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#044 - How to Structure Your Debt for Where You Want to Be in 2030 · Dollars In The Dirt

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  Most graziers are missing a crucial step in setting up their debt for long-term
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  success. Most producers think that as long as they're
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  servicing their debts and not overextending, they're doing fine. After
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  helping hundreds of farmers secure over a billion dollars in finance, I
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  can tell you that proactively aligning your debt with your growth plans
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  unlocks better terms and stronger cash flow. So in this video, I'm
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  going to show you how to structure your debt to thrive through the 2030. I
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  know you're running a solid beef operation in Queensland, turning over about $4 million.
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  You're doing well, but you want to make sure your financial side of your business is
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  set up to support where you want to be in the next seven years. whether
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  that's expanding your herd, buying more land, or investing in
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  infrastructure. And the way you manage your debt today will either
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  be a stepping stone or a stumbling block. And let's break this
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  down into three key points. First, where you are now and
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  how to assess your current debt structure. Second, where
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  do you want to be by 2030 and setting realistic but ambitious
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  growth targets. And third, how to structure your debt
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  between the two points, balancing core debt with your working
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  capital and building in flexibility. Starting where you are
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  now. This might sound obvious, but you'd be surprised how
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  many producers don't take a good hard look at their current debt setup. It's
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  not just about the total amount you owe or your monthly repayments. It's
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  about understanding the types of debt you have, the interest rates, the
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  repayment schedules, and how these align with your current cashflow cycles.
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  For example, do you have a chunk of your debt tied up in short-term loans
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  with high interest rates? Or maybe you've got some long-term loans that
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  are locked in but don't really fit your cash flow cycles. For
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  example, do you have a chunk of your debt tied up in short-term loans with
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  high interest rates? Or maybe you've got some long-term loans that
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  are locked in but don't really fit your cash flow. Sometimes producers
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  pick up loans just to get the money they need at the time, without thinking
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  about how that debt will sit with them in the long run. You want to map out
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  your current debt portfolio, what's the split between fixed
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  and variable rates, how much is secured against property versus equipment
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  or livestock, and what are the repayment terms, and importantly, how
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  do the repayments line up with your income streams? For a
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  beef producer, income isn't always steady month to month, but
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  you might have a big inflow when you sell cattle and then have leaner
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  periods in between. Understanding this gives you a clear
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  picture of your current financial position. It's like knowing the
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  lay of the land before you start planting. Without this, you're flying blind.
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  Let me give you a more detailed example. Imagine you've taken out
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  a short-term loan over the last year to cover some urgent equipment repairs.
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  The interest rate on this loan is higher than your long-term loans, but
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  because it was urgent, you didn't have the time to shop it around. And
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  now that loan is still sitting there, adding into your monthly cash flow,
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  and you're paying more interest than you need to. If you don't identify
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  this, you might miss the opportunity to refinance or restructure that
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  debt into something more manageable. For a $4 million turnover beef
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  producer, even a small percentage difference in interest rates
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  can mean tens of thousands of dollars saved annually. Another
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  common scenario is having a large portion of your debt secured against
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  livestock or equipment, which might not be ideal. Livestock
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  values can fluctuate with market conditions and equipment depreciates over
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  time. If your loan is secured against these assets, you
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  might find it harder to refinance or access additional funds when
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  you need to. On the other hand, loans secured against land tend
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  to have more stability and can offer better turns, so knowing
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  where your debt is secured is crucial. Now here's a good place to
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  pause and say, if you're looking at purchasing a property or growing
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  your business and you want someone generally in your corner, book a free
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  call. I specialize in helping graziers like you get
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  the right loan structure that fits your unique goals and cash flow. The
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  link's in the description. Once you've got that mapped out, you can start to
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  think about where you want to be by 2030. And this is the second point,
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  setting your growth targets. It's not enough to say you want to grow.
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  You need to be specific. Do you want to increase your herd size
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  by 30%? Are you planning on buying an additional 1000 hectares? Maybe
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  you want to upgrade your water infrastructure or invest in new technology
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  to improve productivity. Having clear goals to
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  help you figure it out and how much capital you'll need and when It
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  also helps you decide what kind of debt structure will support those
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  goals. For example, if you're planning on a big land purchase
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  in the next two years, you'll want to position your debt so you can access
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  that finance without overextending yourself. It's also about
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  understanding your business cycles over the next decade. Maybe you expect
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  commodity prices to improve or anticipating some dry
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  years. Your debt structure needs to be resilient even
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  to handle those ups and downs. Setting these targets isn't
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  just about numbers on a spreadsheet. It's about envisaging the kind of
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  business you want to run, the lifestyle you want to have, and the legacy
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  you want to leave. When you have the clear vision, you can make
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  smarter decisions about your finance. So let's put this in
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  context. Say you want to increase your herd by 30% over the next 5 years.
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  That means more feed, more fencing, more staff. You'll
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  need to budget not just on the purchase of the additional cattle, but
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  also the ongoing costs that come with them. If you're planning to buy
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  an extra thousand hectares, you'll need to consider the timing of that purchase,
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  the deposit you require, and how you'll service that loan repayment
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  alongside your existing debt. Maybe you're also thinking about upgrading your
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  water infrastructure. In Queensland, reliable water supply is
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  critical, especially in the variable climates. Investing in
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  better water systems can improve your herd health, productivity, but
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  it can also have a significant upfront cost. Knowing
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  when you want to make that investment helps you plan your debt accordingly. Then
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  there's the external environment. Commodity prices can
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  be volatile. For instance, if global demand for beef spikes, you
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  might see higher prices, which can boost your cash flow. But
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  if there's a drought or a downturn in the market, your income could
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  also take a hit. Your debt structure needs to be flexible enough
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  to weather those fluctuations. All right, moving
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  on to the third point, how to structure your debt between where
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  you are now and where you want to be in 2030. This
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  is where a lot of the producers get stuck. They either carry too
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  much short-term debt that squeezes their cash flow, or they lock into
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  long-term debt that doesn't give them the flexibility to pivot
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  when things change. The key is to balance core debt with working capital.
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  Core debt is your long-term stable borrowing. This is typically
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  secured against your property or major assets and has fixed or
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  variable rates with manageable repayments. It's the
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  backbone of your finance structure, supporting your big investments like
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  land purchases or major infrastructure. Working capital,
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  on the other hand, is your short-term borrowing. This might be an
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  overdraft or revolving credit facility that you use to manage
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  your day-to-day expenses, seasonal cash flow gaps, or
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  unexpected costs. Having access to flexible working
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  capital means you're not forced to sell assets or take on expensive
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  emergency loans when cash gets tight. When you structure your debt
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  this way, you're setting yourself up to be resilient. You
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  can make your big investments with confidence, knowing your core debt
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  is manageable, and you can handle the ups and downs of running a
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  grazing business without feeling the pinch. Flexibility is
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  another crucial factor. The agricultural industry is unpredictable.
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  Weather, market prices, input costs, they all fluctuate. Your
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  debt structure needs to be adaptable. That might mean negotiating redraw
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  facilities on your loan or having the options to pause repayments during
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  tough times. It also means regularly reviewing your
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  debt. What worked for you two years ago might not be the best fit
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  now. As your business grows and your goals evolve, your
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  debt structure should evolve too. So don't be afraid to
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  have those conversations with your broker or your lender. Proactive
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  management can save a lot of stress and money down the track. Another
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  thing to consider is the interest rate environment. With rates changing,
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  locking in part of your debt with a fixed rate can provide certainty,
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  while keeping some variable debt lets you take advantage of any rate drops.
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  It's about finding the right mix that suits your tolerance and cash
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  flow. Let me give you a quick example. Say you want to buy an extra 500 hectares
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  in the next 18 months. You might take out a long-term loan secured against
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  your existing property with a fixed rate for that purchase. At
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  the same time, you keep a flexible working capital facility, cover
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  seasonal expenses like feed or vet bills. This way, your
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  big purchase is locked in with predictable payments and your day-to-day
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  cash flow stays flexible. Another example is
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  if you're planning to invest in infrastructure upgrades over the next five years. You
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  could stagger your borrowing, drawing down funds as you need them, rather
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  than taking out a big loan at once. This reduces the
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  interest costs and keeps the debt aligned with your actual spending.
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  Think about the seasonal nature of your beef operation in Queensland. You
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  might have a period where selling a large portion of your herd brings in
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  significant cash inflow. Then there are leaner months where
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  expenses like feed, vet bills, wages, they still need
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  to be paid. Having working capital facilities that you
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  can draw down during these lean months means you don't have to scramble for
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  cash or sell off assets at the wrong time. Also
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  consider unexpected events like drought or floods. These
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  can hit your cash flow hard and fast. And if your debt is too
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  rigid, you might find yourself in trouble. But if you've got flexibility built
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  into your borrowing, such as the ability to pause repayments, redraw funds,
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  you can navigate these challenges without derailing your business. So
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  the bottom line is your debt structure should be a tool that works for
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  you, not a burden that holds you back. It should support your
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  growth, protect your cash flow, and give you options when things
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  don't go to plan. Before we wrap up, remember that getting this
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  right isn't a one-time thing. It's an ongoing process. Regularly
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  review your debt position, revisit your growth targets, and
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  adjust your finance structure as your business changes. And that's
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  how you build a sustainable, thriving, grazing business through to 2030 and beyond. If
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  you're feeling overwhelmed or unsure where to start, that's exactly why I'm
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  here. I've helped hundreds of farmers like you navigate the complexities of
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  agricultural finance. So whether it's structuring your loans, negotiating
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  better terms, or planning for growth, I'm here to help. So
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  if you want to make sure your debt is set up to help you reach your goals, book a
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  free call with me. The links are in the description. There's no pressure,
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  just a genuine conversation about your business and how to get your
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  finance working for you. Thanks for listening today. Remember, the right
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  debt structure isn't just about managing what you owe. It's about building
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  the future you want. I'm Brecon Curtis, and I'll catch you next time.
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  Thanks for tuning in to Dollars in the Dirt. If you've got value from today's episode,
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  make sure to subscribe so you never miss the insights you need to grow your
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  business. And if you're ready to stop being just another number to the banks, visit
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  Season Finance via the link in the show notes. Remember to follow