Size matters in growth decision

BUSINESSES THAT know their costs and have maximised efficiency should do a large herd expansion in just one year, says SAC business consultant Jimmy Goldie.

 “You don”t begin to pay back capital spend until you fill the bulk tank, so get the cows and start the income stream immediately,” he explains.

“But make sure you have done the sums, have a good business plan in mind and the finance in place before expanding. It”s also essential to involve the bank manager and milk buyer – they shouldn”t be the last to know,” he warns.

 “And watch that herd performance doesn”t suffer over the year while concentrating on the expansion.”

However, herd expansion in small steps is less risky and allows each stage to be assessed along the way, believes The Dairy Group”s Nick Holt-Martyn.

“There is always something which stops progress, whether it”s the parlour or housing, so the aim is to address it then move on. But an overall vision of what needs to be achieved and a realistic timespan is still necessary,” he says.

“Large expansion is stressful mentally, financially and physically. Tackling things bit by bit minimises the impact on the business and continually improves, rather than overstretches it.”