How to make business planning work for you and your farm

According to an Ipsos Agriculture and Animal Health study called Dollars and Sense conducted in 2015, only 26 per cent of Canada’s farmers have a business plan. The study also shows that farmers who have a written business plan they review annually get five times higher return on assets than those who don’t.

Establishing a clear business plan pays … It provides a strong sense of direction and a platform for communication with your team, not to mention much better financial returns.

So take the plunge and pledge to get started on your plan.

What are Canada’s leading farmers doing differently?

Never stop learning

Keep finances up to date to help make business decisions

Seek the help of advisors/consultants

Write down their business plan, follow it, and review it annually

Know their cost of production and what it means for their profits

Conduct a risk assessment and manage risks

Develop a budget and financial plan

Pledge to Plan

Establishing a clear business plan pays.
Pledge to create or revise your business plan this year, putting your farm on the path to success!

Make the time to plan

Like the seasons, business planning is cyclical.

If you are using the seasonal approach, here are the steps. Remember, you can always reach out for help.

See Our Resources
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ASSESS YOUR BUSINESS

Starting in the late fall after harvest you can take stock of your business in the context of changes within the agricultural industry at large. Ask yourself and your team:

What are some internal factors that could positively or negatively affect your farm business?

For example:

  • Do you have a strategy?
  • Where are your markets/customers?
  • What do you produce and how much?
  • What kind of suppliers do you have? Will they be sufficient?
  • Do you have a strong financial system?
  • Do you have the appropriate information systems?
  • Do you/your people have the skills to do the job?
  • What are the risks facing your business right now?
  • Who has responsibility for what jobs?
  • Do you have a succession plan?

What are some of the external factors that could positively or negatively affect your farm business?

For example:

  • Is weather a significant factor?
  • How susceptible is your product to disease outbreak?
  • What is the market demanding in terms of products and production practices?
  • Do you expect prices to fluctuate for your sector?
  • What kind of policy and regulations do you have to adhere to? Do you expect any changes?

Check out the Farm Business Scorecard at takeanewapproach.ca, an online resource that can help you move step-by-step through the business assessment process.

Need help? See our Assess Your Business resources.

PLAN YOUR FUTURE

Now that you have assessed your farm, you can start planning for the future. Winter is the best time for planning and getting ideas down on paper. Some questions to ask would be:

  • What is our vision?
  • What is our mission?
  • What are the values we will uphold in getting there?
  • What are our priorities in getting there?
  • How will we get there?
  • Who will get us there?

Write it down!

Having a written business plan is crucial to defining your farm’s future, staying on track, and sharing with others. The act of writing the plan down helps clarify your thinking and ensures all aspects of the farm business are taken into account. It also helps get other members of the management team engaged and enthusiastic about accomplishing the goals they were a part of creating.

The 12 Components of Business Planning

  1. Set your strategic goals – 3-5 year vision and goals are written and shared
  2. Determine your operation activities – List of things to be done, when and by whom this year
  3. Mind the financials – Data is current, accurate and accessible
  4. Map the supply chain – Suppliers are known, trusted and add value
  5. Manage your data – Use the latest technology for reliable record-keeping
  6. Pay attention to production – Plan production according to market changes, prices, business results, environment
  7. Know your risks – Plan to deal with disease, food safety, animal welfare, policy, market fluctuations and weather
  8. Remember your social and environmental responsibilities – Responsibilities are known and met
  9. Don’t forget a business continuity (succession) plan – In place for when current generation moves on: owners, managers, labour
  10. Take care of your people – Hiring, training and retention of good, skilled people
  11. Market, market, market – Marketing is targeted to customer base
  12. Performance review – for the farm business and the staff, including you!

Need help? See our Plan Your Future resources.

IMPLEMENT YOUR PLAN, MONITOR PROGRESS

Spring is the time to make things happen. Start the season off by gathering the team together to put your plan into action:

  • Host a start-up meeting with your family and/or business partners to discuss priority items, timelines and goals set out in the plan.
  • Make alterations based on what’s happened with your operation
  • Define the highest priorities you, your family and/or staff, and for the business, then pursue them.

Remember, your plan is not set in stone. As you move through your day-to-day operations, new opportunities or risks may arise that could warrant revisiting and revising the business plan.

Need help? See our Implement Your Plan resources.

EVALUATE YOUR PERFORMANCE

It’s a good idea to review your plan while your production year is top of mind.

Reviewing your plan can also give you and your team a big boost — an opportunity to celebrate successes!

Take a look at your plan, your accomplishments and areas for improvement. Build these results into next year’s business plan.

Need Help? See our Evaluate Your Performance resources.

The Agri-food Management Institute and Farm Management Canada have resources that can help you get started on your business plan.

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