Holistic Management Handbook, Third Edition

Regenerating Your Land and Growing Your Profits

Jody Butterfield,Sam Bingham,Allan Savory

• Publisher: Island Press
• Year: 2019
• ISBN:
  9781610919777
• Topic: Biological Sciences
• Subtopic: Science General
• Index: Biological Sciences

Holistic management is a systems-thinking approach developed by biologist Allan Savory to restore the world's grassland soils and minimize the damaging effects of climate change and desertification on humans and the natural world. This third edition of Holistic Management Handbook: Regenerating Your Land and Growing Your Profits is the long-awaited companion volume to the classic text Holistic Management, Third Edition. Crafted under the direction of Savory's longtime collaborator Jody Butterfield, this handbook is the key to developing a comprehensive holistic land plan based on Savory's principles that will help you to restore health to your land and ensure a stable, sustainable livelihood from its bounty.This new edition, thoroughly revised, updated, and streamlined, explains the planning procedures described in Holistic Management, and offers step-by-step instructions for running a ranch or farm using a holistic management approach. Butterfield and her coauthors describe how to use the handbook in conjunction with the textbook to tailor a management plan for your unique combination of land, livestock, and finances. Their mantra is "plan, monitor, control, and replan." Using a four-part approach, the authors walk readers through basic concepts and techniques, help them put a plan onto paper, monitor the results, and adjust the details as needed. Appendixes provide updated worksheets, checklists, planning and monitoring forms, and detailed examples of typical scenarios a user might encounter. The handbook includes a comprehensive glossary of terms.Ranchers, farmers, pastoralists, social entrepreneurs, government agencies, and NGOs working to address global environmental degradation will find this comprehensive handbook an indispensable guide to putting the holistic management concept into action with tangible results they can take to the bank.

PART 1

HOLISTIC FINANCIAL PLANNING

PART 1

HOLISTIC FINANCIAL PLANNING

Generating Lasting Wealth

THIS BOOK DOES NOT BEGIN WITH LAND PLANNING, stock density, paddocks, and grazing periods. It begins with financial planning, because money is the ruler. For better or worse it is the ruler even though your holistic context goes far beyond profit. In fact, both the materialist who finds the breath of life in crisp new bills and the poet who would rather live without them might find more peace of mind and freedom of spirit by accepting the notion that money is nothing but a tool. It is certainly not fulfillment and not necessarily even wealth, broadly speaking.

Holistic thinking would be infinitely harder without the benefit of a tool like money by which to measure progress, though of course money is certainly not the only measurement. By definition holism deals with “wholes” in which many elements affect each other simultaneously, but the human brain can’t handle everything at once. Since your wallet probably can’t either, Holistic Financial Planning is the process through which you will reduce the grand notion of holism to the practical matter of what you do first and how much of it you do, so the whole will come out right.

That said, Holistic Financial Planning does not result in a business plan, but ideally should operate within one that includes multiple-year goals and strategies, performance milestones, and so on. Holistic Financial Planning will result in an annual statement of your income and expenses, which includes a budget and cash flow that you plan forward with an understanding of holistic decision making and key environmental insights. It will be accompanied by a statement of your beginning and ending net worth (similar to, or the same as, a balance sheet). It is not linked to an accounting system, nor monitored and controlled by your accountant. You are in charge of managing and monitoring the plan you create. However, the more you can match the account names used in your accounting system to the income and expense categories in your financial plan, the easier it will be to operate and manage the financial plan.

Two key principles in Holistic Financial Planning differentiate it from other methods:

• Plan profit before planning expenses. Just as work expands to fill the time available, so expenses often rise to the level of anticipated income. So, when creating the plan, we plan the profit first to overcome this tendency.
• Check for context alignment. Which actions are actually moving you closer to your goals? The context checks make sure you prioritize those actions that do move you in that direction while ensuring you achieve a healthy triple bottom line (financial, environmental, social).

The planning process includes two parts. The first is devoted to reviewing the current year’s plan, gathering information and figures for the new plan, and running decisions through the context checks. All the thinking, decision checking, and sorting of the information you compile then comes into play in the second part when you put your plan on a spreadsheet. If you’ve done the first part well and researched the costs involved in the ideas you want to implement, you probably won’t need more than a day or two to put your plan on paper.

Mastering the Basics

HOLISTIC FINANCIAL PLANNING is the single most important activity you can undertake each year to ensure that all the money you earn and spend is in line with your holistic context. If you seek prosperity and financial security, few activities during the year count more than this planning. It takes precedence over vacations, interruptions, and excuses of any kind.

Your Holistic Context: Aligning Your Financial Decisions

Your holistic context ties what you value most in life to your life support system. It starts with an expression of how you want your life to be in the whole you are managing and then describes the environment and behaviors that will sustain that quality of life for future generations. Keep it in mind at all times as you proceed through the Holistic Financial Planning process. Ambiguity about your holistic context may not result in an unworkable plan, but it could very well generate a plan you will not want to work (and may even sabotage subconsciously).

As money is merely a measurement, so profit is a means of fulfilling the desires expressed in your quality of life statement. A close family, the creation or preservation of good land, public service, church work, the education of your children, loyalty to relatives, and many other desires and duties all put demands on profit. If you do not have these things in mind when you plan your commitment of money and labor, you will make a plan that you will inevitably scrap the minute these other aspects of your holistic context demand it. Clarity in your holistic context will enable you to avoid temptations and opportunities of tremendous promise that nevertheless lead in the wrong direction for you.

The planning procedure, covered later on in “Creating Your Plan,” will help you organize a huge amount of complex information about operations that go on simultaneously, but you still have to go one step at a time and put one thing ahead of another. Clarity in your holistic context and a deep ownership in it make that possible.

The Context Checks: Reducing Decision-Making Stress

At this point, reread Holistic Management: A Commonsense Revolution to Restore Our Environment, third edition, chapters 24 through 31 on the context checks: Cause and Effect, Weak Link, Marginal Reaction, Gross Profit Analysis, Energy/Money Source and Use, Sustainability, and Gut Feel. A brief summary also appears at the end of this book in appendix 1. In Holistic Financial Planning, all your policies and projects must come up for review through these checks as you allocate resources. You may start with a hundred different ideas, but before you actually plan action on any of them, you have to evaluate their soundness and set priorities. What enterprises, what investments in land improvements, what training for your staff, and so forth, will you try to carry out this year with the resources you have? Use the context checks when you do this. They will cut a significant amount of the confusion out of this task.

SIDEBAR 1-1

A Word about Profitability

In conventional planning, managers first plan production—crops, meat, timber, hunting leases, and so on. Then they calculate the anticipated income for the year, then the expenses, and finally cut and paste until they see a positive balance. This tends to make profitability the ultimate test, for which all other considerations are compromised.

Holistic Financial Planning proceeds in a rather different way. Profit is planned before any expenses, and it ranks alongside other elements that will sustain your definition of a good quality of life, which probably includes prosperity or economic security. The context checks include a “gross profit analysis,” which is designed to highlight how much each enterprise contributes to covering fixed costs, or overhead. This ensures that a plan will indeed produce profit. The other checks then help ensure that the actions you take to create that profit are socially, environmentally, and economically sound—simultaneously—both short and long term.

Remember, when checking any action or decision to be clear about what it is you are checking. Don’t rush to check a decision before you have clarified what your objective is—to reduce weeds in a pasture, buy a tractor, or whatever—and discussed all the aspects you normally would: what you know or need to know about the proposed action in terms of past experience, research results, a friend’s advice, expert opinion, or what it will cost. Only then should you run through the context checks to make sure that in achieving your objective you remain aligned with your holistic context.

Speed is essential to the checking process, or you risk losing sight of the whole. However, two checks, cause and effect and gross profit analysis, require a lot of thought and, in the latter case, calculations using pencil and paper. Do them first if you are dealing with a problem (cause and effect) or assessing a possible new enterprise (gross profit analysis). Then pass quickly through all the other checks that apply. You may need to return to both these checks. The cause and effect check may require additional probing to find the underlying cause of a problem. If the potential new enterprise passes the other checks, a more detailed gross profit analysis will be needed.

As neat as the context checks appear in theory, they overlap a good deal, and for good reason: what you might miss in one you pick up in another. Sometimes it proves impossible to figure out where one or another applies, but of the seven checks, a few will almost always prove critical in a given case. Some, such as sustainability, almost always apply. Don’t agonize over ambiguity in regard to any one check. They all function together like the elements in one of those filters that purifies water through a series of screens, flotations, and catalysts, each of which eliminates one class of contaminants while ignoring the rest.

It is important to remember why you are doing what you are doing, so let’s recap. You are attempting to make decisions that are economically, socially, and environmentally sound and aligned with your holistic context. The checking questions help you do that. They come into play in Holistic Financial Planning because in deciding where to allocate money, you are actually making most of the major decisions for the year.

Holistic Management covers cause and effect, sustainability, and gut feel well enough to warrant no further practical advice here. The same goes for weak links in the social and biological contexts. The other checks, however, require some translation into dollars and cents. Let’s take them one by one.

Financial Weak Link: Generating Wealth

The financial weak link check has profound implications for deciding the fundamental question of planning: “How do I maximize the income I can generate?” The place to focus is on the weakest link in each enterprise. At any given moment there is only one weakest link, and you must deal with it before considering any other link.

You are trying to build a business and an environment (future resource base) that will endure, so you and following generations can sustain a profit. To do that, you want to ensure every year that your major investments of money and labor keep strengthening the weak link in the chain of production that exists at any point in time for each of the enterprises you engage in. Once you have identified the year’s weak link in each enterprise, you look at all the actions you could take that would strengthen that particular weak link as soon as possible. When allocating money for expenses, those actions that address the weak link in an enterprise will receive priority, assuming that other checks have been passed and the action is in line with your holistic context. Expenditures that...