Better Decisions: What's your game plan?

Tuesday, August 4, 2009

The main reason new business ventures fail in their first two or three years is lack of planning. A sound business plan will help you focus your ideas into manageable components

by DORENE COLLINS

Often, we hear a farmer say:

"I would expand or grow my farm business, or start a new venture on the farm, if only I had more time and money." Are there, in fact, things you can do in planning for an expansion or new venture to ensure that the time and the money are available?

Information gleaned from a training program entitled "Business Planning for Rural Extension," which was offered a few years ago by colleagues at the Ontario Ministry of Agriculture, Food and Rural Affairs, revealed the following: New businesses ventures fail in their first two or three years of operation because of insufficient financing, poor location and business demands that clash with the owner's personality and lifestyle. However, the main reason for failure is inadequate planning.

Planning involves setting goals that help you work smarter, rather than simply harder, thus saving you time.

Goal-setting keeps you in a future-oriented frame of mind focused on results, and planning motivates you to manage future risks.

The planning process starts with an assessment of where you are and what is feasible when considering an expansion or new venture. The assessment process includes a review of the following:

Goals – Where do you want to be?
Resources – What do you have already?
Marketing – Will it sell?
Production – Can it be done?
Profits – Will it make money?

These assessment questions will help lead you to a decision to proceed with your idea or just continue with the status quo.

If your decision is to proceed, a business plan is needed. This will be your game plan for how you will manage and operate the business. Business plans help you anticipate challenges and assess opportunities before you actually start investing time and money. A well thought out written plan also shows a potential lender that you are able to manage, plan and communicate – all skills necessary for operating a successful business.

A business plan helps you focus your ideas into manageable components.

The standard business plan consists of a business profile, marketing plan, production plan, human resource and financial plan. These areas must be examined and projections made in order for the business to succeed.

Example: If you enter a new business venture such as growing a new crop by focusing only on production, your harvest may be disappointing if there is no buyer (marketing), if you did not plan for additional input costs (financial), or if labour was not available (human resources). 

Assessing your business goals and developing a business plan should not be viewed as a challenge but as an opportunity to grow your business. Watch this coming fall and winter for workshops on "Growing Your Farm Profits – Planning for Business Success" in your area.

Back by popular demand, these workshops are aimed at helpingfarmers assess their business and develop an action plan for the future. The workshop reviews important aspects of an operation, including how to develop a business strategy, marketing, production, human resources, financial management, social responsibility, succession planning and business structure.

Dorene Collins is Marketing and Customer Service Program Lead with the Ontario Ministry of Agriculture, Food and Rural Affairs. Email:dorene.collins@ontario.ca