Business Plans to Guide, Lead and Follow

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Business Plansto Guide, Lead and Follow
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• Heather Gessner
• McCook County Extension Educator
• Mark Major
• Jerauld County Extension Educator
• South Dakota State University
• Cooperative Extension Service

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What is a Business Plan

• It is an ongoing process that begins with the
  identification of values and ends with strategic
  planning to address critical management functions

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• Business planning is a critical component to any
  operation. Even though a seat of the pants
  approach to farming might work, it takes to long
  to figure out if a decision is a poor one you
  can waste years doing the wrong thing when you
  could have done the right thing.
• ---Greg Reynolds, Riverbend Farms

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Who should take the time?

• Beginning/Starting Farmers
• Families farming with older children or that want
  to bring children back to the operation
• Marketing Groups
• New/Value-Added Product
• Lender/Investor information
• Holistic

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If you are planning on

• Changing management practices
• Expanding the operation
• Incorporating more family members or business
  partners
• Transferring or selling the business
• Adding a value added component
• Adding a new business venture

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Who puts this thing together?

• YOU DO
• Anyone with a vested interest in the operation
  should be invited to add their input

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• Family members
• Employees
• Partners
• Renters
• Other producers
• Landlords

Customers Resource organizations Input
dealers Lenders Community members Technical
experts
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Building A Sustainable Business

• A Guide to Developing A Business Plan For Farms
  and Rural Business
• Minnesota Institute for Sustainable Agriculture

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Parts To A Business Plan

• Cover
• Executive Summary
• Table of Contents
• Business Background (History and Business Mission
• Current Situation)
• Vision and Goals
• Key Planning Assumptions
• Marketing Strategy
• Operations Strategy
• Management and Human Resources Strategy
• Financial Strategy
• Projected Income Statement and Cash Flow
• Appendices (Relevant support info. market
  research, resumes, brochures, letters of
  recommendation, tax returns etc.)

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The Three Questions

• Where did I come from?
• What is my current situation?
• Where do I want to go?

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Business Plan Guides the BusinessThrough Its
Life Cycle
START/BEGIN
GROWTH
CONSOLIDATE
TRANSFER/SELL
Financial Management in Agriculture, 7th ed.,
Barry et al., 2002
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Through all those stages business owners need to
keep in mind the BIG 4 Management Areas

• Marketing
• Operations
• Human Resources
• Finance

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Where Do We Start?

• Identify Values
• What is important to you?
• These are not goals.
• Identify the values that bring everyone together.
• Personal values need to be combined with the
  values of the whole team.

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Personal Values
EXAMPLE THOUGHT PROCESS

• Because our health is directly tied to the
  health of the environment, we strive to produce
  healthy dairy and meat products by utilizing
  sustainable methods in their production
• ----Cedar Summit Farms

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• Review History and Take Stock of Your Current
  Situation
• What is my current situation?
• Document your business history and take stock of
  your current situation.
• Relay as accurately as possible these facts.

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Current Status

• Current market assessment
• Working assets
• Crop/Livestock production systems
• Human resources
• Family situations
• Financial documentation
• Risk Management

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SWOT Analysis

• Analysis of your operations
• Strengths
• Weaknesses
• Opportunities
• Threats

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• Clarify Your Vision
• Where do you want to go?
• What are your goals?
• Clarify a future vision for the business and
  develop goals and a mission statement that
  reflect the values you have identified.

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Where do you want to go?

• Expanding
• Exiting
• Ownership change
• Production changes
• Vertical integration
• Business Mission Statement

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• Strategic Planning and Evaluation
• What routes can you take to get where you want to
  go
• Development and evaluation of strategic
  marketing, operations, human resources and
  financing alternatives is the largest and maybe
  the hardest part of the plan.

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Strategic Planning Evaluation

• Value added products
• Inventory management
• Marketing plans/Risk Management
• Production systems
• Permits, Policies, Regulations
• Resource allocation/Human resources
• Executive Summary

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Executive Summary

• Most important part of the Business Plan
• Typically includes
• Identity
• Location
• History
• Ownership
• Industry and competition
• Product
• Marketing
• Human Resources
• Finances

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• Present, Implement and Monitor Your Business Plan
• Which route will you take and how will you check
  your progress along the way
• Pull everything together into a formal, written
  plan that can be used as an in-house tool, to
  obtain credit, help everyone remember where you
  want to go.

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Implementation

• How are you going to create this beast?
• Outline
• Implementation to-do list
• Monitoring list
• Tasks and Workload breakdown

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Tying it all together

• Look at where youve been
• Decide where you are
• Figure out where you want to go
• Compile facts, figures, and resources
• Implement and monitor progress

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USE IT!!

• The biggest part of this process is to use the
  Business Plan
• Make it available
• Revise it as needed
• Reevaluate your goals and checkpoints
• Dont use it as a bookend!

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Thank you
Questions?