Tool 1.13 A partial budget template
Partial budget tool is used to analyse the financial impact of one change in your business by quantifying the pros and cons. It is important to remember it only considers the impact of that change and doesn’t consider the impact on your whole operation.
To undertake a partial budget, gather the details of what might be involved in the change you’re considering. You will need to gather information on:
- What new costs occur;
- What costs no longer occur;
- What income is sacrificed/foregone; and
- What new income is derived.
Examples of livestock projects that would be suited to a partial budget process:
- Water telemetry systems
- Scanning and managing for multiples
- Removing gates and installing grids
- Improving pastures
- Growing your own hay for fodder
- Changing enterprise size
- Changing time of shearing
- Changing time of lambing
- Purchasing machinery
Download the partial budget template below.
Agrista_Partial-budget-tool.xlsm
** Interpret this figure carefully as it is based on the marginal change in capital. This is used for comparing among the change scenarios only, not with the ‘current situation’.
The return on investment in the above example does not account for the cost of capital used. For instance, if you took out a $200,000 loan to cover the costs of the new scenario, this process would not account for (assuming an interest rate of 7%) at least $14,000 in interest costs. You can easily account for this by estimating the amount of interest you’ll pay over the anticipated repayment period if you need to take a loan to invest in the change.
For more information and to download the partial budget template, visit https://youngfarmer.farmtable.com.au/toolkit/production-resources-toolkit/#understanding-a-partial-budget
