Business Planning to Get Where You Want to Go

Since we're beginning the year by focusing on goals, here's another avenue: business planning. Yes, business plans are tedious. Yes, they can make you feel like you got stuck on an elevator with the m

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2 thoughts on “Business Planning to Get Where You Want to Go

  1. Kathy, it sounds like we are a lot alike. My husband and I have a ranch in TX that we started from scratch 3 years ago. We still don’t have a formal business plan–we just have a lot of determination, backgrounds in engineering, and motivation to make this work. But I want to get us on an even keel so we can make good purchasing and investment decisions.

    We didn’t have any experience farming before beginning, so it was a steep learning curve, and we dove right in with milk cows, beef cows, heritage breed pigs, laying chickens, broiler chickens, and Thanksgiving turkeys. After the first few years of scrambling to learn to farm, reading everything we could get our hands on, visiting other farms, and gleaning as much knowledge from other farmers as we could, we got our heads around how to produce fat cows, healthy pigs, low-mortality-rate chickens, etc.

    Now that we’re in the nitty-gritty and have more or less mastered the farming aspect, I would definitely agree that what would make or break a farm operation is the business side of things. It is way harder to find an effective method of record and book-keeping than I ever expected. It’s even harder to find business-planning resources that are geared toward small-time, direct-to-consumer farmers. Nobody talks about how much more time selling direct can take and how hard it can be to get into stores. I’d love to read a detailed plan on how to write up a business plan that accounts for seasonal sales, bursts of product availability, how to invest in equipment effectively, etc.

    Among the hardest lessons that I have learned (since I’m the bookkeeper) is that there are specific rules on how to deduct business expenses and you should know those BEFORE you start spending so you spend in the most beneficial way. I learned that the IRS wants certain expenses associated with income of one kind and all the rest recorded in a different way (products raised vs. products resold). I learned that finding a good CPA is not easy and that you really need to understand tax law going in so you don’t get screwed up. I learned that depreciation can be useful, but shouldn’t be relied upon to bring down taxable income. I learned that tracking income and expense as you go is always better than trying to catch up in time for April 15 a whole year later. I learned that keeping track of customers and what they bought and when is really important so you don’t accidentally insult the person who just bought a half a cow by asking them if they’re ready to order again.

    I look forward to seeing what you guys come up with. Please don’t be afraid to get specific–we farmers are tired of ambiguous resources that don’t address our issues in a tangible way.

  2. Kathy,

    This is a very important topic.

    As you point out most farmers do not have a formal business plan. Successful farmers often have a strong mental business plan. I have found that the business plan (mental or formal) determines the success of the operation. We often talk about grazing management, soil testing, or livestock nutrition. However, all of these management practices need to be implemented in context with the farm business and economic sustainability. If a farm is not economically sustainable it will not stay in operation. If the operation is not socially sustainable, the family may not stay together.

    As you said, having a formal plan helps clarify the current or proposed business and brings the business into focus with the individual’s or family’s vision for their life.

    We farm because we like the lifestyle, the cows (or sheep or goats), and grass. A well implemented business (plan) enables us to pay ourselves to do this.

    Thank you for writing on this topic.


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