Holistic Financial Planning: Healthy Land. Healthy Profits

What are your dreams?

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 home/month/may-2010 HM is taught by Certified Educators, materials and support can be obtained through Holistic Management International

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 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 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 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 live gently consuming less than we desire, minimizing our impact on the planet We actively support organizations and individuals that support our vision 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 Make sound financial decisions that move you towards your holistic goal Plan for profit and cap expenses so you achieve it Plan for profit and cap expenses so you achieve it Prioritize expenses to maximize investing in the weakest link in your chain of production 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 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 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

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27IncomeJulyAugustSeptTotal 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 Savings (buffer) do you need? How much for Investing (wealth generating or addressing key problems like logjam)? How much for Investing (wealth generating or addressing key problems like logjam)? How much for Increased Net Worth? How much for Increased Net Worth? How much for Improved Quality of Life? 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 toward your holistic goal 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. cut maintenance first 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 Holistic Financial Planning 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

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46 Assets:StartEnd Cows 250 $800 $200,000 End: 300 $800$240,000 Hay 1500 $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 $125,000110,000 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