Each year, each of our Executive Link (EL) member businesses produces an annual business report. The report provides a clear picture of their economic and financial situation. It also shows their goals and the progress they've made.

The report helps them communicate more effectively with people important to their business's success (e.g., their banker, share holders). It's extremely helpful in businesses with off-farm family and/or partners, and it keeps owners and managers in control of their businesses. The report includes:

  • Mission statement. The mission statement describes the purpose of the business. It's been said that “profit is to business as breathing is to life.”

    However, profit rarely inspires people to achieve great things. Research shows that the most profitable companies have a “bigger” mission than just profit.

  • Vision statement. It's said that vision without action is just a dream. Action without vision is a waste of time. But, vision with action can change the world. Defining a long-term strategic vision shows strategic direction of the organization and is the first step toward achieving the mission.

  • Long-term goals. Long-term or “strategic” goals show the specific actions you will take in the next five to 10 years. Goals should be stated as actions and should list the person accountable for accomplishing the task, as well as the date for completion.

  • Short-term goals. Short-term goals are the steps through which long-term goals are achieved. For example, the long-term goal of “complete estate plan” should be broken down into the steps you'll need to take to get the estate plan done (e.g., meet with the family to discuss the issues, meet with an attorney to draft a will).

  • Executive summary. The executive summary provides a concise description of the business, the current situation and major plans for the future. It should be less than one page long. The shorter it is, the more thoroughly people will read it.

  • Organization chart. The organization chart shows the basic structure of the business. It identifies all stakeholders, decision makers and people accountable for production, marketing and finance.

  • Economic and financial goals, projections and actuals. This section shows projected gross margins for each enterprise and a projected cash flow budget for the coming year. This section should be updated monthly to show actual cash flow to date.

    In addition, it should show key economic and financial ratios. If major capital improvements are planned, it's a good idea to include a long-term capital development plan.

  • Biological calendar. This section provides more detail on production practices and workflow. It includes a forage cycle graph, and a production schedule timeline. It helps show how closely production practices fit the environment.

  • Summary of past actions. EL participants include a summary of past accomplishments (completed long- and short-term goals). Showing the progress made demonstrates to readers that the business has a track record of following through on commitments.

Preparing the report is a major task, but it will improve communication with all of those involved in your business and help keep you in control. That's essential when you're ranching for profit.

David Pratt of Ranch Management Consultants teaches the Ranching for Profit School. Visit www.ranchmanagement.com, call 707/429-2292 or e-mail pratt@ranchmanagement.com.