Operations Planning
The Operations Plan describes the
production management system.
It describes what you produce and how
you produce it.
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Operations Planning
This section should be one of the easier
sections for a producer to develop.
But planning is easy, implementation is
the hard part.
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Operations Planning
Operations/production management is one
of the most important aspects of running
a farm business.
Production level or yield is the single most
important factor determining the cost of
production.
Copyright © 2003 Center for Farm Financial Management, University of Minnesota
Operations Planning
There is rarely one area where significant
cost reductions can be attained.
The key to more profitable businesses is
managing many costs two to five percent
more efficiently than their competitors.
Copyright © 2003 Center for Farm Financial Management, University of Minnesota
Operations Planning
In the operations section of a business
plan, the business manager needs to
adequately communicate that the business
has a sound production management
strategy.
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Operations Planning
What are the critical operational
procedures that make will make the
business successful?
The operations plan should document the
critical operational functions that are
critical for success.
Copyright © 2003 Center for Farm Financial Management, University of Minnesota
Operations Planning
Do you know the critical operational
functions that will determine your
business’s success?
It is the critical function that you don’t
identify that can kill your business.
Copyright © 2003 Center for Farm Financial Management, University of Minnesota
Operations Planning
When starting a new enterprise, visit
similar business’s to identify critical
operational factors.
This is particularly important if you are
starting a new or creative niche operation.
Copyright © 2003 Center for Farm Financial Management, University of Minnesota
Operations Planning
To communicate the Operations plan, this
section should discuss:
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The products produced
The production system
Quantity produced
Production schedule
Copyright © 2003 Center for Farm Financial Management, University of Minnesota
Operations Planning
Operations should discuss:
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Resources available and needed
Permits and regulations
Risk management plan
Environmental issues
Quality control systems
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Operations Planning
The operations section should also help
the business manager think through and
identify production functions that can be
improved.
Copyright © 2003 Center for Farm Financial Management, University of Minnesota
Operations Plan
Marketing and operations are closely
related.
Which plan should you develop first?
Copyright © 2003 Center for Farm Financial Management, University of Minnesota
Operations Plan
You may want to ask:
• Should I determine my marketing
opportunities and produce to meet the
marketing plan?
• Or should I determine my competitive
production capacity and develop markets for
my products?
Copyright © 2003 Center for Farm Financial Management, University of Minnesota
Operations Plan
Traditionally agricultural producers focused
on products they had a competitive
advantage producing.
Today there is a growing focus on
determining marketing opportunities and
producing to meet demand.
Copyright © 2003 Center for Farm Financial Management, University of Minnesota
Operations Plan
Your approach may depend on whether
you are focused on:
• Producing a commodity – competitive
production advantage focus
• Producing a niche product – market demand
focus
Copyright © 2003 Center for Farm Financial Management, University of Minnesota
Operations Planning
The production plan may also address
how the business will:
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Produce value-added products
Specialize on a product or a few products
Diversify the product line
Transition to a new or niche products
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Resources
Guide worksheets
• Risk management – worksheet 4.24
Copyright © 2003 Center for Farm Financial Management, University of Minnesota
Resources
FINPACK Business Plan software
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Crop system
Livestock system
Other enterprises
Risk management plan
Environmental considerations
Quality control systems
Copyright © 2003 Center for Farm Financial Management, University of Minnesota