Sheep enterprises urged to adopt business model

Sheep owners urged to adopt business model


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PROFIT MINDSET: Sheep Profit Blueprint Symposium participants Claire and Lynton Arney (centre), Inverbrackie, Strathalbyn, with Sheep Owners Academy founders Greg Johnsson and Andrew Roberts.

PROFIT MINDSET: Sheep Profit Blueprint Symposium participants Claire and Lynton Arney (centre), Inverbrackie, Strathalbyn, with Sheep Owners Academy founders Greg Johnsson and Andrew Roberts.

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Most farming workshops focus on building technical rather than business skills, but consultants suggest having a sound business model and the right mindset is far more important to a profitable business.

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Most farming workshops focus on building technical rather than business skills.

But Kangaroo Island veterinarian and consultant Greg Johnsson and business mentor Andrew Roberts believe having the right mindset and business model are far more important.

The duo formed the Sheep Owners Academy about two years ago and are working with clients across SA.

Last week they held a sold-out, two-day symposium in Adelaide, attended by more than 120 producers providing a blueprint for running a successful sheep enterprise.

Dr Johnsson said Australian sheep producers could not afford to run an average performing business, with 63 per cent making a loss in the past three years, despite above-average sheep and wool prices.

“In the past 20 years, the average return on assets was just 1.1pc and with an average interest rate of 9pc and at 80pc equity, they a needed 1.8pc ROA just to pay the interest on that debt,” he said.

“So they are eroding their equity and eating into capital gains.

“And if you are leasing land at 3-3.5pc of capital value but your enterprise is returning 1-1.5pc, it is not contributing to your net wealth – it is not a pretty picture.”

Dr Johnsson said profitable sheep businesses needed greater returns than debt, the ability to fund the operation and capital expenses plus enabling owner-operators to draw an annual wage at least comparable to the average worker – about $80,000.

They must maintain a safe level of equity and have the capacity to repay debt in a timely manner, he said.

He challenged participants to strive to have an “above-average” sheep business, using clients John and Jo Symons, Turkey Lane, Parndana, who implemented the TOP (Transform-Optimise-Propel) producer program and achieved 7.7pc ROA, as an example.

The TOP model encourages producers to take stock of their business and test and measure production.

The next step is re-organising their infrastructure and eventually fine-tuning their pastures and increasing scale.

“The majority of businesses lack a model so the owners push hard and are stressed and not finding flow in their life,” Mr Roberts said.

“Once they have a model and passion it can lead to profound results.”

Lynton Arney, Inverbrackie Border Leicester stud, Strathalbyn, says the forum reinforced the need to “back his judgement” and get in the right head space to make business decisions.

“To see so many people in the sheep industry says a lot about the positivity of the industry and great demand for information to help sheep businesses generate profit,” he said.

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