Financial Planning for Small
Businesses
Paul Ellinger
pellinge@uiuc.edu
University of Illinois
April 1, 2008
2008 National Women in Agriculture
Educators Conference
Outline
 Background: Illinois Farm Beginnings
 Overview of FAST Tools
 Business Plan: Economics of the business
 FAST Tool: New Company Simulator
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Illinois Farm Beginnings
 Farmer Training Program initiated in Minnesota
 Illinois Farm Beginnings is facilitated by
 University of Illinois (Leslie Cooperband),
 University of Illinois Extension (Deborah CavanaughGrant)
Two non-profit organizations
 The Land Connection—Congerville, IL,
 Angelic Organics CSA Learning Center—Caledonia, IL
 http://illinoisfarmbeginnings.org/
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Illinois Farm Beginnings
 10 sessions in the winter focusing on
planning for profit
 Hands-on Field Days: April to October
 Mentoring from existing farmers
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Sessions
Session 1 Clarifying values; Setting personal and Strategic Business Goals
Session 2 Building Your Business Plan
Session 3 Whole Farm Business Strategy: Tools and Techniques
Session 4 Financial Planning 101: The Fundamentals
Session 5 Financial Planning 201: Planning for Profit
Session 6 Marketing 101: The Fundamentals
Session 7 Marketing 201: Realities from the Field
Session 8 Connecting with Financial Resources and Farm Business Plan
Presentations
Session 9 Connecting with Conservation Resources and Farm Business
Plan Presentations
Session 10 Mentor/Mentee Meeting
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Session Outline
 Understanding the economics of your business
 Identify the major revenue sources of the business
 Develop a method to determine the costs of producing/preparing
for sale each item
 Variable costs vs fixed costs
 Distinguish your one-time costs from ongoing costs
 Identify vulnerabilities
 Oops and double oops assumptions
 Develop a break even price and/or production level
 Financial statement primer
 What does your lender want?
 Tools and information
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FAST Tools
 farmdoc companion project initiated in 1999
 Development of spreadsheet-based tools to aid decisions for
producers, lenders, consultants and investors
 Facilitate use, access, distribution of tools and resources
through CD and internet distribution
 Quarterly subscription
 farmdoc download
 via workshops
 Approximately 30,000 CDs produced and another 35,000
downloads
 Increased demand for education and training
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FAST Tools - Overview
Computerized
Decision Aids
Financial
Analysis
Investment
Analysis
Loan
Analysis
Farm
Management
Grain Marketing &
Management
Risk
Management
Yield
Database Utilities
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New Company Simulator
 Key components
 Five year financial plan
• Cash Flow:
Monthly cash flow to account for seasonality
• Balance Sheet
• Income Statement
• Financial ratios
 Ability to evaluate 6 alternative crops/enterprises
 Simultaneously evaluate 3 economic scenarios
 Break even analysis
 Solver for initial capital needed under alternative
conditions
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FAST Spreadsheets
Demo of program
www.farmdoc.uiuc.edu/fasttools/
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