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AB120 MakingA Business Plan

Business Library

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Asking and answering

questions can be useful:

• Why am I doing this?

• What do I want to

achieve?

• How can I accomplish

what I want?

USDA photo by Ken Hammond.

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Setting goals and objecties:

• Goal: what you want to accomplish in thelong run, such as• Growing a business to a certain size, or level

of profitability• ompleting a degree

• !b"ective: a step in

reaching a goal, such as• #aising average corn yields

by $% bushels&acre

• ompleting high school

Photo © Nancy Crombie is used by permission.

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Making decisions:

'ome find it easy

• (now what to do

• )ot much thought• *ay ma+e snap-

decisions

• 'ome find it difficult

• Worry about

decisions• .ut off deciding

• /eave problems

unsolved

Decision-making is a skill you canlearn.

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Ste!s to decision "aking:

$0 'et goals and ob"ectives0

10 #ecognize a problem in reaching goals andob"ectives0

20 Gather information about the problem0

30 /ist possible solutions0

40 ompare the merits of solutions0

50 'elect the best possible solution060 *a+e a plan of action0

70 8a+e action on your plan0

90 valuate the results0

$%0 ;ccept responsibility for the outcome0

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Planning far" finances:

• <inancial planning is especially important for

farm operators0

• <arming has a high level of #I'(0• 8ypes of ris+s: mar+et price ris+, weather ris+,

other types of production ris+

USDA photo by Bob Nichols.

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Sound !lanning #

• an improve a farmer=s ability to offset ris+ and

reduce personal stress

• an provide the basis for future growth anddevelopment of the farm business0

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$%e far" financial !lan&

ste! '1:

• >ecide on family goals•  ;nnual income level

• 'aving for future goals• uilding the business for the future

• 'ome ob"ectives on the way toward those

goals• .aying off debt

• orrowing and investing inadditional land, e@uipment or 

buildings

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$%e far" financial !lan&

ste! '2:

• >ecide on how to meet your family goals0

• >ecide on the size of business and the size of

enterprises to meet your goals0• onsider the size of enterprises that will

ma+e the best use of available resources0

•<ind a way to provide financial resources tomeet your goals0

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Asking questions about your

financial resources:

• What is the dollar value of what the farm

operators own A land, buildings, e@uipment,

livestoc+, savings, etc?

• What other resources can the farm operators

contribute A such as labor, management s+ills,

special training, etc?

• What financial resources can the farm operatorsborrow A mortgages, shortBterm loans,

e@uipment leases, land rental0

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(inancial !lanning tools:

• <inancial planning tools help to

answer these @uestions:

•  ;re the goals we are settingachievable?

• What changes do we need to ma+e to

reach our goals?

• ould higher goals be "ustified?

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So"e financial !lanning tools:

• nterprise budgets pro"ect the eCpectedincome, eCpenses and net revenue per acre

or unit, for a crop or livestoc+ enterprise0• *onthly cash flow statement shows when

income is received and bills must be paid

• alance sheet shows what farm operatorsown, what they owe, and their resulting networth0•  ; snapshot of a given point in time

•  ; series over time can show progress0

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ST#&"'T-P#T#'S($ and ")#*$#T +( are registered trademars o Stewart-Peterson Inc

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