Planning Task Five: Present, Implement, Monitor Your Business Plan

Download all planning task five worksheets using the link above.

You are almost there! You have made it through the toughest task—strategic planning—and are now ready to pull your ideas together into a written document. In this planning task, you will:

• begin or complete your written business plan
• define a record keeping system
• create monitoring checkpoints
• draft an implementation to-do list

Begin or Complete Your Written Business Plan

If you have been drafting a plan all along—recording your ideas in AgPlan or elsewhere—this task will be simple. However, if you have not captured your current situation, goals or transition strategies on paper, this task will take a bit of time. We will assume here that you are armed with completed worksheets and tested strategies but have not yet begun to draft a business plan. If you have begun to draft your plan, keep the suggestions made here in mind as you complete, review and revise it.

Audience

When starting from the beginning, first think about who will read your business plan. Will you present the plan to a lender in hopes of securing financing for needed improvements? Will you share the plan with your family or other planning team members who will become involved with the business? In other words, who is your audience? It may be only you!

While there is no single format that must be used when writing a business plan, certain audiences will expect to see certain critical pieces of information. That is why it is important to consider your audience when writing a business plan.

For example, a lender will expect to learn about your historical operating performance, marketing contracts, financial position, cash flow projections and capital request. Your family or business partners may be interested in this information too, but they may be equally interested in your history, current operations, long-term goals, marketing plan, projected workload and management strategies. It will be up to you to decide which elements to include in your business plan.

AgPlan provides a built-in business plan outline. This formal outline is well suited for any external audience (e.g., lenders, business partners, board of directors). You may choose to modify this outline when using your plan only to communicate internally with family or other planning team members.

Presentation

Regardless of your audience, the business plan should clearly convey your production, marketing, human resource and financial strategies for transition and beyond. Your plan should include information that supports and justifies your strategies; it should convince readers of your plan’s feasibility and identify well-thought-out management plans to ad-dress risks should internal or external conditions change. At the same time, do not overdo it. Too much detail can overwhelm your readers or compromise the real message.

All readers will expect your plan to be typed; you can use a word processing program or AgPlan for this task. Graphics and photos also are appropriate so long as they illustrate ideas. You may even want to include a photo of your farm or of those involved in the farm business. Be aware that too many graphics will likely be ignored.

Avoid technical language or jargon that may be unfamiliar to your audience. As Troy Wilson and David Kohl point out in Business Planning—A Roadmap for Success, “Your reader will be more impressed if s/he understands the plan.”

Sample business plans for the Walters’ transitioning dairy, the Kerkaerts’ transitioning grain farm, and Brukhman’s start-up organic processing business are presented in the Appendix. You will notice that the plans differ in style, length and content. However, all three plans contain information pertinent to their business goals, strategies, planning team and investors.

Ongoing Record keeping

Record keeping is a critical component of any business, but even more so when your business plan is dependent on organic certification. We talked about the importance of record keeping for certification purposes in Planning Task Four: Strategic Planning. (You also may wish to read the NOP regulations regarding OSP record keeping and monitoring: § 205.103(c) and § 205.201.) Record keeping also is critical for monitoring the overall success of your new business plan.

In addition to those production- and marketing-related records required for certification, such as input expenses, product handling and sales, and livestock husbandry, it helps to track the following:

• labor (e.g., hours per person per enterprise per month)
• management (e.g., hours per month)
• equipment use (e.g., hours per enterprise per month)

Depending on your goals, you also may decide to track the effects of new conservation practices or other less quantitative activities. In such cases, try developing your own measures. For example, if one of your goals for the farm is to improve wildlife habitat, perhaps you can observe and record bird counts in spring. Be creative and keep it simple.

It is a good idea to identify someone, even yourself, to be responsible for ongoing record-keeping and to designate time for this task. The information collected and preserved in your records will only be meaningful if maintained and put to use. Just as you are required to document your record keeping procedures in the OSP and OSPH, it is a good idea to include a brief description in your business plan of your intended business record keeping practices and the person or people responsible for this job. Do this now if you have not already done so in Planning Task Four: Strategic Planning.

Monitoring

The records described above can be used in combination with your goals, identified in Planning Task Three: Vision, Mission and Goals, to monitor your business successes and to track progress toward your long-term vision. In other words, put your records to good use; do not let them sit on the shelf collecting dust. Just as records must be maintained regularly, they also should be reviewed often and discussed with your planning team.

One of the most effective ways to utilize your records is to pair them with monitoring checkpoints. Monitoring checkpoints, also called critical success factors, are key events, targets or accomplishments that must occur for your farm business to succeed. Monitoring checkpoints are measurable; they can help you assess progress while acting as early warn-ing signals that alert you to when, where and how your goals may need to change. After all, no business plan ever goes exactly as intended—you should expect to make adjustments along the way.

Monitoring checkpoints are more detailed than goals but broader than to-do items. They represent milestones that occur within a defined time period. See the monitoring check-points story panel from the Kerkaerts.

By contrast, an implementation to-do list for the Kerkaerts might be organized by each major monitoring checkpoint and include the name of each person responsible for completing the task.

Use Worksheet 5T.1: Monitoring and Worksheet 5T.2: Implementation To-Do List to record your monitoring checkpoints and to-do list for farm operations, marketing, human resources and finances. You can include both of these items as appendices in your business plan.

Review and Use Your Plan

Your business plan should be thought of as a dynamic document. Business planning never stops; it is a fluid process that is modified over time as your goals evolve and as internal and external conditions change (see Figure IT.1: Business Planning Process on page 17). If reviewed and adjusted as needed, future decision-making will be easier. As Minnesota organic dairy farmer Florence Minar explains, “There are times when [our family] comes up with new [business] ideas. And then someone says, ‘Does this follow our values? Is this going to help us reach our goals?’ And we go to the business plan to see. It’s all in there.”21

Arrange a time—once per month, season or year—when you and your planning team can sit down together and review the business plan. When meeting, ask the difficult question: Have we been successful? Use your goals, monitoring checkpoints and financial projections when answering. If you were unsuccessful in some areas, try to understand why. Review whether external events have changed within the market or industry. Explore how internal circumstances may have changed within the family. Use both your successes and failures to learn and improve your business.

Next, review your financial projections. Organic production is said to have a steep learn-ing curve, and we all know that time brings experience. This means that yield or price estimates originally included in your projections may not have been accurate. If this is the case, take time to adjust your projected output, income and cash flow based on knowledge you acquire each year.

Finally, re-evaluate your business plan. You have come full circle in the planning process and it does not hurt to take stock of your goals and make other adjustments based on current resource availability and the competitive environment. If you are feeling over-whelmed, remember that planning will become easier with experience and time.

Dig deeper

Consult professional service providers—such as financial advisors, certification consultants and conservation planners—when establishing your record keeping system. While we recommend doing much of the record keeping on your own, it is a very good idea to meet with professional service providers when getting started to review your record keeping plans and get some advice on how best to track information.

Moreover, farm financial advisors can be of great help when developing financial projections.

put it in writing

Use AgPlan or a word processing program to draft your business plan. AgPlan will automatically generate a business plan outline based on the sections that you have completed. Next, draft your plan according to the outline.

Develop checkpoints using Worksheet 5T.1: Monitoring. Follow this up by creating an implementation to-do list using Worksheet 5T.2: Implementation To-Do List. Your monitoring checkpoints might be included in the Transition Plan Summary in AgPlan, although it is not necessary. Likewise, your to-do list can be filed with your business plan, but generally it is not included in the plan itself.