One of the joys of being a Road Warrior is participating in many high-level meetings, like the 2010 Farm Futures Business Management Summit in St. Louis, MO. Of course I presented my usual kickoff session; however, one of my graduate student office mates from back at Cornell, Jerry Moss, a large grain and livestock farmer from Quincy, IL, conducted a breakout on business planning.
Jerry, along with Richard Brock of Brock Associates, and Bill Lesser, former Under Secretary of Agriculture, had an office suite and were often study mates. Jerry’s discussion was almost déjà vu of conversations we had many years ago.
Jerry recommended that producers take time to develop business plans. Why should you take the necessary time – possibly 40-60 hours initially – to develop a business plan? Here are some of Jerry’s thoughts.
- The business plan can educate family and key employees. Getting their input and having them involved in the process can be empowering.
- Second, your lender will expect some planning, particularly if you borrow large sums of money. This not only allows you to communicate with the lender, but demonstrates to the lender the risk and plans to mitigate the risk.
- In some cases Jerry suggests using the business plan in landlord negotiations. A participant asked if you should share it with landlords. His response was in most cases, but he advised you should be careful about sharing plans with sensitive landlords, as it may be used against you.
Jerry and I both indicated it takes considerable time and effort to develop the initial plan; however, it can be updated in a quarter of the time! Next week I’ll discuss more insight on business plans.
Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at firstname.lastname@example.org.