Farming without a business plan is like hauling products from coast to coast without a road map.
A written business plan describes:
- the business's past,
- its future, and
- the timetable to fulfill the plan's goals and objectives.
The plan helps the manager head the farm business in the right direction and guides the business through difficulties.
A farm business plan can be prepared by using different outlines. Some of the major components include
- Executive summary
- Company overview (vision, missions, guiding principles)
- Analysis of economics (farm, domestic, international)
- Marketing commodities (goals, commodity mix, promotion, strategies)
- Plan implementation (organizational structure, operations, risk management)
- Control (financial and production records)
- Financial forecasts (net farm income, cash flow, balance sheet, net present value [NPV])
If done correctly, preparing the plan will take time-no pain, no gain. During the business planning process, producers often revise decisions, questioning them and becoming more willing to make changes that determine the business's future. A properly prepared plan reduces the probability of misunderstandings about the business's future. Potential conflicts between personal, family, and business goals are minimized. People often incorporate their values and morals in the farm plan.
The farm business should exist to support the family. Sometimes farm families work so hard for the farm business they lose sight of the family. Preparing a farm business plan can help you identify family and business issues, set priorities, and construct a timetable to reach them.
You don't have to have a business plan to survive. But you better have a huge net worth and be lucky if you don't. Managing your farm business in 2000 and beyond will become more complex. Planning and implementing your strategies will become increasingly important. To be successful in your farm business, you must devote appropriate time to administration, and that includes business planning.
Do you know where your farm business is headed? Will you be the first to know when you have arrived? Creating a farm business plan will help you understand the past and future of your business.