2008 National Women in Agriculture Educators Conference Financial Planning for Small Businesses Paul Ellinger University of Illinois April 1, 2008

2008 National Women in Agriculture Educators Conference 2 Outline  Background: Illinois Farm Beginnings  Overview of FAST Tools  Business Plan: Economics of the business  FAST Tool: New Company Simulator

2008 National Women in Agriculture Educators Conference 3 Illinois Farm Beginnings  Farmer Training Program initiated in Minnesota  Illinois Farm Beginnings is facilitated by  University of Illinois (Leslie Cooperband),  University of Illinois Extension (Deborah Cavanaugh- Grant) Two non-profit organizations  The Land Connection—Congerville, IL,  Angelic Organics CSA Learning Center—Caledonia, IL 

2008 National Women in Agriculture Educators Conference 4 Illinois Farm Beginnings  10 sessions in the winter focusing on planning for profit  Hands-on Field Days: April to October  Mentoring from existing farmers

2008 National Women in Agriculture Educators Conference 5 Sessions Session 1 Clarifying values; Setting personal and Strategic Business Goals Session 2 Building Your Business Plan Session 3 Whole Farm Business Strategy: Tools and Techniques Session 4 Financial Planning 101: The Fundamentals Session 5 Financial Planning 201: Planning for Profit Session 6 Marketing 101: The Fundamentals Session 7 Marketing 201: Realities from the Field Session 8 Connecting with Financial Resources and Farm Business Plan Presentations Session 9 Connecting with Conservation Resources and Farm Business Plan Presentations Session 10 Mentor/Mentee Meeting

2008 National Women in Agriculture Educators Conference 6 Session Outline  Understanding the economics of your business  Identify the major revenue sources of the business  Develop a method to determine the costs of producing/preparing for sale each item  Variable costs vs fixed costs  Distinguish your one-time costs from ongoing costs  Identify vulnerabilities  Oops and double oops assumptions  Develop a break even price and/or production level  Financial statement primer  What does your lender want?  Tools and information

2008 National Women in Agriculture Educators Conference 7 FAST Tools  farmdoc  farmdoc companion project initiated in 1999  Development of spreadsheet-based tools to aid decisions for producers, lenders, consultants and investors  Facilitate use, access, distribution of tools and resources through CD and internet distribution  Quarterly subscription  farmdoc  farmdoc download  via workshops  Approximately 30,000 CDs produced and another 35,000 downloads  Increased demand for education and training

2008 National Women in Agriculture Educators Conference 8 FAST Tools - Overview Computerized Decision Aids Financial Analysis InvestmentAnalysis Loan Analysis Farm Management Grain Marketing & Management Risk Management Yield Database Utilities

2008 National Women in Agriculture Educators Conference 9 New Company Simulator  Key components  Five year financial plan Cash Flow: Monthly cash flow to account for seasonality Balance Sheet Income Statement Financial ratios  Ability to evaluate 6 alternative crops/enterprises  Simultaneously evaluate 3 economic scenarios  Break even analysis  Solver for initial capital needed under alternative conditions

2008 National Women in Agriculture Educators Conference 10 FAST Spreadsheets Demo of program