Strategies for Effective Whole-Farm and Business Planning

Organic Agriculture April 05, 2011 Print Friendly and PDF

eOrganic author:

Deborah Cavanaugh-Grant, University of Illinois

Challenges

In her article "Whole-Farm Planning for Economic and Environmental Sustainability", Kansas State Extension Specialist Rhonda Janke notes the following barriers to whole-farm planning. You are likely to encounter some of these barriers when working with clients to develop a farm or business plan regardless of the planning method they use.

Many farmers/ranchers:

  • Don’t see the need for a written plan
  • Think it is too time consuming, difficult
  • Fear of not meeting goals, are uncertain about the future, have unexpected results
  • Are unclear about how to write a plan
  • Feel more productive “doing” and don’t take time to reflect and write down plans
  • Worry it may stir up old family disagreements
  • May have many landlords or work in different states or counties which makes collaborative planning difficult if not impossible.
  • Fear of greater control by bankers or the government if plans are written down
  • Resist change
  • Lack the information to make realistic projections and decisions
  • Fear regulation now or in the future

In 2003, the Center for Farm Financial Management conducted Train-the-Trainer business planning sessions throughout the Upper Midwest with Extension educators to stimulate discussion and encourage brainstorming about how best to help farm clients, especially those in sustainable agriculture, overcome planning challenges.

Educators agreed:

  • Farmers should write their own plans; you can’t do it for them or the plan will become meaningless.
  • Farmers who attended planning workshops were more likely to complete a business plan.
  • Workshops should be limited in size to no more than 10 participants.
  • Workshops should be limited in duration to no more than 4-6 weeks.
  • Farmers who participated in one-on-one planning sessions with an educator were more likely to complete a business plan.
  • Farmers who were paired with a mentor were more likely to complete a plan.
  • Farmers benefited more when educators were prepared to ask the hard questions.

Organization

After putting so much time and effort into visioning, goal setting, and strategic planning, it is tempting to want to “include it all” in the final, written business plan. Yet, no one, especially a lender who is approached daily by business entrepreneurs, wants to read a 500-page business plan. You need to keep it simple and avoid the common presentation pitfalls listed below. It is important to review your business plan with planning team members.

The text below is reprinted from Business Planning -- A Roadmap for Success, By Troy D. Wilson and David M. Kohl of the Department of Agricultural and Applied Economics, Virginia Tech; Farm Business Management Update, August 1997

Presentation Pitfalls

  • Too much detail - There is a fine line between too little and too much detail in a business plan. Minute or trivial items that dilute or mask the critical aspects of the plan should be avoided.
  • Graphics without substance - With the sophisticated computer software available to the average user today, it is easy to over-emphasize aesthetics while compromising substance. Graphics should be a complement to, not a substitute for, logic and reasoning.
  • No executive summary - Many readers of business plans will not move past the executive summary. If it does not exist, they may not read the plan at all.
  • Inability to communicate plan - The business plan should clearly outline the proposal in understandable terms. Monumental ideas are worthless if they cannot be communicated.
  • Infatuation with product or service - Although a business plan should clearly explain the attributes of the business’ key product or service, it should focus on the marketing plan. An entrepreneur can often become so intrigued by his or her ideas that he or she forgets about the big picture.
  • Too much focus on production estimates - When making projections, the focus needs to be on sales estimates, not production estimates. Production is irrelevant if there are no buyers.
  • Unrealistic financial projections - Potential investors are certainly interested in profitability so that they earn a return on investment. However, unrealistic financial projections can cause a plan to lose credibility in the eyes of investors.
  • Too much technical language or jargon - Technical language, acronyms, and jargon that would be unfamiliar to a person without experience in a particular industry should be avoided. The reader will be more impressed if he or she understands the plan.
  • Lack of commitment - The entrepreneur must show commitment to his or her business if he or she expects a commitment from others. Commitment is exhibited by timeliness and following up on all professional appointments. Investment of personal money is looked upon favorably because it shows that the owner is willing to make a financial commitment.

References and Citations

 

This is an eOrganic article and was reviewed for compliance with National Organic Program regulations by members of the eOrganic community. Always check with your organic certification agency before adopting new practices or using new materials. For more information, refer to eOrganic's articles on organic certification.

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This work is supported by the USDA National Institute of Food and Agriculture, New Technologies for Ag Extension project.