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Holistic
   Management
     Course
    August 24-30
     The Farm,
  Summertown, TN
          Facilitated by:
       Kirk ...
Holistic
   Management
Financial Planning
             Kirk L. Gadzia
    • ~ P.O. Box 1100 ~ Bernalillo, NM 87004
   • Ph...
Why Financial Planning?
Why Financial Planning
Why Financial Planning
Profit Paradigm

       PRICE             DIFFERENCE

                                  IS
COST OF PRODUCTION
            ...
Profit Paradigm
PROFIT OUT OF OUR CONTROL BECAUSE:
1. Prices are too low for the products produced.

2. Our costs to produ...
NEW Profit Paradigm
            PRICE
Demand       Creativity              DIFFERENCE
     Marketing
COST OF PRODUCTION   ...
Which Farm is More Profitable?

1. 45 Bushes per Acre
2. $75,000 Taxable Profit
3. .5% Organic Matter Loss
4. 1 Ton / Acre...
Which Farm is More Profitable?
Farm A: 1000 Acres
•   1 Ton Soil Loss @ 0.5% Organic Matter (OM)
    = 100,000 lbs. OM on ...
Sources of Wealth
Where did the Wealth Originate?

But:
                   =
       Does the Source Matter?
HUMAN CREATIVITY
PLUS ORGANIC OR MINERAL $
MINERAL RESOURCES =

CAN BE USED IN A CYCLICAL OR A CONSUMPTIVE

   MANNER OR T...
HUMAN CREATIVITY
PLUS TRANSACTIONS
                       =   PAPER $

  CAN BE CREATED OR LOST OVERNIGHT.

    STABILITY,...
HUMAN CREATIVITY PLUS
CONSTANT SOURCES OF ENERGY          =

                   SOLAR       $

             ENERGY NOT KNO...
Planning for Non-Profitability

                The 4 Human Tendencies
1.   Allow Production Costs to Rise to Anticipated ...
Planning for A Profit
Planned Income $400,000


            Planned Profit 25 - 50% of Gross Income




            Expens...
With High Debt Service

Planned Gross Income $400,000

            Planned Profit 25 - 50% of Gross Income
               ...
The Monthly WOTB! =
Working On The Business – Monthly Meetings
  Step 1. Always Begin by Reviewing the Holistic Goal
  Ste...
The Big Yearly WOTB! =
    Working On The Business
Step 1. Having a Holistic Goal in Place
Step 2. Using the Holistic Mgt....
Q: If I Pull Hard Enough
On This Chain – Where
Will It Break?




A: The Chain Will Always
Break At the Weakest
Link!
Q: If I Repair That Link In The
Chain and Pull Again –
Where Will It Break Now?




 A: The Chain Will Always
 Break At th...
The Weak Link in Creating New Wealth

                                Marketing
       Resource     Product
              ...
The Weak Link in Agricultural Operations

                                       Marketing
        Resource       Product
...
The Weak Link in Agricultural Operations
       Possible Items to Check
        Resource      In A Livestock Operation:
  ...
The Weak Link in Agricultural Operations
       Possible Items to Check
     Product        In A L ive s to c k O p e r a ...
The Weak Link in Agricultural Operations
       Possible Items to Check
  Marketing
   (Money)        In A Livestock Opera...
The Weak Link in Agricultural Operations

                      Marketing
 Resource   Product
                       (Mone...
Planning For Profitability


                     Plan Tax
                   Consequences   Profit

ON D J F M A M J J A ...
Three Phases of Annual
Wealth Generation Plan
      Mechanical
   Paper & Computer
     Psychological
       “Attitude”
  ...
Expense Categories
A. Items That Generate New Wealth


B. Inescapable Expenses


C. Maintenance Expenses


D. Wrong Expens...
Principle of Allocating Expenses
A. Allocate $ First –100% of Needed Amount

B. Inescapable Expenses – Allocate 2nd
   Are...
6 Keys To Profitable Ranching
1. Wholistic or Integrative Approach
2. Continuous Improvement of Key Resources
   A. Land  ...
Holistic
   Management
     Course
    August 24-30
     The Farm,
  Summertown, TN
          Facilitated by:
       Kirk ...
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Holistic Management Financial Planning

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Holistic Management Financial Planning - by Kirk Gadzia. See the blog at http://carbonfarmingcourse.blogspot.com for details.

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Transcript of "Holistic Management Financial Planning"

  1. 1. Holistic Management Course August 24-30 The Farm, Summertown, TN Facilitated by: Kirk L. Gadzia ~ P.O. Box 1100 ~ Bernalillo, NM 87004 Phone 505-867-4685 ~ Cell 505-263-8677 Email: kgadzia@msn.com Web: www.resourcemanagementservices.com
  2. 2. Holistic Management Financial Planning Kirk L. Gadzia • ~ P.O. Box 1100 ~ Bernalillo, NM 87004 • Phone 505-867-4685 ~ Cell 505-263-8677 • Email: kgadzia@msn.com • Web: www.resourcemanagementservices.com
  3. 3. Why Financial Planning?
  4. 4. Why Financial Planning
  5. 5. Why Financial Planning
  6. 6. Profit Paradigm PRICE DIFFERENCE IS COST OF PRODUCTION PROFIT NO CONTROL OVER PRICE OR COSTS PROFIT IS OUT OF OUR CONTROL
  7. 7. Profit Paradigm PROFIT OUT OF OUR CONTROL BECAUSE: 1. Prices are too low for the products produced. 2. Our costs to produce the products are too high. T r ue o r F a ls e ? American farmers and ranchers enjoy some of the best opportunities in the world for profit. •They receive some of the highest prices in the world for the raw agricultural products they sell. •They pay some of the lowest prices in the world for most of the inputs needed to farm or ranch.
  8. 8. NEW Profit Paradigm PRICE Demand Creativity DIFFERENCE Marketing COST OF PRODUCTION IS Determination Creativity PROFIT Management Attitude Planning Self - Discipline Responsibility for PROFIT is entirely ours!
  9. 9. Which Farm is More Profitable? 1. 45 Bushes per Acre 2. $75,000 Taxable Profit 3. .5% Organic Matter Loss 4. 1 Ton / Acre Soil Loss 1. 40 Bushes per Acre 2. $55,000 Taxable Profit 3. .5% Organic Matter Gain 4. Zero Soil Loss
  10. 10. Which Farm is More Profitable? Farm A: 1000 Acres • 1 Ton Soil Loss @ 0.5% Organic Matter (OM) = 100,000 lbs. OM on 1,000 Acres • 100,000 lbs. OM = 60,000 lbs Organic Carbon • At Normal Carbon:Nitrogen Ratio = Nitrogen Equivalent of 50,000 lbs • Estimated Cost of Nitrogen @ $.50 / l b. • $.50 x 50,000 lbs. = $25,000 or $25 / Acre to Replace Lost Nitrogen Farm B: 1000 Acres • .5% Organic Matter Gain = $25,000 Gain, by Above Calculations • Farm A: $75,000 Profit - $25,000 N Loss = $50,000 Net • Farm B: $55,000 Profit + $25,000 N Gain = $80,000 Net Aeration? Water Holding Capacity? Drought Resilience? Trace Minerals? Soil Life?
  11. 11. Sources of Wealth Where did the Wealth Originate? But: = Does the Source Matter?
  12. 12. HUMAN CREATIVITY PLUS ORGANIC OR MINERAL $ MINERAL RESOURCES = CAN BE USED IN A CYCLICAL OR A CONSUMPTIVE MANNER OR TO BUILD INFRASTRUCTURE ENERGY DERIVED IS POTENTIALLY DAMAGING EXAMPLES: OIL, GAS, COAL, GOLD, DIAMONDS SOIL, FORESTS, WILDLIFE.
  13. 13. HUMAN CREATIVITY PLUS TRANSACTIONS = PAPER $ CAN BE CREATED OR LOST OVERNIGHT. STABILITY, SUBSTANCE, OR VALUE DEPENDS ON CONFIDENCE OF SOCIETY IN GOVERNMENT AND BANKING . EXAMPLES: STOCKS, LOANS, SALARIES, FUTURES, LAND SPECULATION, ETC.
  14. 14. HUMAN CREATIVITY PLUS CONSTANT SOURCES OF ENERGY = SOLAR $ ENERGY NOT KNOWN TO ENDANGER ENVIRONMENT ONLY FORM OF WEALTH WHICH CAN SUSTAIN PEOPLE EXAMPLES: SUNLIGHT, WIND, WAVE ACTION, GEOTHERMAL , GRAVITY
  15. 15. Planning for Non-Profitability The 4 Human Tendencies 1. Allow Production Costs to Rise to Anticipated Income 2. Borrow Against Anticipated Income 3. Spend Minimal Time Planning on Paper 4. Monitoring Efforts Too Late or Non Existent Income Expenses Interest Normal Income Rises Income Drops
  16. 16. Planning for A Profit Planned Income $400,000 Planned Profit 25 - 50% of Gross Income Expense Allocation Cap 50-75% of Income
  17. 17. With High Debt Service Planned Gross Income $400,000 Planned Profit 25 - 50% of Gross Income After Debt Service Paid Expense Allocation Cap 50-75% of Income After Debt Service Paid Debt Service $150,000
  18. 18. The Monthly WOTB! = Working On The Business – Monthly Meetings Step 1. Always Begin by Reviewing the Holistic Goal Step 2. Keep Meeting Focused on Strategic Items •Test Your Proposed Actions Against Your Goal •Make a Plan for Specific Actions That Pass The Tests •Make a Timeline for Completion •Decide Who Will be Responsible for Seeing That Action is Completed Step 3. Review Commitments and Actions and Set Date for Next Meeting.
  19. 19. The Big Yearly WOTB! = Working On The Business Step 1. Having a Holistic Goal in Place Step 2. Using the Holistic Mgt. Decision Making Process – Testing Your Decisions Against Your Goal Step 3. Planning the Planning – Laying the Foundation • Creating Ownership – Who is Involved? • Overview and Scheduling 1. Preliminary Session – ID 2. Gathering Information 3. 1-2 Day Planning Retreat 1. Final Session to Adjust and Schedule
  20. 20. Q: If I Pull Hard Enough On This Chain – Where Will It Break? A: The Chain Will Always Break At the Weakest Link!
  21. 21. Q: If I Repair That Link In The Chain and Pull Again – Where Will It Break Now? A: The Chain Will Always Break At the Weakest Link!
  22. 22. The Weak Link in Creating New Wealth Marketing Resource Product (Money) Conversion Conversion Conversion Sunlight Products and/or raw Marketing and/or of resources services including Products money and and/or creativity services
  23. 23. The Weak Link in Agricultural Operations Marketing Resource Product (Money) Conversion Conversion Conversion Conversion Conversion Marketing of of Sunlight of Plants to Agricultural Through Meat, Products Plants Wildlife, Changing (Pasture, Hay, Grain, the Crops, etc.) etc.
  24. 24. The Weak Link in Agricultural Operations Possible Items to Check Resource In A Livestock Operation: Conversion •Not Enough Grass •Few Paddocks •Poor Control of Livestock •Too Many Herds •Poor Drainage or Water Cycle •Plant Diversity Low Conversion •Lack of Litter Cover of Sunlight •High Supplement Cost Through •Low Soil Fertility Plants •High Levels of Brush or Weed (Pasture, Invasion Crops, etc.) •Riparian Areas Degraded
  25. 25. The Weak Link in Agricultural Operations Possible Items to Check Product In A L ive s to c k O p e r a tio n : Conversion •Unused forage •Unused forage for other species •Poor Conception •Poor Gains •Poor Genetics •High Mortality Conversion •High Predation of Plants to •Low Enterprise Diversity Meat, Wildlife, Hay, Grain, etc.
  26. 26. The Weak Link in Agricultural Operations Possible Items to Check Marketing (Money) In A Livestock Operation: Conversion •Low asset turnover – few marketing opportunities •Low relative prices •Insensitivity to demand •Poor knowledge of market •Poor quality Marketing •Low sales effort of •Low Enterprise Diversity Products and/or services
  27. 27. The Weak Link in Agricultural Operations Marketing Resource Product (Money) Conversion Conversion Conversion = Q: Where Should I A: The Chain Will Always Reinvest Break At the Weakest Link! The Money?
  28. 28. Planning For Profitability Plan Tax Consequences Profit ON D J F M A M J J A S O N D J F M Plan Monthly Replan A Monitor & For Next Profit Control Year
  29. 29. Three Phases of Annual Wealth Generation Plan Mechanical Paper & Computer Psychological “Attitude” Holistic Management Decision Making Process
  30. 30. Expense Categories A. Items That Generate New Wealth B. Inescapable Expenses C. Maintenance Expenses D. Wrong Expenses
  31. 31. Principle of Allocating Expenses A. Allocate $ First –100% of Needed Amount B. Inescapable Expenses – Allocate 2nd Are These Really Inescapable? Minimum Amount Necessary. C. Maintenance Expenses – Allocate Last, Brainstorm Ways to Reduce. Minimum Amount Necessary. D. Waste of Time and $ - Eliminate! Treating Symptoms and Non-Weak Link Items
  32. 32. 6 Keys To Profitable Ranching 1. Wholistic or Integrative Approach 2. Continuous Improvement of Key Resources A. Land B. Livestock C. People 3. Use of Planning Tools A. Financial B. Land and Livestock C. People- Time Mgt. 4. War on Costs / War on Work 5. Emphasis on Marketing 6. Diversity A. Income B. Biological C. People- Ideas
  33. 33. Holistic Management Course August 24-30 The Farm, Summertown, TN Facilitated by: Kirk L. Gadzia ~ P.O. Box 1100 ~ Bernalillo, NM 87004 Phone 505-867-4685 ~ Cell 505-263-8677 Email: kgadzia@msn.com Web: www.resourcemanagementservices.com
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