Certain circumstances require a formal business plan – a well-written, multi-page, charts-and-graphs-laden, crisp-to-the-touch business plan. This type of plan may be a requirement for large government grants, new ventures that require more than just imagination, and occasionally a project that needs to be “sold” to the bank. A typical business plan includes:
- Cover page
- Executive summary
- Mission statement
- Organizational chart
- Description (This is usually the business’s objectives, goals and action plan)
- Projections and financial statements
As important as all these parts can be, often, all your business needs is the process, not the extensive paperwork.
Do you have a sheet of paper?
Wasn’t it Dwight Eisenhower that said, “Farming looks mighty easy when your plow is a pencil…?” Well let’s start pushing the pencil and make this farming business easier! I realize that is not what is meant by the quote, but I strongly believe our lives and businesses can be made easier with a little annual planning. As a colleague of mine often says, “a one-page business plan is a great place to start.” Most of the key information that farm owners and managers need to review on an annual basis can fit on one page. So, pull out a blank sheet of paper and sharpen your pencil.
Start with a Mission Statement
I know the mission statement is not always the favorite part of a business plan for producers, but it is very important. Re-visit why you are doing this. Writing down your mission statement can create good conversation if you are working with a team. If you are doing this on your own, it can refocus your reason for farming. Do not leave this out! Across the top of your blank paper, write why you do what you do.
Define general direction
Below your mission statement, consider a few general directions for your business, label these “objectives.” These could be things like operate profitably, produce high-quality milk, make local produce accessible, maintain open space, provide employment for family, and so many more purposes. Think about what you want your business to look like five or ten years from now. While generating objectives, keep your mission statement on the forefront as objectives should bring your mission statement into focus. Brainstorm lots of objectives and then pick two or three to focus on for the coming year.
Are your goals smart?
The third step is making a goal for each objective. Let’s keep it simple and make these goals specific for the coming year. You’ve probably heard of SMART goals; Specific, Measurable, Attainable, Rewarding and Timed. Here’s a couple of quick examples:
Objective: Provide employment for family
SMART goal: Provide full-time employment for three family members by the end of 2020.
This is specific, easy to measure, realistic or attainable, rewarding and has a deadline.
Objective: Produce High Quality Milk
SMART goal: “Achieve a quality bonus for each month in 2020” or “Keep the operation’s average somatic cell count below 200,000 in 2020.”
The tricky part is integrating what I’d call ‘reach goals’ with what you think is truly realistic. Regardless of what you define as your SMART goals, making the step to define incremental change, and writing it down, will help keep you accountable. Write your goals on your sheet of paper, below the objectives.
Finally, each goal should have an action plan. The action plan should answer the questions:
- Who is going to do this?
- How are they going to do this?
- Who will help or support the goal?
- What are the steps to achieve this goal?
Using the family employment goal from above, the action plan might state:
Mom will relinquish some of her book-keeping duties; Uncle Joe will retire by October 30; both will begin training their replacements (John and Jim) in February. Mom, Joe, Jim and John will develop new job descriptions for John and Jim. Jill will return by June 1 and will fill the market manager position. The team will review the organizational chart with new/changed employees.
Write an action plan for each goal. This completes your one-page business plan!
Keeping it real
Business plans should not be judged based on the paper you generate, rather, it should focus on the process of thinking through a few business steps. This is the essence of another quote by Eisenhower, “Plans are worthless, but planning is everything.”
Making a business plan can be a way for a sole proprietor to reflect on the direction of her business, or a fantastic way to create discussion among a business’s management team. During National #writeabusinessplanmonth, work these simple steps into your year-end planning/budgeting sessions and you will be glad you did. For a simple worksheet to guide your one-page business plan, reach out to your local Farm Credit East consultant.