Farming is a complicated business that can experience significant change. The best way to weather disruptions is by having a good business plan in place.
There are countless variations of business plans depending on the size, age and type of operation. A highly complex, expanding farm with younger owners and multiple stakeholders will require a very comprehensive plan. On the other hand, a well-established, family-owned business under the same ownership for decades can probably manage with a short summary.
Regardless of the complexity of your business planning, Ryan Riese, national director of agriculture strategy at RBC shares a list of essential considerations:
- Understand your costs, including inflation. Keeping a good handle on costs helps you maintain control over your operations and have a clear picture of your profitability and what it will take to drive more profit.
- Clearly lay out your goals. If you start with the end goal in mind, it’s easy to determine next steps. This should not be confined to financial goals. For example, do you want to plan for an early retirement? Do you want to grow the size of your operations? Where do you want to be in five or 10 years? Be sure to share those goals with your family members and team.
- Use professionals to fill in skills gaps. More often than not, operators are strong on the big-picture side of the equation, but aren’t as proficient in handling the finer details of developing a business plan. Don’t be afraid to reach out for help where needed.
- Consider your risk factors and put in plans to mitigate them. It’s important to keep a strong balance sheet, so you may need to reduce your pace of expansion or explore your insurance options.
- Review your business plan. The frequency will depend on the pace of change and your business cycles. Generally speaking, you should review your plan at least once a year.
One important thing to remember in all this is that the business plan document is not the end of the process. It is simply a tool that gives the operator the information they need to make sound decisions.
Find more information online at rbc.com/chartyourcourse.
Source: (NC) www.newscanada.com