Using the “PWIM” approach to ‘Holistic Financial Planning’

The principles
An essential element of Holistic Financial Planning (HFP) is its focus on producing not only a Profit, but what we called a “True Profit”.  True Profit is a crucially important concept for farmers: it is a cash surplus PLUS an increase in the biological health and wealth of the land from which the cash was derived.

The reason for using this process
Because the full HFP process sometimes takes a while to complete, especially if things are not straight-forward for any reason, it may help to quickly get an idea of your situation.  This process does not replace the need for full holistic financial planning!

The method of outlined here sticks to the clear principles contained in the full HFP process, but lacks all of the detail within the full planning process.  Importantly, it is still driven by the PWIM process.  This is a description of the process.

The process
There are five elements to a quick HFP.  They are:
  1. Determine the turnover of the business by calculating the income from each enterprise or source.
  2. P – Set the level of Profit or cash surplus you want to retain.
  3. W – Determine the amount of money you need to allocate to address the Weak Link of the business during the planning period.  The effect of this expenditure is to grow the business, by bringing new wealth into the business.
  4. I - Allocate the necessary funds to meet the Inescapable expenses that are scheduled to occur during the planning period.
  5. M – Allocate the funds required to Maintain the business at its current level for the planning period.  The M expenses include the variable costs of producing the income, and all of the overheads of the business, such as phone, electricity, wages, drawings, and so on.
Go to Brown 6.1 to watch the PWIM Video and a worked example of the process.

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