Healthy Land. Healthy Profits

confidencetoughManagement

Nov 20, 2013 (3 years and 10 months ago)

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Holistic Financial Planning:

Healthy Land. Healthy Profits


Strategicobjective4-05 Part 3 Chapter 13a.m4a
What are your dreams?

Shortcut to Strategicobjective4-05 Part 3 Chapter 13a.lnk
Protect your dreams, always wear
a thick skin


Holistic Financial Planning is a component of Holistic
Management. It was developed by Alan Savory,
founder of the Savory Institute


http://www.savoryinstitute.com/imported
-
20100211170933
-
home/month/may
-
2010



HM is taught by Certified Educators, materials and support
can be obtained through Holistic Management
International


http://www.holisticmanagement.org/





Family


Community


Recreation & Free Time

A Good Quality
of Life

Health

Happiness

Money

True or False:

Money is the most important thing in your life and the
driving force behind why you
are in business.

Cross out the items that are not important to you:


Describe the Life you want (
holistic goal

):


What Quality
of life
do you want?


What behaviors
, beliefs, and infrastructure
do you
need
to realize this quality of
life?


Describe how things need to be in the future to
maintain the life you want


Who will run
the
business? What must the
surrounding community
& customers be like?
What resources will you need?

Manage
toward what
you
want…







rather than what you don’t want

Holistic
Goal


Write it down

What must

be done/

produced to

achieve the


desired Q of L

Quality


of


Life

What the

future must

be like to

sustain this

What are you managing your Business towards?


What do you need to
produce
to achieve your
business “goals”?


What will you need to have in the future to
continue achieving your business goals?



Quality of Life:


Our life is low in stress, manageable, comfortable and includes weekly time
out for fun.



We are financially comfortable, live simply, have ample income to travel,
see family and friends, and put aside money for retirement



We are physically healthy and fit, challenged intellectually and feel good
about what we do everyday.


Our products help enrich our customers lives, protect the earth’s resources,
and promote social justice and peace

Forms of Production:


Future Resource Base:


Forms of Production:


We make time weekly to practice holistic financial planning to ensure
adequate savings and to guide our spending


We consciously choose the raw materials and labor that goes into our
products to ensure our social and environmental standards are met


We encourage our staff to accomplish their goals, & empower them
through education


Future Resource Base:


We live gently consuming less than we desire, minimizing our impact
on the planet


We actively support organizations and individuals that support our
vision


Describe Your Business Management
Structure

Think about what needs doing…Who is in charge?
Who reports to whom?


Write down who is responsible for each job.


How many jobs are you doing? I
s that reasonable?


Could anyone else do some of your jobs?


What are the standards that need to be met?


Are the necessary steps written down?


Do you have job descriptions for each job?


Do you have a good communication system?


What is your weakest link?



What’s Your
Organizational Structure?

Have You Documented Your Critical
Business Systems?


Would your business be able to run
without you?

Do you use your time as the
business owner to focus on the
$100/hr task of financial
planning and management or do
you focus on the $10/hr work of
production?


14


Make sound financial decisions that move you
towards
your
holistic goal


Plan for
profit and cap expenses so you achieve it


Prioritize expenses to maximize investing in the
weakest link in your chain of production


Analyze your
enterprises so you know which ones
give you the biggest return on your investment of
time/energy/money


Monitor your
plan and make adjustments
proactively so sound management decisions can
be made and profits achieved

Traditional Business Plan Financials



I


P = E

16

Wealth

Generating

Maintenance

Inescapable

17

Get your team together and figure
out a time and process to make
the financial plan happen
.


How do you integrate what you
already do with this process?

What’s Your Process?

18

Marginal Reaction

Gross Profit Analysis

Energy/Money

Source and Use

Sustainability

Society and Culture

Cause and Effect

The
Seven Testing Questions
include:

1.
Cause and Effect

2.
Weak Link Tests:
social, biological,
and
financial

3.
Marginal Reaction

4.
Gross Profit
Analysis

5.
Energy/
Money

Source and Use

6.
Sustainability

7.
Society and Culture

Before making decisions,
look at
your
Holistic Goal:

1.
What
are
all
the creative alternatives
you could
consider?

2.

If
you are
facing a problem:
is the proposed
action/expense addressing the
real root cause of
this problem?

3.

Will the action
you are considering
upset anyone
whose support
you
need?

4.

Which of the actions
will
bring the greatest return
on
your investment of time/money /energy (
ie
.
bring you closest to your holistic goal)?


20



Starting
Net Worth

Monthly
Income &
Expense

Ending
Net Worth

We plan until we get a result we like.
Relieves stress, worry and anxiety.

We are in control.

We will make it happen!


9 Steps
for
Financial
Success

#1 Review progress toward your
holistic goal

#2 Assess starting net worth

#3 Plan Income

#4 Plan Profit

#5 Define weak link per enterprise

#6 Plan & sort expenses (WIM)

#7 Cash Flow

#8
Asses
ending net worth

#9 Plan, Monitor, Control,
Replan

22

Logjam

Is there anything keeping us from making
SIGNIFICANT progress toward our
holistic goal
?
(Across the operation)


If so it gets first priority for time or money. This is a
wealth generating expense.


Often is leadership, attitude, debt, lack of capital



Adverse Factors

“Are other factors adversely affecting the business as
a whole?”


This is a wealth generating expense.


Could be location, lack of reliable labor, competitive
market, etc.



Assets:

Inventory



$200,000

Real estate




$75,000

Equipment(list
)


$
50,000

Other



$
200,000

Total
$
525,000

Liabilities:

Bank loan


$
100,000

Op. loan


$
25,000

Total


$
125,000

Net worth $400,000



Increase Assets


New equipment


Livestock


Land


Supplies and Inventory


Cash on Hand


Decrease liabilities such as debts and loans



25

26

27

Income

July

August

Sept

Total

Sales

product x

$1000

$1000

$1000

$3000

Sales Service y

$2000

$1000

$1000

$4000

Total
Income

$7000

28

Decide what you need to make, for the effort to
be worth your while: I
want
a profit
of
$ 1M

or
75%
.


How much Savings
(buffer
) do you need?


How much for Investing
(wealth generating or
addressing key problems like logjam
)?


How much for Increased
Net
Worth?


How much for Improved
Quality of
Life?

Income
$100,000

Expense

$50,000

$40,000

Debt Service
$20,000

Profit A

50%

Profit B

40% ,

but also

reducing
debt

30

The 9 Steps to
Financial Success

#1 Review progress toward your holistic goal

#2 Assess starting net worth

#3 Plan Income

#4 Plan Profit

#
5 Define weak link per enterprise

#6 Plan & sort expenses (WIM)

#7 Cash Flow

#8 Assess ending net worth

#9 Plan, Monitor, Control, Replan

31

Resource
Conversion

Product
Conversion

Marketing
Conversion

Sunlight
and/or raw
resources
including
money

Products
and/or
services

Marketing
of products
and/or
services

32

Resource
Conversion

Product
Conversion

Marketing
Conversion

Sunlight
and/or raw
resources
including
money

Products
and/or
services

Marketing
of products
and/or
services

Do you need to convert more sunlight/raw material
to have something to make into product?

33

Resource
Conversion

Product
Conversion

Marketing
Conversion

Sunlight
and/or raw
resources
including
money

Products
and/or
services

Marketing
of products
and/or
services

Are you making your raw materials into a
product that you can sell, or are resources being
left to “rot on the vine”?

34

Resource
Conversion

Product
Conversion

Marketing
Conversion

Sunlight
and/or raw
resources
including
money

Products
and/or
services

Marketing
of products
and/or
services

Do you need more customers because you have
have

more product than you can sell?

35

Wealth
-
Generating

Expenses:


Education (about how to improve
resource)


Capitol Improvements


Additional
labor for
resource conversion

Resource Conversion

Wealth
-
Generating Expenses:


Education (how to improve product)


Expense to get more
efficient


Get more
product per unit of effort or cost
or
better
quality

Product Conversion

37

Wealth
-
Generating Expenses:


Education (how to sell your product)


Change Enterprises (due to market
conditions)


Time of Marketing


Brochure

Marketing
Conversion

38

W: Generate wealth. Fix the weak link (or logjam
or adverse factor).

I: Inescapable. (essential and constant or morally
obligated)

M: All expenses that aren’t W or I. Maintenance.

39


Land taxes


Lease fees


Loan Interest


I Expenses

40


Living expense


Phone


Utilities


Repairs


M Expenses

41

You want to free up as much money to invest back
into the business in the best place to move you
toward your
holistic goal
.

When adjusting cash flow,
cut maintenance first
,
then inescapable, then wealth generating. Logjam
is last to cut
.

Brainstorm additional income sources before
cutting wealth generating expenses.

42

The 9 Steps to
Financial Success

#1 Review progress toward your holistic goal

#2 Assess starting net worth

#3 Plan Income

#4 Plan Profit

#5 Define weak link per enterprise

#6 Plan & sort expenses (WIM)

#7 Cash Flow

#8 Assess ending net worth

#9 Plan, Monitor, Control, Replan

43

44

45

46

Assets:




Start


End

Cows 250 head @ $800



$200,000



End: 300 head@ $800



$240,000

Hay 1500 tons @ $50


$75,000


$75,000

Equipment (list)



$50,000


$45,000

Land


$200,000

$200,000

Savings and checking



$15,000




$10,000

Total


$540,000


$570,000


Liabilities
:

Bank loan


$100,000

$90,000

Operating loan


$
25,000

$
20,000

Total


$
125,000

110,000

Net worth

$415,000

$460,000


47

Profit=Increased Net Worth

An Increase of $45,000

Can be Held As:


Increased Assets

Decreased Liabilities

Cash


48

Increased

Net Worth


Plus
Living Improved
Quality of Life.


Are we satisfied?


49

The 9 Steps to
Financial Success

#1 Review progress toward your holistic goal

#2 Assess starting net worth

#3 Plan Income

#4 Plan Profit

#5 Define weak link per enterprise

#6 Plan & sort expenses (WIM)

#7 Cash Flow

#8 Assess ending net worth

#9 Plan, Monitor, Control,
Replan

50


Monitor within 10 days after
month’s end


Control within an enterprise


Replan

if control is not possible


51

Now the Choice is Yours:

Stumble in the dark,
and be a victim, watch business
flounder and wonder why you feel stressed out
making financial decisions,
Or


Do
a Financial
Plan/Develop Discipline to Monitor
It.


A map of where we are going


A light to travel by


A way to check
progress


Knowledge that all our hard work is
taking us where we want to be

Thank you, send any questions to me, Mary Johnson at
wrcinashfield@yahoo.com