All dairies should consider developing a new business plan or updating their current plans, but it is especially critical during times of change. Management success and transition of the business can be guided by the business plan. New ventures or diversification of enterprises can be guided by the business plan. Smith et al. (1) reported that developing a business plan was critical for the success of on-farm dairy processing ventures. When faced with changing markets, new opportunities or shifts in business ownership, the business plan provides a foundation for key decision-making. With marketplace volatility, increasing environmental regulations, and uncertain futures, having a well thought out business plan can provide stability.
Each business plan is somewhat unique to the individual dairy farm, but there are several common elements included in most business plans. The first and most important is the executive summary. This is often written last, after the rest of the plan is completed and provides key details in a snapshot format. Business history, current operational information, and a marketing plan along with details about production and finances round out the sections of the business. Projections, both on the production side as well as the financial side, are important in looking ahead and planning for the future. These projects provide business owners with targets and a way to monitor success in accomplishing the plan over time. There are a few templates and guides (2, 3, 4, 5) to make it easier to craft a sound business plan.
Part of business plan development is internal, and those critical conversations among owners and managers are just as beneficial as the final document that is put on paper. External advice and assistance can also be helpful. Having trusted advisors assist with creating the business plan can also help to ensure that your competitive advantages and strategies are highlighted and that your data used is accurate. In Pennsylvania, a number of resources are available through Penn State Extension and the Center for Dairy Excellence. A recorded webinar highlighting steps and benefits to business planning can be found at: Business Planning: Spring Roundtable Recording.
When building a barn or when building a business, take time to develop a good plan. Business plans provide the roadmap to follow during uncertain times as well as to help ensure competitiveness in productivity and profitability.
Source : psu.edu