What's in a successful business plan?
Fifty young, beginning farmers gathered at the DuPont Pioneer headquarters in Johnston, Iowa, July 8-14 to glean kernels of wisdom from a faculty of ag financial, production, and industry experts.
Creating a business plan was a high priority for the New Century Farmers, selected from 150 applicants from across the U.S.
“You need to have a tool for projecting how you’re going to make money – an easy way to explain it to others,” Gary Matteson, Farm Credit Council vice-president for Young, Beginning and Small Farmers, advised them. “A business plan allows you to anticipate success or failure, and be more strategic and less tactical.”
Matteson said that a business plan is divided into two parts:
- The narrative
- The numbers
“It should include long term expectations as well as short-term contingencies,” he said. “So if and when bad things happen, you’re ready for it. Unplanned things happen. But if you have a plan, with a fallback position, you may be able to mitigate the situation.”
The numbers portion of the plan includes a budget with:
- Projected earnings
- Projected profits
- Cash flow
Matteson distributed a one page business plan created by FCS. “It’s not what you would take to FCS to apply for a loan, but it will get you started,” he said. “Sometimes the hardest thing is to just get started.”
Somewhere in the narrative of the plan, he reminded them tomake sure there’s a place for personal goals such as happiness, and a strategy for life balance.
“When you set your goals, be sure to include the appropriate balance of work and home life,” he said. “Remember, a goal without a deadline is only a dream.”
He said that people, including employees, have to be in your plan if you’re going to make it work.
“As a rule of thumb for every time your operation doubles in size, you’ll be required to spend four times as much time managing it,” he said. “You’ll need a plan that doesn’t require you to be the person on the front line all the time.”
Dennis Straube, Farm Credit Services of America loan officer, Mason City, Iowa, also shared his observations with the New Century Farmers.
“One of the biggest things we’ve seen young farmers struggle with over the last three or four years is projecting the take-home money left on the table,” he said. “Young people assume that current profits will continue. During the best of times, don’tget so terribly enthusiastic.”
He advised the young farmers to build a reserve for bad times. “Good and bad times are part of the cycle,” he said. “If you can survive in the bad times, you’ll prosper in the good.”
The New Century Farmers Conference is sponsored by DuPont Pioneer, Case IH, CSX Corporation; and Farm Credit Services, as a special project of the National FFA Foundation. Successful Farming is a media partner of the program.