Getting started with farm business planning
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EmailGet your farm business plan going with SMART Goals, SWOT analysis, and Mission/Vision/Core Values.
Have you tried to make better farm plans and not known where to start, or gotten stuck in the process? In this article, we will go over a few basic business planning concepts that will help get you in the right mindset to become an effective farm business planner.
Why should I write down my goals?
Writing goals down allows farm managers to go from strategic to tactical thinking as part of their planning functions. You may have multiple short-term goals that need to be prioritized, or a long-term goal that can be broken down into multiple short-term goals. Writing goals down allows you to reflect on how each one relates to your overall mission and values and to other goals. Goals are the first step in creating an action plan, and writing them down should help clarify if additional resources will need to be collected, such as information, labor, equipment or financing, before implementing the plan. Written goals serve as a reference point for helping you make decisions and measure progress, and they can also help reach consensus and align objectives with business partners.
What are SMART goals?
SMART is an approach to writing down goals that is best suited for tactical (short-term) planning. SMART stands for specific, measurable, attainable, relevant and time-bound. First is specific. Your initial draft of the goal might be vague, but eventually you should be able to be more specific so that your goal is actionable. Next, your goals should be measurable. What metrics will you use to determine if you have met your goal? The next characteristic is attainable. Is the goal achievable within the given time frame and resources available on your farm? Is the goal realistic? Goals also have to be relevant. They should align your company’s longer-term objectives and abilities as well as the realities of the market. Finally, goals need to be time-bound. When do you want to accomplish this goal by?
What is a SWOT analysis?
SWOT stands for strengths, weaknesses, opportunities, and threats. A SWOT analysis is part of the internal and external scanning that farm managers do on the control stage of their farm management functions. Scanning the internal and external environment allows farm managers to make short term adjustments or reconsider long-term strategic plans. Strengths and weaknesses are internal factors that can influence the success of the business, while opportunities and threats are external factors. Strengths and opportunities are factors that can help your business reach success, whereas weaknesses and threats could impede or decrease that success.
To help think through your strengths, ask yourself:
- What does my business do well?
- What unique resources do I have?
- What do others see as my strengths?
When thinking about your weaknesses, ask yourself:
- What could I improve?
- What do competitors do better than I do?
- Where do I have fewer resources than needed?
- What do I think others see as my weaknesses?
To think about your opportunities, ask yourself:
- What are market and consumer trends?
- What is happening in my area that could be advantageous?
When thinking of threats you may be subject to, ask yourself:
- What trends could negatively affect my business or impede my success?
- What is happening in my area that could be disadvantageous?
- Do changes in technology threaten my business?
- What is my competition doing?
Vision, mission and values
It is critical to have clarity on what you want to achieve with your business (vision), and have a general idea of how the vision will be achieved (mission) before you can go into the tactical and strategic planning phase. It may seem like all farms have similar visions and missions. However, your core values really set you apart, and they should be weaved into your mission, your vision, and ultimately your planning. Core values define your organization in terms of the principles and values leaders will follow in carrying out its activities. They are what make your business unique. For example, your vision may be to become “A successful family dairy business.” Your mission statement may be “To provide unique and high-quality dairy products to local consumers.” Throughout your plan, you could talk about land stewardship, technology, efficiency, the environment, conservation, customer service, product quality, community, family, lifestyle, the different enterprises in your farm, etc. These statements are valuable to create unity in your internal team, and to communicate about your business with partners and customers.
I like to say “processing is part of the process.” There is an abundance of business plan resources from MSU Extension and other organizations. I hope that with this article, you have ideas to ruminate on before you actually sit down to write them down. Discussing these ideas with friends, family or business partners will make your writing faster and more effective.
View a presentation about farm business planning
Listen to a podcast about farm business planning
Michigan State University Extension has many resources available, including bookkeeping and financial analysis tools to help you with the important decisions you have to make as a farm manager. Many of these resources, including a listing of MSU Extension farm management educators, can be found at the MSU Extension Farm Management website.
You may also consider filling in this form to receive updated resources, answers to common questions, notices of future farm business management events, and other useful information from Florencia Colella.
