The last column’s discussion on business plans centered on Jerry Moss, my former office mate in graduate school at Cornell. Jerry is a large grain and hog producer in Quincy, IL, and was speaking at the 2010 Farm Futures Business Management Summit in St. Louis, MO.
The business plan can educate family and key employees, and build relationships with lenders, landlords and business partners. However, let’s dig deeper. Jerry indicated that there is personal satisfaction in creating and developing a business plan. Yes, it will take time, including holding a business retreat for half a day in his case, to a full day in our creamery’s situation. The joy of establishing a vision, mission and goals, and thinking through operational, marketing and risk-management plans, and putting a comprehensive financial plan on paper, can bring the owner and management team peace of mind.
Jerry stated the business plan can assist in organizing macro and micro finance strategies. Testing various scenarios, such as price, input cost, production and interest rate changes, can provide a guide to decision making.
Jerry also said that the business plan can be a quick reference guide to use throughout the years as business game conditions change. A management succession plan was spelled out in Jerry’s plan with key responsibilities and accountability.
Finally, Jerry indicated that it forces him to review both good and bad points of the business annually, and provides a “state of the state” report of the business.
PS: As a side note, at this year’s TEPAP Ag Executive School with Danny Klinefelter at the helm, only 21% of participants had a business plan in place, but 45% were working on it. So Jerry, you are leading the pack!
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 sullylab@vt.edu.