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HOLISTIC MANAGEMENT INTERNATIONAL Holistic Management and Holistic Management International/Healthy Land/Sustainable Future are registered trademarks of Holistic Management International. Copyright ©2012 Holistic Management International. All rights reserved. Holistic Financial Planning How it has worked for PACE Plan for Success!!!!
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Page 1: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Holistic Management and Holistic Management International/Healthy Land/Sustainable

Future are registered trademarks of Holistic Management International. Copyright

©2012 Holistic Management International. All rights reserved.

Holistic Financial Planning

How it has worked for PACE

Plan for Success!!!!

Page 2: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Page 3: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Holistic Financial Planning

Daily

Action List

Targets (Intermediate)

Objectives

(Long Range)

Strategy

Policy

Holistic Goal Quality of life, Behaviors & Systems, and Vision Statements

Financial Decisions Productivity Pyramid

Page 4: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Holistic Financial Planning

• Making financial decisions toward your Holistic Goal

• Facilitating important conversations

• Analyzing your enterprises

• Assessing potential new enterprises

• Planning for profit upfront (not just production)

• Defining income streams

• Calculating a cap for all expenditures

• Prioritizing expenses to reinvest in your operation

• Monitoring your plan proactively

Page 5: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Holistic Financial Planning The Nine Steps to Financial Success

#1

Annual Review

#2

Assess Starting Net Worth

#3

Plan Income

#4

Plan Profit

#5

Enterprise Investment

Analysis

#6

Prioritize Expenses

#7

Cash Forecast

#8

Assess Ending Net Worth

#9

Monitor for Results

Page 6: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Holistic Financial Planning Financial Planning vs. Accounting

Production vs. Profit Focus

Traditional Model:

I – E = P

Holistic Financial Planning:

I – P = E

Page 7: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Holistic Financial Planning

Plan

The best we can do at a given time

Replan

Does not mean our first plan was wrong.…conditions changed.

…allows us to reach our goals.

…we are responsible.

…we make it happen

…what doesn’t change is our Holistic Goal

Page 8: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Holistic Financial Planning

What’s your Process?

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?

Page 9: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step One: Annual Review - Assess

Progress Toward Holistic Goal

Logjam

Is there anything keeping us from making SIGNIFICANT

progress toward our Holistic Goal? (Across the operation)

If so, this is a Top Priority Investment.

Adverse Factors

Are other factors adversely affecting the business as a

whole?”

These investments are also top priority.

Page 10: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Two: Assess Starting Net

Worth - Building Net Worth

Assets

Cash (last year sale goats) 6,000

Hay, grass 2,000

Equipment (list) 12,000

Other (savings) 50,000

Total $70,000

Liabilities

Loan $1,000

Total $1,000

Net Worth $69,000

Page 11: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Two: How to Increase Net

Worth

• Increase Assets

–New equipment

–Livestock

–Land

–Supplies and Inventory

• Cash on Hand

• Decrease liabilities such as debts and loans

Page 12: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Three: Planning Income

Page 13: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Three: Planning Income

Tools to help

•Your Holistic Goal

•Gross Profit Analysis

•Enterprise Budgets

•Your Dreams

•Your Passion & Skills

•Matches to your infrastructure and

resources (management inventory)

Page 14: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Three: Planning Income

Income PACE July, 2013 Sept., 2013

Goats 50 hd. $120/hd. $6000

Tomato 100Bu. $40/Bu. $4,000

Total Income $10,000

Page 15: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Four: Planning Profit

Income

$10,000

Expense

$3,000 $1,000

Debt Service

$1,000

Page 16: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Four: Planning Profit

I want a

profit of X$ or X%.

For:

Savings (buffer)

Investing (addressing key problems like logjam, enterprise weak links, or adverse factors)

Increased Net Worth

Improved Quality of Life

Page 17: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Five: Enterprise Investment

Analysis

Resource Conversion

Product Conversion

Marketing Conversion

Sunlight and/or raw

resources including

money

Products and/or

services

Marketing of products

and/or services

Page 18: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Five: Enterprise Investment

Analysis

• A tool/method to prioritize expenditures

• Perform it on each enterprise.

• Identify the weak link and brainstorm solutions.

• Use the testing questions to select solutions.

• Cost out solutions and record it on the “Investment”

Worksheet.

Page 19: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Five: Enterprise Investment

Analysis – Identify Weak Link

Resource Conversion

Top Priority Investments:

• Education (about how to improve resource)

• Fences

• Water Development

• Soil Amendments

• Additional labor for planting/harvesting

Page 20: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Five: Enterprise Investment

Analysis – Identify Weak Link

Product Conversion

Top Priority Investments:

• Education (how to improve product)

• Expense to get more milk per animal

• Get more animals or better genetics

Page 21: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Five: Enterprise Investment

Analysis – Identify Weak Link

Marketing Conversion

Top Priority Investments:

• Education (how to sell your product)

• Change Enterprises (due to market conditions)

• Time of Marketing

• Brochure

Page 22: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Six: Prioritizing Expenses

• Be a price maker not a price taker

• Invest in your business (all expenses are not equal)

I – P = E

Top Priorities

Maintenance

Liabilities

Page 23: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Six: Prioritizing Expenses

• T: Top Priority Investment. Fix the weak link (or

logjam or adverse factor).

• L: Liabilities (essential and constant or morally

obligated)

• M: All expenses that aren’t “T” or “L” are

Maintenance.

Page 24: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Six: Prioritizing Top Priority

Expenses

T = 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

liabilities, then top priority investments. Logjam is

last to cut.

Page 25: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Six: Prioritizing Liability

Expenses

L

Land taxes

Lease fees

Loan interest

Page 26: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Six: Prioritizing Maintenance

Expenses

M

Living expense

Phone

Utilities

Repairs

Page 27: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Six: Prioritize Expenses

Expense PACE Jan 1/06 Dec 31/ 06

(T) Goats, crop $4,000 Mar.

(L) Lease $500 Jan.

(M) Water $500 yr.

Total Expense $6,000

Page 28: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Seven: Cash Forecast

Page 29: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Seven: Cash Forecast -

Balance Plan

Subtract total expenses from total income plus the profit

you planned to make sure your PLAN balances. If your

PLAN does not balance you can:

• Cut expenses

• Use other revenues to offset deficit

• Increase income (higher prices, sell more products,

change enterprise mix, adjust production systems, etc.)

Page 30: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Seven: Cash Forecast

Goats Tomatoes

July Plan 3,000

- Actual 2,500

Difference (500)

Cumulative Difference to date (500)

Sept Plan 3,000

- Actual 5,000

Difference 2,000

Cumulative Difference to date 1,500

Page 31: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Eight: Ending Net Worth

Assets Start End

Cash $6,000 $7,500

Hay/grass $2,000 $3,000

Equipment (list) $12,000 $11,000

Other (Savings) $50,000 $49.000

Total $70,000 $70,500

Liabilities Start End

Bank Loan $1,000 $0

Total $0 $0

Net Worth $69,000 $70,500

Page 32: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Eight: Net Worth & Profit

Profit=Increased Net Worth

An Increase Can Be Held As:

Increased Assets

Decreased Liabilities

BUT

Lost Profit ???

Page 33: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Eight: Net Worth & Profit

Strategic Growth in Operation

(5-10 year program to double grass/stocking rate)

# of Goats 50 60 70 80 90 100

Income/Goat $160 $160 $160 $160 $160 $160

Variable Cost $60 $60 $60 $60 $60 $60

Gross Profit $100 $100 $100 $100 $100 $100 $100

Overheads $10 $9 8 8 8 8

Net Profit/Cow $90 $91 $92 $92 $92 $92

Profit/Ranch $4,500 $5,460 $6,440 $7,360 $8,280 $9,200

Increase +1.21 +1.43 +1.63 +1.84 +2.04

Page 34: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Eight: Net Worth & Profit

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!

Page 35: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Step Nine: Monitor & Control Your

Plan

Do a financial plan and monitor it

• A map of where we are going

• A light to travel by

• A way to check progress

Page 36: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Testing Financial Decisions

The Seven Testing Questions

1. Root Cause

2. Weak Link Tests: social,

biological, and financial

3. Comparing Options

4. Gross Profit Analysis

5. Input Analysis

6. Vision Analysis

7. Gut Check

Page 37: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Holistic Financial Planning

Plan

The best we can do at a given time

Replan

Does not mean our first plan was wrong.…conditions changed.

…allows us to reach our goals.

…we are responsible.

…we make it happen

…what doesn’t change is our Holistic Goal

Page 38: Holistic Financial Planning How it has worked for …...HOLISTIC MANAGEMENT INTERNATIONAL Holistic Financial Planning The Nine Steps to Financial Success #1 Annual Review #2 Assess

HOLISTIC MANAGEMENT INTERNATIONAL

Holistic Management and Holistic Management International/Healthy Land/Sustainable

Future are registered trademarks of Holistic Management International. Copyright

©2012 Holistic Management International. All rights reserved.

Lisa Bellows, Ph.D.

[email protected]

(940) 736-3996


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