Business plans provide roadmap, meet needs of investors and lenders
“People can go by the seat of their pants, but really thinking about things and maybe making our mistakes on a computer or a piece of paper makes more sense than doing it in real life,” said American Agri-Women President Doris Mold.
As part of a webinar series for beginning producers co-funded by American Agri-Women, Farmer Veteran Coalition and USDA, Mold talked with producers about the importance of creating a business plan on March 7.
Business plans can be defined in multiple ways, said Mold.
“It’s a formal statement of business goals, the reasons why they’re attainable and our plan for reaching those goals,” she continued. “Some people look at it as a roadmap.”
A business plan is a written document that typically outlines goals, strategies, action plans and other key areas of the business.
According to Mold, a successful business plan aids producers in accomplishing multiple purposes.
“It’s a way to step back and think about those crucial decisions for our business and maximize the resources,” commented Mold. “That business plan can help us if we turn back to it and use it to guide us, even in our day-to-day work.”
“There’s a lot of different things that surround the purpose of a business plan,” commented Mold.
According to Mold, one of the purposes that creating a business plan accomplishes is showing family, employees and lenders that the producer has taken time to think objectively about how to make the business succeed.
“It’s a way to effectively communicate our business externally to lenders, investors, partners and other people who are out there and need to know something about our business,” she said.
Creating a business plan is also an opportunity to brainstorm what unique attributes and values make the business stand out.
The creation of a business plan can also help producers improve business management.
“It serves as a blueprint for operating our business or a guide for our business, and it gives us opportunity to step back and think about what we’re doing,” continued Mold.
“All business plans are going to contain similar components,” said Mold. “They’re going to be related to the production side of our business, the marketing management, the personnel and the financial management.”
When getting started, Mold advised producers to keep the plan simple to not get overwhelmed.
“I think the best approach is to take a look at what our needs are for the business and whoever else is looking at our business and find out what they require and what they need from us,” she continued.
The length of the business plan will greatly vary depending on the type of agricultural enterprise.
“It’s different for somebody who’s got a small herd of goats and is making goat’s milk soap and bath products versus somebody who’s going to run a 1,000-cow dairy,” commented Mold.
When deciding how long to make a business plan, producers should also consider what the purpose of creating the plan is.
“Is it just to get me organized and thinking of new ideas, or is this something that I’m going to present to a lender in hopes of getting a loan?” she noted.
According to Mold, there are multiple tools that can be used for creating business plans, with her favorites all available online.
“The first one is the Farm Credit One Page Business Plan, and the sections of the business plan include mission, objectives, goals, action plan and developing a budget,” she said. “Even with this version, we should be looking at developing a short summary of what our business is about, the history and business description and a little discussion of our vision and values.”
The Vinewise Business Plan I has a slightly different approach and is a much more expansive document, Mold explained.
“They really developed this to be a conversational workbook to walk us through the different stages of looking at our business and maybe looking at our business in a little bit more of a holistic way,” she continued.
Another online and free tool that Mold uses extensively is agplan.umn.edu, which provides outlines, tips and examples specifically for agricultural businesses.
Mold explained that there are several tools and resources available for producers working on their business plans.
She noted that local peer groups can be an extremely helpful resource.
“If there’s a peer group in the local area or others farmers and ranchers that we respect and we see are doing a good job, they can serve as a peer mentor to us,” said Mold.
Depending on their location, producers may also have access to Extension programs, small business administrations and lender guides.
“Another helpful resource for women is Annie’s Project. Of course, there are consultants out there, and there are lots of things available online,” she concluded.
Emilee Gibb is editor of Wyoming Livestock Roundup and can be reached at firstname.lastname@example.org.