Latest / Dollars In The Dirt / #040 - The Team Graziers Need To Succeed

Transcript

#040 - The Team Graziers Need To Succeed · Dollars In The Dirt

• 0:00
  Who is actually on your advisory team? And more importantly, are they
• 0:03
  all talking to each other? Most graziers have an accountant they see once
• 0:06
  a year, a bank manager who changes every two years, and a lawyer they
• 0:10
  only call when something goes wrong. The truth is, if your advisors are
• 0:13
  operating in silos, your business is leaking money and missing
• 0:16
  opportunities. After helping hundreds of farmers secure over a billion dollars
• 0:20
  in finance, I can tell you that the most successful operators don't
• 0:23
  just hire advisors, they build a coordinated, strategic team.
• 0:27
  So in this video, I'm going to break down exactly who needs to be on your team,
• 0:30
  why the broker is the missing link, and the massive cost of staying loyal
• 0:34
  to the wrong person. The biggest problem we see in agricultural businesses is
• 0:38
  the silo effect. You've got an accountant who's brilliant at
• 0:42
  minimising your tax bill, and you might have an agronomist who's
• 0:45
  great at maximising your pasture yield. Then there's the bank manager who's
• 0:48
  laser focused on the bank's risk metrics and lending policies. But
• 0:52
  here's the kicker, none of them talk to each other. When your advisors operate
• 0:56
  in solos, they often give conflicting advice that can seriously hurt
• 1:00
  your business. For example, your accountant might suggest aggressively
• 1:04
  writing down your assets to save on tax this financial year. And
• 1:07
  that's a smart move on the surface, right? But then six months
• 1:11
  later, when you go to the bank to borrow money for that property you've been eyeing
• 1:14
  off, the bank looks at those written down financials and says, you
• 1:17
  don't have the servicing capacity to take on a loan. So that tax
• 1:21
  strategy you follow actually sabotages your
• 1:24
  growth strategy. This isn't some rare issue
• 1:28
  either. I've worked with graziers running a $10 million operation who
• 1:32
  are paying three different professionals, each doing a technically excellent job,
• 1:35
  but collectively steering the business in three different directions. The
• 1:39
  accountant was optimizing for tax minimization, the
• 1:43
  bank was optimizing for security and risk minimization, and
• 1:46
  the lawyer was focused on legal protection. But nobody
• 1:50
  was optimizing the growth or the long-term success of the business. So
• 1:53
  what happens next is decisions get made in a vacuum. You
• 1:56
  buy a property without checking whether the legal structure will satisfy the
• 2:00
  bank's security requirements. You restructure your entities for
• 2:03
  tax purposes. without realising it triggers a
• 2:06
  review or breaches your existing loan covenants, and you sign a lease
• 2:10
  without understanding how it affects your borrowing capacity. Every one
• 2:13
  of these mistakes is avoidable, but only if your team is communicating
• 2:17
  clearly and working towards the same goals. To succeed at
• 2:20
  scale, you need a team that is aligned with your overarching business
• 2:24
  objectives. Say your goal is to buy the block next door within
• 2:27
  the next three years. Your accountant, your broker, and your lawyer all
• 2:30
  need to know that today. They need to be working together to structure your
• 2:34
  entities, manage your tax, and build your balance sheet so
• 2:37
  that when the property hits the market, you're ready to strike with confidence. In
• 2:41
  fact, I recently worked with a cattle producer in central Queensland who'd
• 2:44
  been trying to expand for years, but kept running into a finance roadblock.
• 2:48
  His accountant was focused on short-term tax savings, his lawyer
• 2:52
  was drafting leases without considering bank security implications, and
• 2:55
  his bank manager kept changing, so no one really knew the
• 2:59
  situation. Once we brought this all together, aligned the
• 3:02
  strategy, restructured the operation's finances, legal
• 3:05
  setup, he secured a $3 million loan for a neighbouring property within
• 3:09
  the next six months. That's the power of a coordinated team. So
• 3:13
  who actually needs to be on this team? At a minimum, a commercial grazing operation
• 3:17
  needs a proactive accountant, a specialised agricultural lawyer, and
• 3:21
  a dedicated finance broker. Let me break that down a bit more.
• 3:25
  Notice I said a proactive accountant, not just a tax agent. You
• 3:28
  need someone who looks forward, not just backwards. They should be
• 3:32
  helping you with your cash flow forecasting to plan for the season variability,
• 3:36
  entity structuring that supports both tax efficiency and financing, and
• 3:40
  succession planning to keep your operation thriving for generations. It's
• 3:44
  about having an accountant who understands the unique cash flow cycles of agriculture,
• 3:48
  who can model scenarios like drought or market shifts, and advise
• 3:52
  you on how to structure your business to withstand those shocks. not
• 3:55
  just someone who lodges your tax return once a year. You
• 3:59
  need an agricultural lawyer because farm law is highly specialised.
• 4:03
  Whether it's drafting a deed of family arrangement for succession, negotiating
• 4:06
  a complex sale contract on a grazing property, or
• 4:10
  dealing with water rights that can make or break your operation, a
• 4:13
  generalist suburban lawyer will often miss the nuances that can
• 4:16
  cost you millions. For example, I've seen cases where a poorly
• 4:20
  drafted water access agreement limited the producers' ability to
• 4:23
  irrigate the new pastures they're looking to develop, which in turn affected
• 4:27
  their carrying capacity and profitability. Having a lawyer who knows the
• 4:30
  agricultural landscape, understands the local regulations and
• 4:34
  can anticipate how legal structures impact your finance options
• 4:37
  is invaluable. You also need a finance broker. The broker is
• 4:41
  often the missing link that brings this all together. We act as the translator
• 4:44
  between your accountant's financials, the bank's credit policies. We
• 4:48
  take your tax-effective structure your accountant has built and explain it
• 4:52
  to the bank in a way that proves your commercial viability. We
• 4:55
  ensure that the legal structures your lawyers put in place actually
• 4:59
  align with the bank's security requirements. So we sit in the middle, ensuring
• 5:02
  the financial strategy supports the entire operation. Think
• 5:06
  of it this way. A broker is the conduit that makes sure everyone
• 5:09
  is speaking the same language. For instance, I recently worked
• 5:13
  with a sheep grazer in Victoria who wanted to refinance and buy
• 5:16
  more land. His accountant had structured his trust to save tax.
• 5:20
  His lawyer had set up a complex family arrangement, but
• 5:23
  the bank wasn't happy with the security being offered. I stepped in,
• 5:27
  liaised with both the accountant and the lawyer, and restructured the loan application to
• 5:31
  reflect the true commercial picture. we ended up securing a
• 5:35
  $1.5 million loan with better terms than expected, enabling the
• 5:38
  purchase to go ahead smoothly. And without the broker's role,
• 5:42
  these kinds of deals stall or fall apart because the bank just doesn't
• 5:46
  get the full story. And that's why the broker is such a critical piece in
• 5:49
  the puzzle. If you're looking to expand your operation and you want to
• 5:52
  make sure your finance structure aligns with your account strategy, that's
• 5:55
  exactly what I help with. Book a free call with me and we'll review
• 5:59
  your setup. There's a free call link in the description. The
• 6:02
  final piece of building a successful team is knowing when
• 6:05
  to make a change. Agriculture is an industry built on relationships, and
• 6:09
  loyalty is a core value. But blind loyalty to an
• 6:12
  advisor who is no longer serving your business is incredibly expensive.
• 6:17
  We see producers who have been with the same accountant for 30 years. The
• 6:20
  accountant might be a great bloke, but he doesn't understand the complex trust
• 6:24
  structures, the latest changes to capital gains tax, or the new government
• 6:27
  grants and incentives. The producer sticks with him
• 6:30
  out of loyalty and it ends up costing them hundreds of thousands of dollars
• 6:34
  in missed opportunities or unnecessary tax. And
• 6:38
  the same applies to the bank. Staying loyal to a bank manager who
• 6:41
  doesn't understand your business or a bank that has tightened its agricultural lending
• 6:45
  policy will strangle your growth. Here's the thing, the
• 6:49
  bank manager you're loyal to has probably already been rotated to a
• 6:52
  different branch or even a different role, and that relationship you
• 6:56
  valued is gone. But you are still sitting with the same bank
• 6:59
  out of habit. I have seen producers miss out on major
• 7:03
  expansion opportunities because their bank quietly changed its agricultural lending
• 7:06
  appetite. and the banks stopped being competitive on rural loans. But
• 7:10
  the producer never shopped the market because they felt obligated to
• 7:14
  stay loyal. Meanwhile, a competitor down the road was getting
• 7:17
  better rates, more flexible terms, and faster approvals from
• 7:21
  a lender who actually wanted their business. One example
• 7:24
  that sticks out was a mixed livestock and cropping operation in New South Wales.
• 7:28
  They'd been with the bank for 20 years, but over time the bank tightened
• 7:32
  lending on mixed enterprises, especially those with cropping exposure
• 7:36
  due to a recent drought. This producer tried
• 7:39
  to get a loan for new machinery and an additional block, but
• 7:43
  was repeatedly rejected or offered unfavourable rates. Eventually
• 7:46
  they switched brokers who shopped the market and found a lender who
• 7:50
  specialised in mixed farming operations. securing a $2.5 million
• 7:53
  facility with better terms. The producer told me later they
• 7:57
  regretted not reviewing their option sooner, as the delay had cost them at
• 8:00
  least 12 months of growth. You have to treat your advisory team
• 8:03
  like any other critical asset in your business. You review the performance of
• 8:07
  your bulls, you review the performance of your pastures, and you
• 8:10
  must review the performance of your advisors. If your team isn't
• 8:13
  proactively bringing you ideas, if they aren't communicating with
• 8:17
  each other, or if they don't understand your long-term goals, it's
• 8:20
  a time for an upgrade. As a broker, I don't have loyalty to
• 8:23
  any single bank. My loyalty is to your business outcomes. We
• 8:27
  constantly review the market to ensure the current lender is still
• 8:30
  the best fit for your strategy. And if they aren't, we move.
• 8:34
  You need to apply the same ruthless commercial lens to every professional
• 8:38
  in your corner. A strong advisory team is an investment, not
• 8:42
  an expense. If your accountant is stuck in the old ways and missing
• 8:45
  the new opportunities like the recent changes to the instant asset write-off
• 8:48
  threshold or expanding small business restructuring laws, it's
• 8:52
  worth having a conversation with someone who's current. If
• 8:55
  your lawyer isn't familiar with the latest water access reforms or
• 8:59
  the nuances of agricultural leasing in your state, that's another red
• 9:02
  flag. And if your finance team isn't actively seeking the
• 9:05
  best products, rates and terms in an ever-evolving market, you're
• 9:09
  leaving money and growth on the table. It's not about burning bridges
• 9:13
  or being disloyal. It's about being honest with yourself and your business. The
• 9:16
  agricultural sector is tough and you need every advantage you can
• 9:19
  get. Upgrading your team when necessary is part of that.
• 9:23
  So remember guys, you can't run a multi-million dollar agribusiness on
• 9:26
  your own. You need a team of specialists who are aligned to your
• 9:30
  goals and communicating with each other. Don't let solid
• 9:33
  advice or blind loyalty hold your business back. And if you need
• 9:36
  a finance broker to step in and coordinate your debt strategy with the broader
• 9:40
  business goals, reach out to Season Finance. And as your broker, this
• 9:43
  is exactly what I do for my clients. And we'll see you in the next episode. Thanks
• 9:47
  for tuning in to Dollars in the Dirt. If you've got value from today's episode,
• 9:51
  make sure to subscribe so you never miss the insights you need to grow your
• 9:54
  business. And if you're ready to stop being just another number to the banks, visit
• 9:58
  Season Finance via the link in the show notes. Remember to follow