Estates - a strategy for success

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News article

Estates - a strategy for success

November 2010

estates - a strategy for success

Many individuals successfully run a farm or estate enterprise. However, occasional input from a consultant with relevant business experience can be of great benefit. An impartial review of an estate’s existing strategy can produce suggestions that will improve its performance enormously.

Some farm and estate businesses are run without a clear strategy and, as a result, they lose their focus and consequently performance dips. The decline may take a number of years but its impact on the business is still negative. When running or managing an estate there are a number of key issues owners need to consider that will alleviate their ever increasing burden of responsibility.

Income requirements - A healthy estate is dependent on sources of income. The question that should be asked is whether the estate is making the most of its assets? Sometimes it is difficult to concede that the current strategy is not working and a new one is needed to move the estate into profit.

Investment criteria - what rate of return is being achieved from the estate’s investments and can these be improved upon? The estate might need external intervention to realise that it might need to move in a different direction.

Succession - it is crucial that an estate is in good order to pass on to the next generation. It is not just a business but a passion and gift which is handed down from generation to generation. It should be inherited in a good position so that the next custodian is proud and excited about the estate’s future.

People - impartial third party involvement can reinvigorate relationships between owners, employees and tenants. This involvement can reap rewards and get flagging estate businesses back on the road to recovery and a positive business performance.

Family - most farms and estate businesses are owned by a family and very often have other siblings with financial interests. Managing these interests is a critical part of making a business succeed. If the whole family understands the business strategy and future plans for the estate it is easier to get everyone onside when any difficult decisions need to be made.

Risk profile - Every business has a different view as to what is a reasonable level of borrowing but there must be a strategy to repay this.

Core property - it is often helpful to identify certain property which could be sold off to assist with investment in other projects or restructuring. In some instances it can take many years to achieve a position where a non core property can be sold. Although the objectives of a plan may be fixed, the route to achieve this will often change due to circumstances. An estate’s business plan and strategy must have the flexibility to cope with this.

The rural economy will be subject to some huge variations in profitability over the next few years and this will necessitate the need to change.

Too many owners are faced with a bewildering array of advice - much of it conflicting - and it can be difficult to see the way forward. However, a good external consultant can give owners the confidence to make the necessary decisions to move their businesses forward.

For further information contact Henry Sale on 01858 410200 email henry.sale@fishergerman.co.uk
 

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