Turnover vanity profit sanity….what a load of tosh

[DrWazzock]

The government has just increased the vat threshold to £90k so they are expecting tradesmen with a van, a few tools, and a small accountants bill to be earning up to that, small farm profitability just doesn’t stack up the same, nice place to live or not. In the last 15 years my business has changed a lot, not because I particularly wanted it to but I saw it as the way forward(and I get bored easily and like new challenges).

So you got bigger and made more profit.
And…?

 

[SilliamWhale]

I really don’t envy those who have massively scaled up TBH. Headless chickens with huge expenses. Don’t know whether they make much.

They probably do. Bloke on twitter bought 4 new class combines t'otehr day

 

[DrWazzock]

The government has just increased the vat threshold to £90k so they are expecting tradesmen with a van, a few tools, and a small accountants bill to be earning up to that, small farm profitability just doesn’t stack up the same, nice place to live or not. In the last 15 years my business has changed a lot, not because I particularly wanted it to but I saw it as the way forward(and I get bored easily and like new challenges).

I noticed that. It worried me as I’m a big VAT reclaimer. I hardly pay any in.

 

[neilo]

So what sort of % profit on turnover is considered good? We make about 30%. £30k profit on £100k turnover on average.
We could do better but I admit I’ve wasted money on machinery. I’m trying to rectify that now by cutting machinery fleet to bare minimum. SFI will replace BPS and will continue to be half of the profit. I say average. This past year and coming year will be below average.
As said above by @teslacoils a small farm, however well run is now a nice place to live and a bit of pocket money. We’ve simply been outscaled on all fronts and left behind by the huge disparity between commodity price inflation (or lack of it) and cost of living but we are still in the game, part time. C’est la vie.

I would suggest that, in today’s economic climate, £30k profit from £100k turnover is pretty damned good.

That said, if I wasn’t paying a rent, my wife was putting an income in towards living expenses (rather than being paid a tax efficient wage from the farm as an employee), then we wouldn’t be a million miles off the same ratio.
I’m certainly not desperate to increase turnover, unless it resulted in an increase in profit for doing so.

 

[SilliamWhale]

There's always a queue at the drive throughs around here. There are folks who believe it's an "essential".

I think it's all about habits and feelgood factor for relatively little outlay.

 

[DrWazzock]

They probably do. Bloke on twitter bought 4 new class combines t'otehr day

Good for him. You could probably cut what’s left here after this wet winter with a scythe.

 

[Devil's advocate]

I remember 30 years ago a man with 120 free draining acres, I accept it was stony.

He sold it to rent 400 acres of deep light sand (prone to flooding & drought) to get economy of scale.

If he gave up his tenancy now, I doubt he could buy his original farm back.

Its all about earning a crust whilst the assests earn the real money.

 

[DrWazzock]

I would suggest that, in today’s economic climate, £30k profit from £100k turnover is pretty damned good.

That said, if I wasn’t paying a rent, my wife was putting an income into wards living expenses (rather than being paid a tax efficient wage from the farm as an employee), then we wouldn’t be a million miles off the same ratio.
I’m certainly not desperate to increase turnover, unless it resulted in an increase in profit for doing so.

I feel our farm is maximised on the agricultural front. We could shuffle things around but there’s no real potential for agricultural gain unless we intensified into a big chicken shed or something but they tell me margins can be slim for the outlay and risk.
As @B R C says though, our profit and indeed turnover has not kept up with cost of living. That’s the fundamental problem.

 

[DrWazzock]

But there’s no way to expand agriculturally as land and kit is too dear and if we sold we’d get a massive tax bill so we keep going part time as efficiently as we can. The farm is now just one income stream and a good capital asset. I can’t see owt wrong with that.

 

[DrWazzock]

I remember 30 years ago a man with 120 free draining acres, I accept it was stony.

He sold it to rent 400 acres of deep light sand (prone to flooding & drought) to get economy of scale.

If he gave up his tenancy now, I doubt he could buy his original farm back.

Its all about earning a crust whilst the assests earn the real money.

Quite a few did that here. Often sold to the Church Commissioners for a few hundred quid an ancre and rented it back.

 

[DrWazzock]

I think it's all about habits and feelgood factor for relatively little outlay.

It is. We could live very cheaply indeed but have all the excitement of the life of a worm.

 

[Devil's advocate]

My Grandad who was born on a one leg longer than the other small holding, said back in the early 70's. Those little 6 cow farms with a house, a stone barn & 15 acres will be worth more by the year 2000 than the working capital of a 400 acre rented farm.

Well providing the small holding owners had a job to pay the bills, Grandad was certainly right in 2024

Something like that now worth a million pounds, maybe much more, for weathy people who work at Manchester, Sheffield, Huddersfield even Barnsley.

 

[DrWazzock]

My Grandad who was born on a one leg longer than the other small holding, said back in the early 70's. Those little 6 cow farms with a house, a stone barn & 15 acres will be worth more by the year 2000 than the working capital of a 400 acre rented farm.

Well providing the small holding owners had a job to pay the bills, Grandad was certainly right in 2024

Something like that now worth a million pounds, maybe much more, for weathy people who work at Manchester, Sheffield, Huddersfield even Barnsley.

Aye. I remember the real smallholders here. Dressed in army surplus, smoking roll ups, a dozen sheep and a few pigs. A few hen houses, an old van bought and taxed a day before the MOT ran out (before DVLA got computers). They’d lie in bed at night looking at the stars through the holes in the roof if they weren’t out netting rabbits. They’d scythe the churchyard to feed their milk cow. They often called in for rolled cereals or barley meal and would run their sheep with ours for lambing. In return we’d get a cletch of bantam chicks or something they’d found in the nettlebeds. Happy days. Those places now worth £750 k for house and 5 acres. Range Rovers in the drive. Dead vans, nussen huts and Nettie beds, and smell of pipe smoke and pig sh!t long gone.

 

[Robt]

Heard this said plenty of times, but really if you have a small farm turning over a relatively small amount say £1-200k you are only ever going to be able to make so much money no matter how efficient you are or how well you sell your produce. The only way to increase profits is to increase revenue and that means turnover. Lots of moaning on here about cost of red tape and lack of government support and the expectation that we should be supported, I agree we should be recompensed for any environmental obligations. We have to accept that cheap food relative to the cost of everything else is important for the world’s people and governments. In order to survive, we need to increase revenue and profit. So what’s your plan?

Yes but why do you “have to produce from your farm” can you use the land to do something more profitable? Why do you have to produce food?

 

[Johnnyboxer]

Yes but why do you “have to produce from your farm” can you use the land to do something more profitable? Why do you have to produce food?

Very true
Farms can ‘produce’ all sorts of things …if one thinks outside the ‘farming box’

 

[Green oak]

Yes but why do you “have to produce from your farm” can you use the land to do something more profitable? Why do you have to produce food?

Because that’s what the grey haired farmers in my agricultural discussion group have always done.

 

[neilo]

It is. We could live very cheaply indeed but have all the excitement of the life of a worm.

Therein lies the problem. How do you want to live? As an adrenaline junkie or as a worm?
As long as you make enough to cover the lifestyle you desire, then what else matters?

 

[crashbox]

It's not the coffee, it's the experience. Ie it's something to do, somewhere to go, sugar rush etc.

Agreed, you're not paying much for the coffee, you are paying to occupy a space in a warm and valuable building!

 

[DrWazzock]

Personally I’d rather saw my own leg off than open the place up to the public by way of holiday let’s or that kind of thing. It would ruin it.

 

[Hilly]

id rather have 1m turnover and 300k profit

Would you turn over £137 a year to make £7 ?