LOVELOCK - Every farm, ranch and small business should have a business plan. In today's business world, just "Working Hard" does not guarantee that you will be successful, you must also "Work Smart" too help ensure success. A business plan should include a written mission statement, short and long-term goals/objectives, enterprise budgets, marketing plans and financial statements.
Businesses need a written mission statement to show why the business exists, its values, what the business will be and what it will accomplish. Its mission statement describes the purpose of the business and its targeted products, services and quality. The mission statement provides the basis for developing the business's long-term plans, goals and objectives. From it, the business develops and identifies its actual and targeted legal arrangements (sole proprietorship, partnership, corporation, cooperative, etc.). Keeping the business' mission statement as the target, the manager will develop business plans, enterprise budgets, market plans and financial statements to see if the operation shows a profit; has a positive cash flow; is a good use of time, labor, and money; and has any opportunities or weaknesses that need to be addressed.
Business planning is about finding, describing and refining the business' competitive advantages and moving the business in the direction to reach its goals and objectives. The operation needs both "tactical plans" for short-term planning (i.e., do I sell livestock/crops this month or next month?) and "strategic plans" for long-term planning (i.e., do I buy more land, or do I invest in more breeding stock?). These plans should connect the production, marketing and financial aspects of the business. The plans should provide a road map for management of the operation that helps all parts of the business to flow smoothly. Everyone who is involved in the business should be included in the planning process. By doing this, each person's goals are evaluated to see if and how they fit into the overall goals of the operation and whether they can be realized.
The planning process helps to:
1. Identify the goals of the business (what you want to accomplish);
2. Identify the operation's inventory and resources (what you have to work with);
3. Assess the business and the environment in which it operates (where you are and where you may want to go);
4. Identify the operation's organizational structure (and chart) if it is a larger operation with several employees, employee compensation, allocation of profits, etc.;
5. Analyze the performance of the business (how you have done in the past based on the historical financial statements);
6. Decide upon a course of action (what you will do);
7. Implement the strategies (how you will do it); and
8. Evaluate the business plan (whether it is working).
If you need help with a business plan you can contact me at (775) 273-2923 or e-mail me at fosters@unce.unr.edu. Also, here is an Internet reference that may help in developing a plan: http://www.beginningfarmers.org/farm-business-planning/.
Source: Marion Simon, Ph.D., State Specialist for Small Farm and Part-Time Farmers, Kentucky State University Cooperative Extension Program.
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