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Why Does My Family Farm Need a Business Plan?

Category: Operations, Farm Business Planning | No Comments

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What’s your vision for your farm’s future?

What kind of leader are you? Henry Kissinger defined leadership as “the ability to take people from where they are to where they have never been.” Are you moving your team forward toward a defined common goal? If that is not happening as efficiently as you would like, you may need to create and gain buy-in for a plan for your business.

A written business plan can help businesses of all sizes and complexities in three ways:

  • Provide a comprehensive assessment of your business as it exists today
  • Serve as a tool to communicate about your business to others, such as
    • Bankers/lenders/investors
    • Landowners
    • Key employees
    • Family members
  • Define your objectives and the specific steps you will take to accomplish them, used internally as a management tool and externally as a communication tool

From the outset, acknowledge that your business plan is a fluid document, designed to change with economic events, organizational changes, and the evolution of your vision and strategic planning.

 

Drafting Your Farm Business Plan

Your business plan will include five major parts:

  • A brief description of the business as it exists today
  • Detailed plans for specific areas of the business
  • Your objectives for the future direction of your business, focusing on the next two to three years
  • Financial support data
  • Documentation and additional data that provide evidence supporting the plan

When using your business plan as a communication tool, it’s important to select sections that provide information that’s relevant to the specific audience and support your purpose for sharing the plan. For example, a lender is looking for specific financial information, while a landowner will be more concerned with your farming methods, conservation efforts, and landowner communication practices.

 

Where do you want to go, and how will you get there?

Include your vision and mission statements in your plan. If you have never defined your vision and mission, this will be the time to think through where you want your business to go (vision) and how you intend to get there (mission). Make these statements short, powerful, and memorable. Also take the time to define the core values of your business in this document. The 1–2-page executive summary should be a thorough brief giving the highlights of your plan; this may be the only part of your business plan document some audiences will read.

The business plan should include sections detailing your farm’s ownership, history, personnel, profit centers, marketing plan, growth objectives, financial position, and objectives for the next few years. Organize your business objectives by importance, and specify for each a timeline for completion, the main person responsible for reaching it, and methods of measuring success.

 

Get internal buy-in.

Owners and key managers should be involved in the writing of your business plan as well as a regular review and update process. This will make everyone aware of your business’ big picture and objectives and help ensure that you are all pulling in the same direction.

 

Make sure your business plan is clear and thorough, and revise it regularly.

Communication is vitally important to the smooth running of your business and its ongoing success. The business plan is an efficient tool for communicating with those working in your business and with many other audiences. For many, your business plan will be the first introduction to you and your operation, so be sure it is well written, complete, and up to date.

The experts at FamilyFarms Group are here to assist our members with all aspects of farm management, including business plan creation and revision. Learn more about who we are and how we can help.

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