The Annual Plan
The Holiday Season is a time of family, traditions, and looking to the future. It is also the time when smart managers turn their attention to planning activities for the new year. We’ve already established our strategic plan (perfectly described in a four part blog entitled “If you don’t look out, the LOOK OUT!, written by Les Gilman) and now it is time to look across the next twelve months and design our work that meets the Goals and Objectives you have previously developed.
The Annual Plan has three basic functions:
1. It is the instrument that defines the work to be done on the ranch.
2. It justifies the expenditure of funds.
3. It provides accountability to the ranch owner that we will say what we are going to do, and do what we say.
Doing work on a ranch is rarely much of an issue. There is always something to do. Ranch workers tend to concentrate on the work at hand, be it calving, haying, or feeding. And in between these major work items, they work on equipment and do other maintenance on the ranch. But rarely is this the only thing a ranch owner wants done on his or her ranch. An Annual Plan looks at the goals and objectives of the ranch and puts together a work schedule that ensures the vision of the ranch is achieved. Of course, this includes care of livestock and crop production. But it also provides for systematic and purposeful maintenance of facilities on the ranch. Replacing and repairing infrastructure on the ranch can be daunting and very expensive. Setting up maintenance schedules and working on priority areas metes out the cost over time and in a purposeful way.
As with most new ranch owners, they have different objects on how the ranch is used, compared to traditional ways. Balancing those objectives take much effort and discussions. I have written a Blog on this entitled “Professional Balance”. The Annual Plan takes these more non-traditional objectives and weaves it together in day-to-day operation of the ranch. How will hay production be conducted while meeting the needs of nesting pheasants? What crops will be planted to provide food for turkeys and improve deer herds? Annual Plans provide a workflow that incorporates all the goals and objectives of the ranch.
Annual plans also justify the expenditure of the ranch owner’s funds. Using the goals and objectives of the ranch as a basis, the Annual Plan will establish a budget to meet the work demands of the ranch in the coming year. A useful tool I use is a quarterly cash flow budget that summarizes the income, expenses and capital purchases into a quarterly format. Iowa State University Extension has a great article on how to establish and use a cash flow budget “Cash Flow”. It identifies cash shortfalls and surpluses for each quarter. If additional capital is necessary to meet the implementation of the Annual Plan, it is identified in the Cash Flow Budget. The ranch owner, the manager, and the ranch workers all know what the budget is, where money will be spent, and what the corresponding work targets are associated with the budget.
Perhaps that greatest value of an Annual Plan is it provides for accountability between the owner and the manager. Often times, ranch owners fall ill to Invoice Fatigue; where the non-stop flow of invoices to be paid becomes overwhelming. There are indeed endless jobs and work to be done on the ranch. However, with the Annual Plan these jobs are outlined and the owner knows exactly what will be done and the manager knows that the owner has approved them for implementation. Everyone is on the same page, the budget is transparent, and the manager is held accountable. Getting the work done on the ranch is seamless between the owner and management.
Annual Planning is an essential activity for every ranch. It is often overlooked and much confusion, misunderstanding, and hurt feelings ensue. Each December, during the holiday season, take a step back and establish your plan for the new year, and you will see the benefits of designing your work, justifying expenditure of funds, and establishing accountability; a ranch that functions and provides for the needs and wants of the ranch owner.