5-Implement,monitor and review
Implement the plan and monitor progress
Once you have reviewed your enterprise, developed your goals and objectives and settled on the best strategies to pursue, you need to turn your attention to actually implementing and monitoring your activities as you move through the changes you need to make to achieve your goals.
Guidelines to implementing and monitoring a change
Ensure that all family and staff members know what is to be implemented and by when. In a successful farming business, it is important to:
- ensure each member of the business knows their roles and job responsibilities.
- develop a set of clear ground rules to reduce the risk of personal conflict.
- discuss and agree on expectations pertaining to key areas of the business.
- create a written agreement that has regular review dates set in advance.
- hold regular business meetings to ensure all people in the business spend part of their time and energy working on the business, and not just in the business.
The implementation of any enterprise transition plan should be part of the annual operating plan for your farm. Aim to achieve the change from current practice to new enterprise strategies in as short a time as possible. At the same time, ensure that cash flow maintains business equity and liquidity within the set limits. Develop a process that tests, prioritises and sequences the best-bet options to maximise return on investment of time and capital and annual business profit.
A successful transition plan should control then improve enterprise cash flow.
Monitor and evaluate
Monitoring and evaluation of progress are the basis for continuous improvement in a beef enterprise. Monitoring provides an extremely important check on the accuracy of the inputs and predictions from the analyses used to set the enterprise strategic direction. They are also necessary to ensure that the plan is being implemented as intended and that changes in enterprise productivity and profitability align with predetermined targets after accounting for variations in pasture growth, market prices and variable costs.
Monitor the productivity and profitability of your business regularly
There is generally a strong association between ongoing monitoring and feedback and the successful implementation of a plan. Continual monitoring of physical resources, livestock performance and financial outcomes provides you with confidence that the strategies are either on-track or need revision. The system must alert you to weaknesses in the enterprise operation and allow you to take the necessary corrective changes based on accurate information. This helps to reduce the risk and uncertainty about whether changes made to your beef enterprise are actually working.
Monitor physical resources, animal performance and financial outcomes to check enterprise strategies are on-track
Undertake sufficient monitoring to effectively update your short-, medium- and long-term objectives from the results of the previous year. It also makes sense to review the strategic direction periodically in relation to changes that have occurred in technology advances, genetic progress, pasture species and your own business and family goals.
Check the accuracy of inputs and predictions.
Benchmark your beef enterprise
Monitoring change to the business is achieved by benchmarking the performance of your enterprise as outlined in Procedure 1. Benchmarking is not only important to evaluate how the business compares with industry, but when your business is undergoing change, benchmarking the performance is a critical aspect to evaluate success and also to identify ongoing aspects that can be further improved.
Manage the risks
Risks associated with implementing a new strategic direction in the beef enterprise can be managed by carrying out the procedures in this module with attention to those parts that are relevant to your farming business.
The main risks of transition are failure to gain a higher enterprise profit from the restructure. To ensure success:
- management needs to have the knowledge and skills to manage change
- implementing the transition plan in a logical sequence leads to greater productivity
- investments must be scheduled in the highest order of rate of return on investment
- enterprise changes are planned to control cost and maximise returns.
Other risks include one or a combination of the following:
- not knowing the accuracy of the analysis or predictions used
- not having an accurate way of knowing whether planned actions or tactics are meeting targets
- lack of objective feedback to build confidence in change
- implementation of the planned changes is not successful
- over time, changes in the overall business environment, or in your own business or family goals, mean that the initial directions set are no longer the most appropriate.
Manage risks and take the appropriate corrective actions
When tracking progress, potential corrective actions include:
- identifying the reason for being off-track and taking the appropriate action when outside the limits you set
- rigorous checking that implementation is not at fault
- revising the analysis using updated values when change is implemented correctly
- re-examining the original analyses when the original projections are not on-track. Using your own information can add confidence to the review
- re-examining the strategy every five years, or in the event of a new opportunity (return to Procedure 1).
A worst-case scenario is when the farm business is destabilised during the transition phase by declining beef enterprise cash flow. This contributes to reduced equity and liquidity so that business commitments may not be met. The options for corrective actions include:
- complete or re-calculate partial budgets, beef business and enterprise budgets and cash flows to establish discounted rates of return and implement projects in order of decreasing return.
- stop or limit progress on those changes with relatively low discounted rates of return and re-direct investment to business areas with the highest rate of return and highest likelihood of success.
- delay or advance implementation of the rate of change as cash flow and time constraints increase or decrease.
What to measure and when
When changes to an enterprise are made, it is important to monitor both physical and financial indicators to allow a thorough comparison with targets. For a start, compare actual management change compared to budgeted changes on your monthly (or weekly) management calendar.
Cash flow budgets should be analysed, comparing actual to budgeted performance at least monthly in addition to an annual review. Annual profit and loss should be reviewed as should the farm balance sheet. This information can be used to perform an annual benchmarking review.
Monitor key performance indicators for your beef business
Measuring the cost of production is a useful process (refer to Procedure 1 and Tool 1.2). More specific business and enterprise benchmarks can be obtained from benchmarking services that are available within regions and across regions.
Monitor key physical and financial key performance indicators that impact on your beef enterprise, remembering that:
- Lag indicators can only be seen after the event and are more closely related to the ultimate measure of performance and return on assets (RoA). Examples of these include return on assets, cost of production and equity change.
- Lead indicators can be used in real time or before the event, with the aim being to track progress and reduce the impact of unforeseen events. These will be related to return on assets to varying degrees. Examples include stocking rate, pasture utilisation, weaning rate and percentage of carcases meeting market specifications.
- Numerous farm management consultants or rural based accountancy practices provide benchmarking services and have similar regional specific publications that provide production and productivity benchmarks.
- MLA's EDGEnetwork offers practice learning opportunities to help producers gain knowledge and develop skills necessary to improve their livestock enterprises. For further information visit www.mla.com.au/edgenetwork or email email@example.com