Better Decisions: Don't overlook the importance of planning in your farm business
Tuesday, February 3, 2009
Knowing where you are going and what you hope to achieve will give your business an edge when it comes to responding to opportunities
by DORENE COLLINS
Have you ever said to yourself, I should have planned that better? This statement is common to everyone. We often head right into action without a plan, which results in extra work or lost efficiencies. Planning is hard work and often one of the most neglected parts of a farm business.
Kenneth Thomas, an extension economist in farm management at the University of Minnesota from 1959 to 1992, saw many changes in farm production while business planning principles remained the same. He authored many reports and documents on the importance of good planning for success on the farm.
Thomas believed that the farm owner or manager should always have the end in mind, whether this is specific to a certain project on the farm, or at the end of a farming career. When you are starting out, it is difficult to "have the end in mind," but this is what good business managers strive for. You must ask yourself: "If I were to sell my business tomorrow, would it be of benefit to the community, the new owner and myself?" Would there be financial, social and environmental benefits?
So how does one begin with the "end in mind?" Planning is readiness. Knowing where you are going and what you hope to achieve will give your business an edge when it comes to responding to opportunities. By being prepared with avoidance tactics – actions that we can take to respond to threats – business owners can quickly adapt to changes.
A written plan is best and should be a joint project with all members of the farm team. Here are some key planning principles to get you started. They are part of "Growing Your Farm Profits – Planning for Business Success," a business assessment and action planning program developed in partnership between the Ontario Soil and Crop Improvement Association and the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA).
Principle # 1: The Value of Planning.
To make sure something gets done, plan or write down: What do you want to do, when do you want to do it, who is going to do it, and why you are going to do it. Also, writing down your plan makes sure that you do not forget anything and that your plan stays on track.
Principle # 2: The Planning Process.
Planning is a process which involves setting goals, choosing priorities, developing actions and measuring activities and evaluating results. It is necessary to ask yourself what your goals are and whether they can be achieved by your present activities. You should also set priorities to help achieve your goals in the most effective and efficient ways possible.
Principle # 3: Personal Goals in Business.
Being involved in a farm business offers opportunities for personal growth. The farm business can also provide:
• Employment (a job);
• An income source, such as a wage, business profits or capital investment growth;
• A chance to learn skills and knowledge in production technology, marketing, financial management, people management, business management and industry involvement;
• A community, a lifestyle and a legacy.
Principle # 4: The Scope of Marketing.
Marketing is more than sales. It is the set of activities used to get your potential customers' attention, motivate them to buy, get them to actually buy, and to buy again. Marketing is how you define your product, promote it, distribute it, and maintain relationships with your customers.
For some resources to help you in this task, visit the OMAFRA Business Management Unit website at: http://www.omafra.gov.on.ca/english/busdev/agbusdev.html and subscribe to our OMAFRA Agricultural Business Update Newsletter at: http://www.omafra.gov.on.ca/english/
busdev/news/index.html#agbus. BF
Dorene Collins is Marketing and Customer Service Program Lead with the Ontario Ministry of Agriculture, Food and Rural Affairs. Email:dorene.collins@ontario.ca