A business plan is an invaluable tool that helps keep a producer on track to reach agricultural business goals.
Small farms should manage their operations similarly to larger agricultural enterprises to ensure long-term sustainability. To achieve this goal, substantial planning and development of a comprehensive business plan is key. A business plan is a written document that should be updated periodically. It defines the business goals, outlines reasons why these goals are attainable and details a plan for reaching these goals.
Small farms are susceptible to unexpected changes in output and input prices as well as other factors influencing their bottom line (e.g., losses due to adverse weather conditions). Small farm managers should develop and follow a business plan to better use the scarce resources (e.g., land, labor and time) needed to develop a profitable farm or ranch operation. Oftentimes, the action-oriented producer is tempted to skip the planning stage and focus on daily production activities. Even though a "getting the job done" attitude is needed, investment without planning is a risky venture.
Business plan development requires an initial commitment of time by the farm operator; however, the long-term benefits to the business are worth the effort. A sound business plan is necessary to obtain loans and secure appropriate interest rates. It is also viewed as evidence that your operation qualifies as a business with the intent to make a profit. Developing a comprehensive business plan can also help identify markets to attract new customers and increase overall demand and income.
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