Copyright © 2002 Center for Farm Financial Management, University of Minnesota

Center for Farm Financial Management University of Minnesota Department of Applied Economics

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Center for Farm Financial Management To Improve the Farm Financial Management Abilities of Agricultural Producers and the Professionals who Serve Them Through Educational Software and Training Programs

Copyright © 2002 Center for Farm Financial Management, University of Minnesota A comprehensive whole farm financial planning and analysis system A tool to help develop, monitor and implement a crop marketing plan

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Agricultural Producers Haven’t Had: 4Business Planning Software Designed Specifically for Agriculture 4A Comprehensive Agricultural Business Plan Format 4A Convenient Method to Document Financial Plans

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Purposes for a Business Plan 4Communicate Your Business Externally To lenders, investors, partners 4Communicate Your Business Internally To family members & employees 4Help Manager Think Through Where the business is at Where they want it to go

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Purposes for a Business Plan 4Helps you Take Time to Think About Doing the Right Things to Increase Profits Profit = (Price – Cost) x Volume

Copyright © 2002 Center for Farm Financial Management, University of Minnesota How do you Increase Profit? 4Profit = (Price – Cost) x Volume Increase margin (price – cost) Increase volume Creative innovation

Copyright © 2002 Center for Farm Financial Management, University of Minnesota You Need a Business Plan for 4Increasing Volume – Expansions 4Creative Nontraditional Alternative Enterprises

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Business Plan Components 4Executive Summary 4Farm Description 4Strategic Plan 4Operations Plan 4Marketing Plan 4Personnel Plan 4Financial Plan

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Business Plan Components 4Determine the purpose for your plan 4Use the components you need

Copyright © 2002 Center for Farm Financial Management, University of Minnesota FINPACK Business Plan Let’s Look at the Software

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Strategically Planning Your Future: Dairy

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Strategic Planning doesn’t mean you have to spend money, but you do have to spend time.

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Sessions Help Producers Make Time to Think: 4Creatively 4Honestly 4Strategically 4Watch Maine farm video tape Focusing on opportunities

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Five Analyses Participant’s Complete 4Industry opportunities can take advantage of 4Their interests regarding potential alternatives 4Their strengths that they can capitalize on 4Their goals 4The farm teams’ likes and dislikes

Copyright © 2002 Center for Farm Financial Management, University of Minnesota The Agenda – Day 1 4External Analysis Opportunities in the Dairy Industry Big questions facing dairy farmers Two business strategies 4Interest Survey 4Mission and goals

Copyright © 2002 Center for Farm Financial Management, University of Minnesota The Agenda – Day 2 4Mission and goals – continued 4Internal Analysis Strengths and weaknesses Benchmarking – how you compare Likes and dislikes 4Pulling it together into potential alternatives

Copyright © 2002 Center for Farm Financial Management, University of Minnesota The Agenda – Day 3 & 4 4Day 3 - Evaluating Business Alternatives Your FINLRB 4Day 4 – How to complete your Business Plan Marketing, personnel, and operations

Copyright © 2002 Center for Farm Financial Management, University of Minnesota External Analysis of the Dairy Industry 4 Identify opportunities that you may be able to take advantage of or threats that you may need to respond to.

Trends in the Dairy Industry Product Demand Processing Capacity Supply Growth Comparative Advantages Regionally Residential Sprawl Copyright © 2002 Center for Farm Financial Management, University of Minnesota

Trends in the Dairy Industry Labor Availability Niche Markets Consumer Attitudes Farm Policies Copyright © 2002 Center for Farm Financial Management, University of Minnesota

The two Strategies for Dairy Producers Commodity Creative AlternativeStrategy Expansion orientedNiche oriented Low-cost producerUnique product

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Characteristics of Two Strategies Commodity Creative Alternative Look at Look for alternative expanding enterprises that dairy herdgenerate revenue

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Opportunities and Threats 4 We have looked at: Trends in the dairy industry and the associated opportunities and threats Questions dairy farmers are faced with Size of herd issues The two strategies for dairy farmers Videos showing other farms’ strategies

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Opportunities and Threats 4 One of today’s primary goals: Identify one to three opportunities that your dairy business could take advantage of to increase profits or more effectively reach your goals. Use worksheet

Copyright © 2002 Center for Farm Financial Management, University of Minnesota External Analysis of the Dairy Industry 4We’ve Developed a List of Potential Alternatives in the Dairy Industry Rate alternatives based on your interest and the viability of the alternative Each person from the operation should do this independently

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Homework Assignments Day 1 4Summarize the interests you rated with other members of your farm team 4Determine whether you will pursue a commodity or creative alternative strategy 4Work on your goals

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Day 2 Strengths and Weaknesses 4Am I good at the activity? This is the strategy question 4Avoid asking the WHY or HOW questions These are tactic questions

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Objective Measures 4Percentile chart Shows your percentile rank Information from your FINAN is used 4Thought provoking questions designed to assess your strengths

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Percentile Chart Feed Cost per cwt 10%20%30%40% 60%70%80%90% 100 %

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Percentile Charts 4Production Milk Dairy Heifers Crop Production 4Finance

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Other Strengths and Weaknesses Evaluated 4Marketing 4People Skills

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Pulling it All Together Into Viable Alternatives for Your Business

Copyright © 2002 Center for Farm Financial Management, University of Minnesota We’ve Done Five Analyses 4 Your goals 4 External opportunities 4 Your potential interests 4 What you like to do 4 Your business strengths

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Alternatives for Your Farm 4 Can you identify some viable alternatives for your farm business? 4 What alternatives will help you accomplish your goals? 4 Are there alternatives that will improve your profitability and quality of life?

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Evaluating Alternatives 4 Next step – an individual session with an educator using FINLRB to evaluate the financial feasibility of potential alternatives you have identified.

Copyright © 2002 Center for Farm Financial Management, University of Minnesota Completing Your Business Plan 4Day 4 – How to complete your Business Plan Marketing, personnel, and operations

Copyright © 2002 Center for Farm Financial Management, University of Minnesota What We Have Learned 4Participants Identify “Mindset” as the Key Element for Future Success 4Management is Critical 4Participants Work Hard at Planning, Thinking, and Communicating

A World of Opportunities