Farming without a business plan is like piloting an airplane without any flight instruments, according to Allen Prosch, business management coordinator at the University of Nebraska's ag economics department.
"When things are going good, you can fly successfully. But when conditions get bad, the pilots with instruments have a lot better chance of surviving," he says.
"A written business plan is a blueprint for your future that describes what you are today, what you want to be and a description of that outcome," says Prosch. "But it's about more than just your future. It's about your family, yourself and your community. It's also a reality check. If parts of your plan are less developed, perhaps those areas of the business need detailed attention. A business plan also provides a timetable that allows you to track progress toward your written goals."
Ag lender Jeff Eisenmenger looks at a business plan as a road map that details the direction farmers need to go to achieve their farming goals.
"It's a way for farmers to get started in the right direction and to ensure they don't make a wrong turn along the way," he says. "It helps guide farmers through difficult times and through the expansion process."
It's important that your business plan is on paper, not just floating around under your hat.
"Someone once said that a goal that isn't written down is only a wish," says Eisenmenger, vice president for business development, Farm Credit Services of America, Norfolk, NE.
"A written business plan helps farmers clarify their ideas and goals, identify key issues, and address details that otherwise might be overlooked," Eisenmenger says. "And it gives them a way to easily communicate that plan to others."
Perhaps most importantly, a business plan helps keep the "family" in the family farm. "Sometimes families work so hard to save the family farm that they lose the family in the process," says Prosch. "The farm should exist to support the family, not vice versa. When you write a business plan, you can set those priorities and a plan for how to reach them."
There isn't one right way to do a business plan. Done correctly, it will take time. You probably already have some of the data, production and financial records written down or in your computer. Some of the components, like goals and a mission statement, may give you brain cramps before you get them completed.
A completed business plan is a powerful tool to share with others. Some farmers use them as a sales tool to get more rented land. Eisenmenger notes that, when a farmer walks into his office with a business plan, he's more likely to walk out with the loan he's after.
This Soybean Digest Special Report will walk you through the basics of a written business plan and profile farmers who have made them work.