Business planning: the roadmap for the future of your dairy farm

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If you’re looking for ways to improve your bottom line and build a roadmap for your future, creating a business plan may be the right move for you. Business planning is essential for all successful businesses, including dairy operations.

It establishes the goals you want to achieve while describing how your past has brought you to where your business is now.

During a business planning roundtable hosted by the Pennsylvania Center for Dairy Excellence and Penn State Extension, Penn State Extension’s Andrew Sandeen explained why creating a business plan is vital for your operation. as well as how to create one.

What will a business plan do for my dairy operation?

Creating a business plan is important for any business because it shows where you are now and what your team needs to accomplish to be successful in the future. According to Sandeen, “Business plans help create a roadmap for the future of your dairy.”

The objectives for starting your business plan are:

  • Better understand the importance of business planning.
  • Know the key elements that contribute to a business plan.
  • Familiarize yourself with resources to help you in the planning process.

Sandeen noted that while business planning helps dairy farmers understand their dairy operations, it’s not something that should sit on the shelf and be seen as the last word.

“A business plan is a living document. It helps us cope with changes in our operations,” he said. “It’s not something to put away in a filing cabinet. This can help us realize what our goals are and whether we have achieved previously set goals.

As plans change, people change, and the world changes, it’s important that your dairy’s financial plan can change with them.

Where to start to create a business plan?

Although creating a business plan is for the improvement of your operation, it is still a long and thorough process. Creating your business plan shouldn’t be a one-day or even a week-long event, but something that’s put in place over months to ensure that no pieces are missing. Before starting the plan, Sandeen shared three questions to ask yourself about your dairy business:

1. What are the key issues that will determine future success?

2. What are the past successes that can form a basis for your future?

3. Looking to the future, what unexpected events could have a positive or negative impact on your dairy?

“When developing a plan, the process is just as important as the plan itself. The process of working with advisors outside of the operation can guide you into the future and establish the strength of the plan,” added Sandeen.

The business planning process is also effective in bringing your entire farm team together. Often your team can work separately on different tasks across the company with no possibility of communication. Bringing your family and employees together can bring new ideas and new goals for the future. Creating a business plan and reviewing it will also keep the farm and its decision makers on track and on the same page.

“An important part of a business plan is working with hard data to get a good picture of where your business is now and what it needs to do in the future,” Sandeen said. Accurate data, such as DHI records and financial statements, are essential to creating an effective business plan. If key pieces of data are inaccurate, the entire plan will be inaccurate.

What goes into a business plan?

Sandeen suggested breaking your business plan into smaller sections to make sure your data is accurate and you won’t be overwhelmed with all the details. It is also important to seek advice from outside consultants such as your financial advisor. They can help you develop a business plan divided into eight sections:

  • Executive Summary – Provides a quick overview of the farm and includes a brief summary of the rest of the plan.
  • History and Overview – Includes images and a timeline of how the farm has evolved over the years. It gives the person reading an idea of ​​the family and the farm.
  • Mission Statement and Goals – Indicates what is important to the company’s values ​​and future. These are important for customers but also for your team to remember what is important for your dairy business.
  • Future prospects – This is important for any future planning and will require you to make changes to your business. As Sandeen mentioned in the meeting, the milk market doesn’t have to be so mysterious if you look at the futures markets.
  • Financial summaries – Includes financial analysis and balance sheet. It may also be helpful to add charts and consult with a financial advisor to help you understand your financial situation.
  • Workforce and Organization – Provides insight into how your business operates, your employee structure, and the types of responsibilities your team and partners handle.
  • Transition and Exit Plan – Indicates your company’s plan for exiting the industry or transitioning the operation to the next generation. Sandeen reminded participants that every business has a life cycle.
  • Trends – Includes all other factors important to your business and its goals.

Ultimately, business plans are essential to your future success and help you understand both the big picture and the finer details of your dairy operation. It can also provide you and your team with the roadmap you need to manage change.

“Change is happening, whether we like it or not, on all farms and operations,” Sandeen said. “We can’t control the changes, but we can control how prepared we are to deal with those changes.” end mark

Kylie Lusk is the 2021 Communications Intern at the Center for Dairy Excellence in Pennsylvania.

Kylie Lusk

  • Kylie Lusk

  • Communications Intern
  • Dairy Center of Excellence

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