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Management: Why you need a business plan

The main goal is to create a plan that is useful to you and meets your needs.

By Wendy Osborn

It’s easy to know you need a business plan, but it’s harder to know exactly what to include.

Business plans tend to follow a standard format, and many online resources and templates can be adapted for your operation. Make your plan as simple or as complex as you like. The main goal is to create a plan that is useful to you and meets your needs. Here’s some advice:

  • Operation overview. This is the “elevator pitch” about your farm. Describe the basics of your operation related to your mission and objectives, the crops you produce, and your acreage.
  • Ownership summary. Include information about ownership and company structure. With any type of business, different owners bring different expertise. It’s always good to evaluate each owner’s strengths.
  • Strengths and weaknesses. Identify ways to use your ownership team’s strengths to your advantage and plan for ways to overcome any weaknesses in your operation.
  • Sales and marketing strategy. Once you have identified your operation’s strengths, look for opportunities to leverage them to your competitive advantage as you create sales and marketing strategies.
  • Financials. This is the most important part of your business plan. Include a budget and a balance sheet that reflects your assets, liabilities and net worth.
  • Goals. Research has shown that the simple act of recording goals will increase the likelihood of achieving them. Write down both short- and long-term goals, such as purchasing a new combine or paying down debt. Your goals should be SMART — specific, measurable, achievable, realistic and time-bound.

An accurate and updated business plan is a powerful tool that can open up many opportunities.

Osborn is a vice president for Farm Credit Mid-America.

Money Matters is brought to you by professionals at the Farm Financial Standards Council. The blog offers sound advice on capital, cash flow, asset management, recordkeeping and other financial matters related to agriculture.

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