Farm Business Planning

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Farm Business Planning MarketingDavid
MarrisonOSU Extension-Ashtabula County
Extension Educator Assistant Professor 39
Wall Street Jefferson, Ohio 44047440-576-9008ma
rrison.2_at_osu.edu
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So Where do I start?

• The biggest mistake entrepreneurs make is jumping
  into the lake without checking to see if there is
  water.
• Take the 5-P Approach.
• Prior Preparation Prevents a Pitiful
  Performance
• Plan and then plan some more.

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The Business Plan

• A document that presents a picture of the
  business, where the business is going, and how it
  will get there

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Developing a Business Plan

• A written plan may include
• Mission, Purpose, Objectives and Goals
• Enterprises, Facilities, Machinery
• Marketing Strategies, Risk Management
• Human Resources, Management Team
• Financing, Business Structure, Cash Flow Plan
• and an Executive Summary

Vague ideas are not enough
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Business Plan Basics-CDFS-1101

• Cover Letter
• Summary
• Business Objectives Goals
• Business Description
• Market Analysis Strategy
• Financial Information
• Management Organization
• Executive Summary

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Purposes for a Business Plan

• Communicate Your Business Externally
• To lenders, investors, partners
• Communicate Your Business Internally
• To family members employees
• Help Manager Think Through
• Where the business is at
• Where they want it to go

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Defining your Current PositionComplete a
Balance Sheet of Life

• The common rule is complete a balance sheet at
  the end of each year to gauge your financial
  situation.
• Are there other items besides finances that you
  should look at?

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Planning starts with you anda personal vision
that comes from. . .

• Your dreams
• Your values
• Your emotions
• Being honest with yourself

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Where am I?

• Why do I farm?
• What do I value?
• What are my strengths?
• What are my production operations management
  skills?
• What are my financial management skills?
• What are my general business management skills?
• What are my personal attitudes and decision
  skills?

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Where are we?

• Who is involved in the agribusiness?
• What is the familys philosophy on money, quality
  of life, and work hours?
• Who will be responsible for what areas of the
  business?
• What plans have been made for succession and
  transition activities?

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Three Essential Elements
Mission Why the farm business exists, based on
the values of the owner. Goals SMART
statements of what needs to be done en route to
an objective. Tactics Precise, individually
itemized plans for action. Who will do what,
how, when and where.
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Mission
Adapted from Equine Management Excel
A mission statement is a business plan written
on the head of a pin.
A Mission Statement is
The fundamental underlying reason for the
business to existits critical purpose.

• Meet family needs
• Financial
• Customer
• Employees
• Practical

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MISSION STATEMENT
Adapted from The Strategic Business Planning
Process in 4-H

• Reason for the existence of the business
• The one critical purpose
• Brief, concise and concrete
• Aligns what the business says it does, what it
  actually does and what others believe it is about
• Clarifies what the business is not trying to do
  and not trying to be
• Tool to establish broad, overall direction
• Communicated and remembered throughout the
  business.

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Mission Statement Examples
OSU Extension "To help people improve their lives
through an educational process using scientific
knowledge focused on identified issues and
needs".
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Mission Statement Examples
The Yoder Farm mission is to produce and market
high quality milk in sufficient quantity to
provide a good standard of living for our family.
The business should also be profitable enough to
provide above average compensation for employees
and long-term financial security for our family.
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Developing the Content of the Mission Statement
Adapted from Equine Management Excel

• Your mission statement may contain some, but not
  necessarily all, of this information
• What do you sell?
• Who or where is the target market?
• How does the customer benefit?
• How will your business fulfill your customers
  needs?
• Where do you conduct your business?
• When do you conduct your business?

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Developing the Content of the Mission Statement
(cont.)

• What are the family and business values you
  identified earlier?
• What is your philosophy about employees?
• How are your family members involved?
• What does or will your business do better than
  any of your competitors?

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MBC Farms

• Vision
• MBC Farms will be an agribusiness focused on the
  profitable, progressive, and sustainable
  production of premium quality identity-preserved
  grains, oilseeds, and dairy products. MBC Farms
  will be a respected, responsible neighbor and an
  asset to our community. We prefer a rural
  lifestyle and are willing to embrace change as a
  means to that end. MBC Farms provides the
  opportunity for our children and employees to
  participate in production agriculture either as
  owners and/or managers of the business.
• Mission
• MBC Farms is a producer of grains, oilseeds,
  specialty crops, and milk. Our mission is to be
  recognized by our business associates and
  competitors as one of the top producers in our
  area and to make sure that productivity
  translates into prosperity and growth for
  everyone involved with our farm.

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GOALS ARE SMART

• List five or more goals for your farm.
• Are they SMART?
• Specific, Measurable, Attainable, Rewarding,
  Timed

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TACTICS describe. . .

• Who
• What
• When
• Where
• HowActivities will take place to accomplish
  a goal.

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TACTICS are action oriented

• List some tactics on your farm.
• Are they specific about who, what, when, where
  how activities will take place?
• Do they support your goals and mission?

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An Exercise for You

• Spend some time thinking about the vision and
  mission of your farm.
• The exercises have a set of questions that will
  help frame your thinking.
• Remember, developing vision and mission
  statements are not immediate occurrences they
  take time, reflection and practice.

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Video Discussion Questions

• Minars started by discussing why they developed
  a business plan.
• What reasons do you have for developing a
  business plan?

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Video Discussion Questions

• Minars also discussed how developing their
  business plan took time.
• Why does development of a business plan take so
  much time?
• What can we do to reduce the time commitment?

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Video Discussion Questions

• Minars were asked what advice they have for
  other producers regarding writing a business
  plan.
• What did you learn based on their advice?

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Advisory Board Functions

• Fresh Ideas
• Sounding Board
• Technical Information
• Evaluation of Plans
• Suggest Improvements
• Motivate managers to address problems
• Mediate Differences

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Video Discussion Questions

• What did Minars say were the benefits of having
  written a business plan?
• What do you view as the benefits of writing your
  plan?

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Business Planning

• More writing and organization tips
• Dont include graphics without substance
• Always prepare an executive summary
• Communicate clearly

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Business Planning

• Additional writing/organization tips
• Dont use technical language or jargon
• Make sure presentation is professional
  presentation (typed, proofed)

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Business Planning

• Take-home ideas
• Talk to others, ask questions
• Study your markets
• Be honest with yourself when evaluating ideas
• Reject a strategy if it doesnt make money on
  paper
• Ask for feedback from family, team members
• Get started!

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Business Planning

• Lastly, remember that a business plan should be
  used
• Distribute copies to those involved in business
• Review plan periodically
• Monitor progress, meet with planning team
• Keep records
• Compare actual outcomes to projected outcomes
• Make changes to plan as needed

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Help in Developing a Business Plan

• Once source can be from Purdue as it offers a
  free on-line ag business plan development web
  site _at_
• https//www.agecon.purdue.edu/planner/

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Purdue Business Plan Software

• Fundamentals of your Business
• Analyzing your Market
• Producing your Product or Service
• Marketing your Product or Service
• Financial Analysis of your Business
• Executive Summary

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• Includes
• A standard format to help develop and store your
  business plan.
• Tips or questions to help you think through your
  plan.
• Sample business plans

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FINAN Year End Analysis Where Am I?
Balance Sheet Beginning
Balance Sheet Ending
Farm Records
Crop Livestock Budgets
FINLRB Long Range Planning Where Do I Want To Be?
FINFLO Cash Flow Planning How Do I Get There?
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Develop comprehensive business plans using
supporting FINPACK output. 95 for individual
Land rental analysis with breakeven cash rent and
returns from share rental. 95 for individual
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Where to Find FINPACK ?

• The Center for Farm Financial Management at the
  University of Minnesota developed and markets
  these programs. Check their Web Site
• www.cffm.umn.edu

• At your County Extension Office - See your local
  Agriculture Natural Resources Agent for an
  analysis of your farm business or for a
  demonstration of the power of FINPACK

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Summary

• There are opportunities in direct marketing
  agricultural products.
• Plan, plan, plan
• Be a student of the game.
• Develop your plan and then execute it.

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More information

• OSU Extension
• Ashtabula (440-576-9008)
• Geauga County (440-834-4656)
• Lake County (440-350-2582)
• Portage County (330-296-6432)
• Trumbull County (330-638-6783)