This tool is also described in our page Developing a plan to mitigate the loss of BPS as part of Step 3 – How to decide on the best option available to you to offset the loss of BPS.
The following budget options tool provides a framework for assessing the pros and cons of potential systems. The idea is to “make your mistakes on paper”. Budgeting reduces the chances of making a bad decision and taking the business down a wrong path.
Download the example spreadsheet to see worked examples of different budgeting options. Then download the blank spreadsheet to try out options for your own farm.
The budgeting process is not simply about assessing the likely impact on profitability. It challenges you to judge potential systems against several criteria. An example will illustrate the budgeting process and the hurdles that must be passed.
Criteria that can help you choose a direction:
|When up and running will profitability more than meet cash needs?
|Feasibility (cash flow and capital requirement)
|Is cash flow good enough to cover bills in the months, even years, before the changes are fully established?
If not, will a lender support the business through this period?
|Can the levels of performance built into the budgets be delivered?
Are the farms resources, including the farmer, up to it? Or are new skills required?
|What happens if performance levels, prices and costs are much worse, or better, than expected?
|How much wiggle room is built into the system? Does it have potential bottlenecks where things must go right?
|How is biodiversity and habitats affected? Implications for water and air quality? Does it improve the carbon footprint? Any impact on the landscape?
|Does this option have all partners’ complete commitment?