Business Planning Introduction
Definition
Business planning is the process of developing goals, strategies and actions that form a road map
to business growth. The first part of business planning looks at profitability and fiscal feasibility;
is an operation profitable enough to expand the number of families making a living from it? The
second part of business planning looks at risk management. A great business plan will not
prevent downside risk from happening, but it will improve the odds of successful and satisfying
outcomes. A well-written business plan is a regular topic of discussion at farm and ranch family
meetings.
Learning Objectives
At the end of the course, participants will be able to:
 Understand their current farm or ranch business and personal financial positions by being
able to identify a balance sheet and interpret three selected ratios for interpretation:
working capital, debt to asset ratio, and net worth.
 Have a hand in planning the future of their farm or ranch business by understanding the
importance of vision, mission, and goals.
o know how to write a goal
o know where to find and use business planning resources.
Overview
Anyone who has ever taken a trip without a destination in mind or a map has ended up where
they intended—nowhere. And certainly, anyone along for the ride can understand the frustration
of a poorly planned and executed trip. Lack of respect for a plan, not knowing how to make a
plan, or just the thought of pulling so many details together can paralyze the business planning
process.
Business planning will help farm and ranch women with communications, defining vision,
mission, goal setting, and organizing information. Among the plan components are financial
documents that provide useful information about profitability, growth, and efficiency.
Discussions about retirement of one generation and bringing in another generation will hinge on
things like cash flow, profitability, and managing finances for growth and diversification to
reduce risk. And while finances are important, there is much more to include in an overall
comprehensive business plan.
Business transitions can involve a fairly large group of persons—children, grandchildren, heirs
from outside the immediate family, in-laws, spouses, tenants etc. Coordinating goals and
expectations will take considerable thought and communications. Getting thoughts of vision,
mission and goals into a written plan for everyone’s review and approval is as rewarding as it is
daunting. By your participation in this course you are confirming family communications and
business planning are worth the effort you put into it. Throughout this course, watch for
communication tips concerning vision, mission and goal writing exercises that will guide you
through the business planning process.
Once vision, mission and goals are established and the family understands the finances, a critical
element of the business plan is the risk management section. Risk is defined as the probability of
an unexpected downside outcome that can derail the best of plans. As an example of derailment;
Joan and her farmer-husband bought a large piece of farm equipment and later the same day he
suffered an aneurism. He died leaving Joan to run the farm with her two sons. Life can throw a
lot of curves including drought, disease, and unsettled economies, just to name a few. A business
plan can help farm and ranch women think through specific risks to their own families’ and
businesses’ circumstances and consider ways to reduce their impact.
There are a variety of tools available for financial documentation and business plan writing. This
course introduces participants to a wide variety of business planning methods from simple to
comprehensive. Women can choose the tools and methods most effective for working with their
families and advisers. For a selected list of business planning resources and associated websites
see Business Planning Resources. You’ll also find Financial Vocabulary for financial terms
associated with specific types of documents like balance sheet terms and associated ratios. While
this course will focus on three specific ratios from the balance sheet, we have also provided you
with the list of 21 financial ratios, Farm Financial Ratios and Guidelines for your future
reference.
Introduction to Insurance Basics; Life, Health, Long Term, Home, and Auto
Insurance can be a big expense with many farm operations prompting the feeling of “insurance
poor.” If you have a lot to lose, then you have a lot to insure to keep things on track if a negative
occurrence happens. You can gamble with less than adequate coverage but understand what you
have at risk (Large Loss Principle) and are you willing to take the downside consequences
should something negative occur.
Not only is insurance used to manage risks, but it can also be a tool in estate planning. One
example is providing a means for compensating non farming heirs allowing a business to
continue with minimal interruptions. Properly designed insurance strategies can provide cash for
buying out disinterested parties or unintended partners in a business. Having competent
professionals with your needs in full focus is essential for managing risks and executing on estate
plans. Whatever your need for insurance, a woman should be familiar with the concepts of the
role of insurances for risk management and estate planning.
This part of the program is designed to use all or as few of the provided power point slides to
stimulate discussion and empower women to explore the use of their insurance dollars.
The objectives of this section are:
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To increase your awareness of the financial cost of various risks in life
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To discuss key characteristics of different types of insurance policies
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To help you formulate questions to ask insurance professionals
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To help you identify your current insurance strengths and weaknesses