean a fair and balanced commercial outcome can’t be achieved or is given away, but it means that you have confidence that the other party is genuinely interested in your success, your satisfaction or in meeting your key needs. And critically, that they will do it on a sustained basis, not just a one-off transaction.

  2. Competence – this is pretty simple. At the core of any relationship that has a high degree of trust is the confidence that the other party is competent – that they can do the job, provide the service, run your organisation, provide great advice – with an appropriate level of skill or execution.

  3. The ability and willingness to resolve disputes – any relationship will have times where tension is high, or parties aren’t seeing eye to eye. A relationship that is built on trust will have the ability to navigate these times and find a solution and outcome that allows all parties to move on with the relationship intact (and possibly strengthened).

So how does trust relate to positive succession outcomes

(and running a successful business)?

When you think about it, trust is at the core of succession in so many ways. To achieve a positive succession outcome, you need to trust:

  • Each other – the base of everything else that goes into a succession process. Do you have trust in each other? Do you have confidence that those involved have your best interests at heart? Are you able to be open and honest with each other, knowing that sharing openly won’t be used against you? Do you exhibit trust when setting up the ongoing structure of the business? And have you earned trust?

  • In advisors – invariably, a well-managed succession process will involve a group of advisors. In some cases, these advisors will have an execution role – legal framework, ownership structure, funding solutions etc. In other cases, an advisor will play a key leadership role in facilitating the succession process and being a part of the ongoing execution. Whatever the role they play, having the ability to trust your advisory team – the faith that they are working for you, that they are competent to do the job you are asking – is critical. Trust is also at the core of holding all these parties to account for their own performance and execution.

  • To put the right people in the right roles – as Andrew pointed out in his article, a great business is key to succession. And a great business has the right people on the bus and puts the right people in the right roles. Whether that be operationally, or at advisory or governance level, being prepared to make the hard calls on key people and trust in their abilities is key.

  • To be held genuinely accountable – again, another fundamental value of a great business. Having built a clear strategy, having plotted a deliberate pathway, having developed excellent systems for monitoring performance – are you prepared to be held accountable to all these elements?

  • To let others, have control or influence in your business – this can be one of the hardest things to achieve. Having built a business over decades, being in control of most aspects operationally and making all the decisions, are you prepared to let others in? What do you need in place to be able to trust that the people coming in to run the business, drive decision making or provide governance or strategic support are trustworthy? Or what is it about yourself that you need to get comfortable with, to allow yourself to trust these people?

  • The process – there are rarely quick and easy solutions to succession. These are processes that take time and energy and patience and leadership. And at times you will be frustrated, or feel things aren’t moving quickly enough or in the right direction. But if you have laid out a clear process, with clearly defined roles and responsibilities, at times you will need to just sit back and trust the process.

  • To let go! – possibly the last and the hardest step. Trusting your process, the people around you, the plan and the structure and being able to step back and let go.

We work with many businesses at various stages of the succession process.

Trust doesn’t get built overnight. It’s built on great communication, on openness, on transparency, on a willingness to let go and on the confidence that there is a level of competence from all involved that inspires trust.

 

When there is trust – and where succession is done well, what does that look like? And what has led to that point?

When I draw on personal experience, the businesses I see doing this well exhibit the following characteristics

  • Starting early – and the earlier the better

  • Communication – an environment where open and honest communication is encouraged, and where people feel like they can articulate their needs and be heard and understood

  • Transparency – being open and transparent about what the business is, how it is performing, what its strategy is, what are its strengths and weaknesses. Being honest about what the exiting generation wants and needs. And having an environment where the next generation feels the same.

  • Clear expectations – what do you want personally, and what do you expect of others?

  • Leadership – who is going to drive this process. Who has the competence and mindset to see a truly great process from beginning to end?

  • Independence – getting the right people around the business, people who genuinely want to see a great outcome and will go on the journey with you. Too often we see a “succession plan” – a document that lays out some needs and a structure, but no pathway to a successful endpoint. Great independent support will be there right through with you, playing a key role in successful execution.

  • And of course, a great business – one that everyone wants to be a part of.

And the last element that often gets missed is to have some fun!

Being able to build and transition an inter-generational business is something to be immensely proud of. Yes, there will be bumps along the way, but you are achieving something that few businesses have the opportunity to do. That should be a satisfying and fun process, something to cherish and appreciate.

 

No successful and sustainable relationship exists without trust.

And successful and sustainable relationships are at the heart of succession and running strong businesses. At NZAB, trust is our highest priority. We exist to see our clients succeed, and every month we are measured on that. We employ the best in the market, with years of knowledge and experience and the know how to help you navigate the challenges of succession, the challenges of building a business that people want to be a part of.

 

So, trust the process!

Read More

If You’re Thinking About Succession, Start by Redefining It

Jun 23, 2021 10:08:26 AM / by Andrew Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

0 Comments

 

I was reading an article recently about the traits of some of the most engaged businesses based on a survey by Gallup. It was a global survey and started by noting that, “85% of employees are not engaged or actively disengaged at work. The economic consequences of this global "norm" are approximately $7 trillion in lost productivity”

Keeping in mind the NZ economy is about $USD200BN, that is staggering.

The article talked about the key traits of high engagement companies being:

Having a shared Mission – employees have a clear sense of where they are going and why and feel like they are on a journey together. 

People Development - Hire and set them up for success. Care for them, share information with them, build a plan for them, coach both strengths and weaknesses, and provide meaningful feedback.

Valued Voice: Trust between co-workers and leaders is so high that both sides are open to communicating ideas and information to avoid problems and create new solutions

Earned Trust & Benevolence: They live their core values both internally and with the external market rewarding those who demonstrate them and not tolerating those who don’t. The customer base and employees genuinely believe that the company has their best interests at heart.

 

It got me thinking about farming

And in particular- how engagement levels have been lowered by financial stress (albeit now improving) and now increasing compliance - something highlighted in KPMG’s recent Agribusiness agenda with the following statement “ a sector that is fatigued, straining to cope with the wide range of issues that is having to respond to on a day-to-day basis with morale falling”.

So, what does engagement have to do with succession?

Well, everything we say.

Read More

Introducing The NZAB Agri Bank Dashboard

Jun 11, 2021 4:04:15 PM / by Andrew Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

0 Comments

 

Knowledge is power.

With that quote deeply in mind, we are proud to introduce the "NZAB Agri Bank Dashboard".

It's a quarterly snapshot on all bank movements, with source data from RBNZ.  

Why is this important? 

Well, understanding the forces at play in each bank gives us very strong direction on how we help our farmers more easily access capital, who from, plus the likely costs of that funding.

It also saves time for our farmers and puts energy into the right parts of your credit process, rather than chasing shadows in an increasingly complex world.    All of this so you can focus on what you do best- running your own strategy and your business effectively.

We'd love your feedback

Anything that you think might be useful, we'd love to hear from you!

We'll add to this dashboard over time - including things like a bank appetite index (diving deeper into each banks metrics for viability and security assessment). 

We'll put this out quarterly from here.

The version below is with data to the 31 March 2021.


Read More

Bank Margins in Agri are Set to Get Very Interesting

May 27, 2021 8:32:21 AM / by Andrew Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

0 Comments

 

The interest cost that you pay as a farmer is one of the biggest costs on farm that you will face. It is right up there with your feed/grazing bill and your wage bill. Suffice to say, it should demand your attention.

We are in a great period, with farmers enjoying some of the lowest rates ever.

However, whilst those rates have dropped substantially over the last few years, the range of rates being offered to different farmers in the market is now incredibly wide versus history.

Farmer A could easily be paying double that of Farmer B.

Within that we are also seeing some significant change in the components that make up your interest rate and can see some interesting movements coming up as bank appetite shifts into the positive territory.  

How you take advantage of that will require a specialised approach.           

Firstly, lets start with what makes up your interest rate.

To illustrate, let’s narrow this discussion to only floating rate lending.

Your floating interest rate is made up of three things - The underlying “base indicator”, the banks’ “liquidity costs” and the banks “customer margin”.

Read More

Setting the milk price for your budget is not an exercise in picking the market

May 13, 2021 9:17:01 AM / by Andrew Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

0 Comments

 

It’s that time of year when we’re finalising budgets for FY 22 and the ultimate question on all dairy farmers lips is: “what payout do we use for budgeting next year?”  

It is a much different landscape entering into FY 22 than it was in FY 21.   This time a year ago we were knee deep in COVID-19 and incredible uncertainty was evident in all parts of the world economy.  A common trend amongst most bank economists were milk price forecasts leading with $5 in front of it. When Fonterra finally delivered their opening forecast of $6.00+, it was met with mild jubilation (albeit noting the very wide range offered).

What a turnaround it has ended up being. At $7.60, being the current mid-point (milk only) with a sense of some upside potential, its going to be the second equal payout of all time.

Read More

Changes in Agri Bank Market Share are Telling.

May 7, 2021 9:11:04 AM / by Andrew Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

0 Comments

 

As you know we are very interested in the “why” when banks show differing levels of appetite in the Agri Sector.  

By understanding the “why” from a bank perspective allows farmers to better understand how they should navigate their credit and negotiation processes with their bank.

Knowing this allows our farmers to more effectively separate their strategy from what is good for their business and what is good for their bank which can, at times, be quite different things.

This short article looks at the impact of differing bank strategies since 2007 when lending took off quite aggressively in the Agri sector with the first “whole milk powder boom” and the very challenging volatility that followed.

These first graphs show how much capital each bank has leant to the Agri Sector (in total), since 2008.

Read More

We're Thrilled to Announce Further Growth in our Canterbury Team

Apr 16, 2021 1:41:32 PM / by Scott Wishart posted in Debt, Action, Planning, Budget, Banking, Strategy

0 Comments

 

It's not every day that you get to welcome one of New Zealand's most senior and respected Agribusiness Bankers to our team, which is why we’re absolutely delighted to have Cam Blain join NZAB as part of our Christchurch team.

I've known Cam personally for a long time and his genuine desire to help farmers grow their businesses has been clear to me and this makes him a perfect fit for our business.

Cam is our 18th team member. That's a milestone we are reflecting on proudly as a business. We started with a mission to help farmers take control of their finances in order to ensure they get what they deserve. The greatest litmus test of our success has been not just our growth, but that it has come almost exclusively from word of mouth and referrals from our customers.

The journey ahead looks exciting. It feels like we are just getting started. We're investing heavily in our offering to bring more value to our customers and insights to support their business objectives, so watch this space!

Thank you to all of our customers for your ongoing support. If any one in your wider network would like to talk to us about how we might help, please pass on our contact details or we would be happy to give them a call.    

Read More

Where's the Balance?

Apr 13, 2021 11:26:32 AM / by Tom Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

0 Comments

 
I grew up as a child of the 80’s.
I had a horrendous bowl cut, idolised Richard Hadlee, thought Bruce Springsteen was the epitome of cool…..and had no desire at all to follow Dad into farming.
 
Things were tough – for most farming businesses life was about survival – just getting through a season and a year and hoping that fortunes would turn. And slowly they did.

The 90’s bought a period of relative stability and as the decade went on farmers saw opportunities to intensify, utilise abundant water resource, change land use and embark on a period of unprecedented wealth creation.

Read More

A Wave of Cash is About to Transform the Agri Market

Mar 31, 2021 6:56:24 AM / by Andrew Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

0 Comments

 

We are in very interesting times right now.  

There are some big forces about to play out in the main trading banks operating in New Zealand. We believe this will culminate into a wave of capital that the Agri sector hasn't seen for the past 5-7 years.

That wave of capital coming to the Agri sector is going to have some interesting effects on asset values, funding costs and decision making.

Read More