We welcome producers next week to our first annual LAUNCH!, a three-day educational conference for young farmers and ranchers, many of whom are beginning or growing their operations with support from our Development Fund.
The name of the conference reflects the Development Fund’s aim – to launch a new generation of producers, providing them with relatively low-cost working capital for up to five years to increase their short-term viability while they develop a long-term strategy for success. Now in its second year, the fund supports producers in an array of sectors, and those attending LAUNCH! showcase that diversity: beef, pork, dairy, grain, forage, customer farming/harvesting, seed sales and agribusiness.
There is one commonality to every operation supported by the Development Fund: A sustainable business plan. We made business planning integral to the fund, beginning with the application process, because it is so important to long-term success. Participants attest to the immediate payoff of putting their plans in writing, including a better understanding of an operation’s strengths and opportunities, as well as its weaknesses and risks.
Developing a business plan doesn’t have to be complicated. The key is to think about who you are and the skills you bring to an operation to accomplish your goals. A good business plan will grow and change with your operation.
Below are a few nuts and bolts to understanding and developing a business plan. Dr. David Kohl, an ag economist specializing in business management and finance, will discuss the topic in greater depth at LAUNCH!, which runs Aug. 9 to 11, 2017. We will share some of Dr. Kohl’s insights. Follow #launchOMA on Twitter.
Business and financial plans for start-ups:
- A business plan helps organize ideas, which can then be tested on paper, before any money is on the line. Run projections on your plan’s cash flow and profitability. Repeat this drill – organize, test – with every major idea.
- If you run a projection and the results aren’t satisfactory, identify areas of your plan that can be improved. Don’t cheat yourself and “fix” profitability by changing something you can’t control, such as market prices. Instead, focus on what you can control -- adjust your marketing plan to limit price risk, improve livestock care to reduce death loss, closely manage costs to limit expenses.
- Not every plan needs to be profitable. Plenty of agricultural operations are subsidized by off-farm income. There is nothing wrong with that.
- You may find that your plan doesn’t work, despite your best efforts. Many plans don’t. That is the benefit of starting and testing a business on paper – before it chews up savings and credit. But don’t throw away a failed plan. Seek a second opinion from those you trust. This process can help make your next idea a success.
- While a business plan is primarily for you, it also can help potential business partners, including lenders, get on board. Partners can help improve and refine a plan that they can read and understand.