Every business needs a direction.
When unsure about the direction to travel, it helps to begin by looking at where you’re starting. The first stage of strategic planning will do just that: take an inventory of resources available, followed by an assessment of the businesses strengths, weaknesses, opportunities and threats (SWOT analysis). These inventories provide a foundation for creating a vision.
A good time to get started on this process is from November through March, as it is a downtime for most ranchers. “If you can get through this process in the winter, then a year from now you can review the plan, update it and improve it,” says Barry Dunn, executive director of the King Ranch Institute for Ranch Management. The business demands an annual review, he adds.
For Ben Spitzer, inventorying resources began the moment he stepped into the general manager position of Salacoa Valley Farms near Fairmount, GA, in July 2007. He describes feeling “under the gun,” as Georgia was facing the worst drought in its history, and the farm had 300 bulls to market and a set of calves on the way. It was all he could to do make a quick assessment of the situation and prioritize. Nearly two years later, he’s found some breathing room to continue the strategic-planning process.
“It’s paramount for us to have a vision, to have a plan and to stick to it as much as possible,” Spitzer says. “Otherwise, we’ll just end up spinning our wheels.”
Assess the current situation on the ranch, inventory ranch resources and develop a vision statement for the operation.
A realistic vision statement requires an accurate assessment of the current situation. An inventory assesses the tools available. These tools should include financial, physical, natural and human resources. The latter may include skills, abilities and inclinations of those on the ranch, such as having an employee trained in artificial insemination, or a young person wanting to return to the operation.
Conduct a SWOT analysis.
The SWOT analysis reviews the ranch operation as a whole, assesses the current situation and is considered a continuation of the inventory process. It should be a simple review of the immediate strengths, weaknesses, opportunities and threats you perceive on the ranch.
When conducting a SWOT analysis, consider the following guidelines:
1. Strengths and weaknesses come from within the operation. Try to formulate a list that reflects not only how you see your operation, but also how customers see both the business and the products they purchase. To identify strengths, ask yourself:
• What advantages does my business have?
• What do neighbors see as my strengths?
• Why do customers like what they buy?
• What are the present and future reasons why my business has a sustainable competitive advantage?
An example of a strength may be a college degree, which represents specialized knowledge, providing a competitive edge.
To identify weaknesses, ask yourself:
• What can I improve?
• What are the factors that prevent me from selling to certain customers?
• Why can’t I achieve target financial objectives?
Weaknesses are often the easiest to spot, as they are the opposite from one’s strengths. It requires a strong sense of reality and self-awareness; it can be difficult to objectively see where your business stands today and how it is facing the future. Remember that a weakness may represent an opportunity. An example may be the lack of enough calving pastures to control diseases.
2. Opportunities and threats come from outside of your operation. When listing opportunities and threats, ask yourself:
• What will markets be doing in the short and long term?
• What are my competitors’ weaknesses?
• Is my operation ready to take advantage of anticipated technological changes?
• How is my firm positioned to face changes in legislation?
• The U.S. is opening markets to the kind of products I market. Is my operation ready to immediately benefit from that?
These questions work in determining both opportunities and threats, depending on your answers. Threats may include a change in consumer tastes, various unforeseen legal and/or legislative effects, seasonal sales patterns and the closing of certain commodity markets.
3. Understanding competition is part of this process, too.
Competition is an important concept to consider. For many corporations and businesses, competitors may be relatively easy to identify. However, competition between farmers and ranchers may be hidden in discussions about the best yields, weights and/or prices.
Once the SWOT analysis is complete, it will define which issues are important in helping achieve the desired vision and those that may prevent you from achieving it.
A SWOT analysis is a useful tool because it helps analyze the operation as a whole, or evaluate a project before implementation. It’s a quick way to determine the factors leading the business toward a certain degree of success, and which factors may hold it back.
Establish a vision for the ranch.
While the resource inventory and SWOT analysis provide a deeper understanding of the ranch business and the resources available, a vision statement provides clear direction about where the business is headed. It should be written in a manner that motivates operators to move forward.
A thoughtful vision statement will also be useful in communicating to customers, suppliers, advisors and community members what is important to your ranch, how it is unique and why the ranch and its operators are valuable.
Strategic-planning experts suggest a vision statement should include three key components:
• A statement about the business’ values and reason for being.
• An envisioned future describing what the business will be like if it achieves its goals.
• A recognition of how the business serves its stakeholders (which may include owners, employees, customers, community and/or society as a whole).
Additionally, a vision statement should address:
• Time. Generally describe a situation to be achieved 5-10 years into the future.
• Energy. By using energetic and emotional language, a vision statement should inspire those involved in the ranch and the importance of moving toward the vision.
• Cooperation. The statement should encourage the cooperation and creativity of the ranch team. Spitzer says a lot of operations have identity crises. “You’ve got to pick your battles and pick your markets – you can’t be all things to all people,” he says. “You’ve got to tailor your operation to what you do well, and what you can offer, and go from there.”
Develop the vision
The process of developing a vision statement is as important as the final drafted statement. Throughout the process, allow yourself to dream.
Just as important is including everyone involved in operating the ranch in developing the vision. Business experts frequently refer to the power of “shared” vision. A vision embraced by all participants cannot be dictated; it must be developed through consensus building. Comments from those outside the business may be useful as well.
The following is a list of questions that will shape the vision statement. Consider what the family and business both value and dream about, by asking, “What do we want?” and “What is the family and business willing to make a strong commitment to?”
1. If our ranch could be anything we can imagine eight years from now, what would that be?
2. What new activities will our ranch business be pursuing? What business(es) will we be in? Are there new products we would like to produce or activities we would like to be involved in?
3. What will be the important concerns of our customers eight years from now? How do we meet their demands and desires?
4. How will our ranch business excel?
5. What will be the roles and responsibilities of family members and ranch employees?
6. What is of greatest value to family members? To the ranch business?
Next, consider each of the following categories. Begin by describing what each situation looks like currently, followed by what the preferred future would look like.
• Ranch business products/services.
• Ranch production practices.
• Ranch business size.
• Ranch business structure and organization.
• Social responsibilities.
• Family members and employees.
• Family activities.
Using the notes and discussions from above, you can now draft a short vision statement that describes your desires for the future.
In just a short time of managing, Spitzer says strategic planning has improved the working environment.
“When we got there, the ranch was running us,” Spitzer says. “Now we’re running the ranch. If you don’t have a plan, you just end up running from fire to fire without making any progress – you’re just squirting water.”