Review Financials Monthly
Farmers know that having a team of on- and off-farm eyes to track nutrition, reproduction and milk quality on a monthly basis is critical to keeping production on track.
Even more important, especially over the past five years, is having a similar team to look at financials. “Just because the numbers are ugly, and they are ugly, doesn’t mean you can’t make progress,” says Scott Brenner, who partners with Nathan Dinderman and Doug and Tom Block at Hunter Haven Farms, a 1,100-cow dairy near Pearl City, Ill.
Brenner and Dinderman took ownership of the Blocks’ cattle in January 2017, and are leasing facilities and machinery and renting land from the Blocks. The Blocks have no children interested in continuing their dairy business. Brenner and Dinderman are both former employees.
Brenner started at Hunter Haven in 1996, just as the Blocks were expanding from 300 cows. He eventually became herdsman. Dinderman hired on as an employee a few years later, working on the crop side.
Both now have 20 years or more of production experience. But neither has a business background. Buying and phasing into the ownership of a dairy this size is daunting for both and their spouses.
“Nathan and I just felt going into this transition that we needed to know the dollars we were dealing with not only for ourselves but for our wives. We need to know what we are doing with the finances each month and why,” says Scott.
He, Nathan and Doug typically meet monthly to review financial information, comparing the budget to actuals. “The budget is just a road map,” says Scott. “So each month we ask if we hit our targets, and if not, why not.”
Then every quarter, they bring in their lender, a financial consultant and other consultants such as their veterinarian or nutritionist as needed, to go over the records.
The effort is paying off. For example, last year, they went through the budget line by line, challenging everything from seed selection to calf vaccination programs.
“We tore apart every system we had,” says Scott. They looked at herd health and vaccination protocols, reproduction, treatment protocols, milking equipment and milk quality protocols, feeding, and labor.
“We went through every line and asked the question: ‘Why are we doing this?’” says Scott. “We cut $200,000 out of the budget by doing this.
“Did we make money last year? No. But the hole would have been deeper had we not done it,” he says.
“Sometimes, we don’t change anything,” he says. “But everything gets challenged. You think a dollar here or a dollar there doesn’t amount to much, but on the number of cattle and acres we have, even small amounts can add up quickly,” he says.
Bringing in outside consultants gives the on-farm team more sets of eyes. They see things and have ideas that have worked on other farms that the on-farm team never considered, he says.
Initially, the meetings took a lot of time. “But now that we have a system down, we know what we want to look at,” he says. The cash flow versus budget meetings take an hour or two. The full-blown team meetings take longer, of course.
Besides the potential budget and cost savings, Nathan and Scott now know their financial situation inside out. Bankers are also more friendly.
When they lay a plan out in front of lenders, Nathan and Scott know what their farm is capable of doing and can back that up with financial evidence. “When bankers see we know what we’re talking about, they’re much more willing to work with us,” says Scott.