Business Plans
to Guide, Lead and Follow
Heather Gessner
McCook County Extension Educator
Mark Major
Jerauld County Extension Educator
South Dakota State University
Cooperative Extension Service
What is a Business Plan
• It is an ongoing process that begins with
the identification of values and ends
with strategic planning to address
critical management functions
• “Business planning is a critical
component to any operation. Even
though a ‘seat of the pants’ approach to
farming might work, it takes to long to
figure out if a decision is a poor one;
you can waste years doing the wrong
thing when you could have done the
right thing.”
---Greg Reynolds, Riverbend Farms
Who should take the time?
• Beginning/Starting Farmers
• Families farming with older children or
that want to bring children back to the
operation
• Marketing Groups
• New/Value-Added Product
• Lender/Investor information
• Holistic
If you are planning on:
• Changing management practices
• Expanding the operation
• Incorporating more family members or
business partners
• Transferring or selling the business
• Adding a value added component
• Adding a new business venture
Who puts this thing
together?
• YOU DO
– Anyone with a vested interest in the
operation should be invited to add their
input
Family members
Employees
Partners
Renters
Other producers
Landlords
Customers
Resource
organizations
Input dealers
Lenders
Community members
Technical experts
Building A Sustainable
Business
A Guide to Developing A
Business Plan For Farms and
Rural Business
Minnesota Institute for Sustainable
Agriculture
Parts To A Business Plan
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Cover
Executive Summary
Table of Contents
Business Background (History and Business Mission
Current Situation)
Vision and Goals
Key Planning Assumptions
Marketing Strategy
Operations Strategy
Management and Human Resources Strategy
Financial Strategy
Projected Income Statement and Cash Flow
Appendices (Relevant support info.: market research,
resumes, brochures, letters of recommendation, tax
returns etc.)
The Three Questions
• Where did I come from?
• What is my current situation?
• Where do I want to go?
Business Plan Guides the Business
Through Its Life Cycle
START/BEGIN
GROWTH
CONSOLIDATE
TRANSFER/SELL
Financial Management in Agriculture, 7th ed., Barry et al., 2002
Through all those stages business
owners need to keep in mind the
“BIG 4” Management Areas
Marketing
Operations
Human Resources
Finance
Where Do We Start?
1. Identify Values
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What is important to you?
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These are not goals.
Identify the values that bring everyone together.
Personal values need to be combined with the
values of the whole team.
Personal Values
“Because our health is directly tied to the health
of the environment, we strive to produce
healthy dairy and meat products by utilizing
sustainable methods in their production…”
----Cedar Summit Farms
2. Review History and Take Stock of Your
Current Situation
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What is my current situation?
Document your business history and take stock
of your current situation.
Relay as accurately as possible these facts.
Current Status
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Current market assessment
Working assets
Crop/Livestock production systems
Human resources
Family situations
Financial documentation
Risk Management
SWOT Analysis
Analysis of your operations:
• Strengths
• Weaknesses
• Opportunities
• Threats
3. Clarify Your Vision
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Where do you want to go?
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What are your goals?
Clarify a future vision for the business and
develop goals and a mission statement that
reflect the values you have identified.
Where do you want to go?
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Expanding
Exiting
Ownership change
Production changes
Vertical integration
• Business Mission Statement
4. Strategic Planning and Evaluation
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What routes can you take to get where you
want to go
Development and evaluation of strategic
marketing, operations, human resources and
financing alternatives is the largest and
maybe the hardest part of the plan.
Strategic Planning &
Evaluation
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Value added products
Inventory management
Marketing plans/Risk Management
Production systems
Permits, Policies, & Regulations
Resource allocation/Human
resources
• Executive Summary
Executive Summary
• Most important part of the Business Plan
• Typically includes
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Identity
Location
History
Ownership
Industry and competition
Product
Marketing
Human Resources
Finances
5. Present, Implement and Monitor Your
Business Plan
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Which route will you take and how will you check
your progress along the way
Pull everything together into a formal, written plan
that can be used as an in-house tool, to obtain
credit, help everyone remember where you want
to go.
Implementation
How are you going to create this beast?
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Outline
Implementation to-do list
Monitoring list
Tasks and Workload breakdown
Tying it all together
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Look at where you’ve been
Decide where you are
Figure out where you want to go
Compile facts, figures, and resources
Implement and monitor progress
USE IT!!
• The biggest part of this process is to
use the Business Plan
• Make it available
• Revise it as needed
• Reevaluate your goals and checkpoints
• Don’t use it as a bookend!