By Betty Berning
There is always a lot to do and it is easy to wonder where time goes. In the midst of milking cows and making hay, management activities, like working on a transition plan for the farm or writing up an animal welfare policy, are frequently set aside. That is why it is so important to MAKE time on a regular basis (ideally weekly) to work on these strategic activities. Just like an exercise program, if you don’t make time for these items, activities that are more urgent will consume your time. It takes discipline to commit to a regular time to work on management activities.
Management of your business is important. By carving out time to regularly work on your business’ strategy and goals, you set the course for your farm and can proactively respond to changes. This can help your farm to survive in the future.
One management task I suggest beginning with is a business plan. Does your farm have a business plan? I recommend that every farm have a business plan, especially those that are new, expanding, or making major changes.
A business plan is simply a statement of business goals and a roadmap to how those goals will be achieved. Think of it as a blueprint for your farm. It sets the direction of where your business is headed in the future.
By creating this plan, you can effectively communicate what your farm is about to others. Do you farm with other family members? A business plan can help all of you discuss and align on goals for your farm. Do you work with a lender? You farm’s plan can be shared with your lender to help him/her understand your farm’s vision and goals.
There are several sections to a business plan: executive summary, business description, production management, personnel management, marketing management and financial management. It takes time to write your first plan. After you have a plan in place, though, it becomes a living document that you can use. If you want to make changes to it, it is easy to update. Because it’s an important piece of YOUR farm’s business, I strongly suggest that you (or your leadership team) write this document. You know your business best and can best describe its goals. A brief synopsis of each section follows:
- Executive Summary: I like to think of this as the bow on a present. It wraps everything up and presents it in an easy to understand format. Often times this may be the only section that is read. It is here that you’ll want to summarize your business and its goals.
- Business description: This is a great place to start. Many people find this to be the easiest section to write because you simply write about your farm. For example, you may write about the size of your farm, where it’s located, what you produce, your ownership, or your history. Think about what you’d want someone to know about your farm as you write this section.
- Production management: Some people call this operations management. This is the nuts and bolts of how you run your farm! In this section, you describe what you produce and how you produce it.
- Personnel management: Here you describe the organizational structure of your farm. You may be laughing, thinking, it’s just me! That’s okay. This section will be short for you, but it’s good to write that you are the sole proprietor and list any help that you have. If you have a profitability team or advisory committee, include them, too. For larger farms, list your employees. Describe the different jobs on the farm and each person’s responsibilities.
- Marketing management: This section can be about how you sell your grain or milk, or if you sell products directly off your farm, it might be your plan for how you effectively sell these products. For most dairy farms, this is the place to write about whom you sell your milk to and your selling strategy. You can also include an analysis of market trends or describe a competitive advantage (e.g. being organic or grass-fed) that your dairy may possess.
- Financial management: If you are creating your plan because you’d like to request a loan from your lender, this is the section for you. Here you’ll want to include financial history, financial projections, financial statements, and your capital request. It may also be helpful to include benchmarks against other dairies that are similar to yours. It is here that you can illustrate if your farm can financially handle an expansion or change.
All of this may seem overwhelming. There is a great tool available from the Center for Farm Financial Management at University of Minnesota called AgPlan (agplan.umn.edu). This tool will help you create your own business plan for your farm. There are tutorials and resources available that provide in-depth detail on each of these sections. It can help you determine what you want to include in your plan! It also allows you to share your plan with others, so that you can edit it between family members and business partners.
By completing a business plan, you begin to shape your farm’s strategy. This exercise will help you identify where to spend your management activity time. Take time every week to work on becoming a better manager. With discipline, you will find the time to do this and your farm will benefit!