Review Financials Monthly
Farmers know having a team of on- and off-farm eyes to track nutrition, reproduction and milk quality is critical to keeping production on track. Even more important, especially over the past fi ve years, is having a similar team to look at fi nancials. “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 coming back to the business, and Brenner and Dinderman are former employees.
Although both Brenner and Dinderman have 20 years of experience or more on the dairy, neither has a business background. Buying and phasing into the ownership of a dairy this size is daunting for both men 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,” Brenner says. “We need to know what we are doing with the finances each month and why.”
Brenner, Dinderman and Doug Block meet monthly to review financials, comparing the budget to actuals. “The budget is just a road map,” Brenner says. “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. They looked at herd health, vaccination and treatment protocols, reproduction, milking equipment and milk quality protocols, feeding and labor. “We went through every line and asked the question: Why are we doing this,” Brenner says. “We cut $200,000 out of the budget by doing this.” Though they weren’t in the black last year, he says the financial pain would have been worse without this effort. “Sometimes, we don’t change anything,” Brenner 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.”
Bringing in outside consultants gives the on-farm team more sets of eyes. The consultants see opportunities and bring ideas that haven’t been considered before. Initially, the meetings took a lot of time. “But now that we have a system down, we know what we want to look at,” Brenner says. Brenner and Dinderman now know their financial situation inside out. Bankers are also more friendly. When they lay a plan out in front of lenders, Brenner and Dinderman know what their farm is capable of and can back that up with financial evidence. “When bankers see we know what we’re doing, they’re more willing to work with us,” Brenner says