It is important to have a business plan before you start a livestock business, no matter how much other preparations you have done. Farms today are much more complex and varied than they were 100 years ago. Markets changed, costs rose, profits fell, different ways of raising livestock emerged, and specialized markets emerged. You can create any type of business plan, but the steps below will help you in the long run.
Step
Step 1. Take a few sheets of paper, a pencil, or use a computer that has Microsoft Word, One-Note or another similar word processing program
These tools will help you write or type what's on your mind, especially your goals and aspirations in building a farm.
Step 2. Start looking for inspiration
You don't have to write a scientific paper to do this. You also don't need good sentence structure, correct spelling, or great writing skills. The best way to start is to make a list of what you want to do, decide how you're going to do it, and what you're prepared to do to achieve it.
- You should start by looking for inspirational goals and objectives. Running a business is more effective when you have a goal in mind than just the vague idea of "wanting to do something with animals." Ideas are not enough and will get you nowhere!
- As you think about your goals, remember that strategy is not the same as marketing. Strategy is the way your business adds value to consumers (“your value offering”). Strategy also describes how you convince potential customers to get added value from you by communicating the uniqueness of your business (or, what makes you different from other breeders). Business strategy also explains why you can provide more value than other entrepreneurs (the anatomy of your performance). Your marketing plan should describe how you will communicate your strategy to potential customers.
Step 3. Perform a SWOT analysis
SWOT is a popular acronym used in business and economics representing Strengths, Weaknesses, Opportunities, and Threats. Strengths and Weaknesses are internal characteristics that are controlled. Opportunities and Threats are external characteristics that are beyond the control of your business and industry. To perform this analysis, create a table with four columns, entitled: Strengths, Weaknesses, Opportunities, and Threats. Place the headings at the head of each column. Or, if you think that creating a table is too tiring and inconvenient, you can use a different paper for each factor.
- This kind of analysis is very simple and flexible because you can use it to analyze yourself, your business, or the industry you are starting to work in.
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These four strategic planning factors should explain everything about you, from pointing out what you can and cannot do, the help you need from more professional or expert people, what you are willing to learn, what problems or issues you need. you may face, and what opportunities can make you successful and profitable.
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Remember that there are two factors that will affect you and you should analyze:
- Internal strength you can control, such as the type of livestock you choose, whether your business is intensive or extensive, how you feed your livestock, etc.
- The External Strength you can't control, such as weather, topography and soil type where you farm, local, national and international industry issues, market prices, product demand and consumer preferences.
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Perform an internal SWOT analysis of you and your operations. Ask yourself what your skills are and what you need to improve on, what you can do to improve your skills and things that could make you reconsider your farming business. This includes considering seeking help from people with more experience in a particular area and the pool of knowledge you already have. Help can take the form of advice from a veterinarian, an accountant with experience doing farm audits, a farm construction supervisor, a farmer who has been in the business you're interested in for 20 years, etc.
Also do an analysis of your farm, the land on which it is farmed, and your family. Ask questions as above, but to the family. You should ask how much time together they expect, what will happen if you put the farm before family, what you can do to encourage and teach your children to be involved in your work, etc
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Do an external SWOT analysis of the type of livestock industry you want to enter, whether it's cattle (meat or dairy), horses, pigs, chickens, goats/sheep, or even exotic animals (like bison, deer or emu). We recommend that you do your research to complete a comprehensive SWOT analysis of the type of industry you are interested in. Read national industry news from local newspapers and magazines about livestock and visit trustworthy websites. For example, if you want information about livestock business in Canada, check out the Canadian Cattlemen's Association website at CCA.org. You will find a lot of information about national industry news and issues. Western Producer (for the provinces of Alberta, British Columbia, Saskatchewan and Manitoba) is the perfect newspaper for reading the latest news and information about various industries.
The more research you do at this stage, the more aware you will be of what to expect when the surprise strikes. When you have started to execute a business plan, you will become more and more aware of the shortcomings of your plan, the challenges that exist, and the needs and requirements needed to get involved and compete in the livestock business
Step 4. In a separate table, write down four columns starting from "Where am I now," "Where is my goal," "How do I get there" and "How do I know I've arrived"
Again, look for inspiration to answer these questions. If you can only make a point or two, that's fine. However, detail the four questions to help you answer them. Below are some points that you can consider when answering these questions:
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Where am I now?
Include a SWOT analysis (see previous step), for the following areas: consumer, operations, human resources, and finance. If you don't own a business, you can use a SWOT analysis as previously mentioned.
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Where is my destination?
This is a question of goals and targets that you want to achieve in the next 3 to 5 years. Include all aspects, such as funding, marketing, livestock health, breeding, animal delivery, weaning, rejects, sales, pasture management, feeding management, cost analysis, etc.
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This question is also appropriate for personal, family and business targets. When formulating family goals, ask family members to write down their own goals. Don't discuss your goals when you write them down. Discuss after all targets are written.
- Personal goals include things like reducing working hours, increasing your knowledge of commodity markets or accounting and production programs, etc.
- The business target focuses on livestock as a business entity, for example, the maximum debt burden, owning or controlling x hectares of land, etc.
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How do I achieve it?
This question is the most important part of a business plan because it asks you to write down ways to make you, your family, and your business better. Brainstorming is a great tool for answering this section because you can always have plans B, C, D, etc. in addition to your plan A.
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How do I know if I have arrived?
If you think of your business plan as a journey, it's not hard to understand that you need to measure your progress along the way and determine whether you're moving forward, staying in place, or walking backwards. This is done by defining, collecting and reviewing metrics, measures and Key Performance Indicators on a regular basis. This process is carried out for validate your plans and decisions, direct your future activities, justify changes to plans and intervene when things don't go according to plan. All of your goals must be measurable.
Metrics and measurements will provide the answer to this important question.
Step 5. In another file (if you are typing on a computer) or on another paper/page, start writing a Business Plan
Create a Business Plan by creating three main plans: Strategic Plan, Operational Plan, and Succession Plan:
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The strategic plan. This is the place to link all the thoughts, ideas, goals, and targets that you got when brainstorming in steps 2 to 4. In simple terms, the form of business plans developed by companies contains the following things:
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Vision Statement:
A statement about how you or your farm will look 5 to 10 years from now.
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Mission:
It determines or defines the life role the organization will carry out in society. This statement should briefly state what the company does, for whom, and why.
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Score:
Values are general standards or important guidelines for farms and families.
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Situation Analysis:
It is the process of identifying and understanding how your company stands within the environment in which you operate, both internally and externally. Step 3 describes this part of the strategic plan.
- Aim What is the main achievement you want to achieve in the next 3 to 5 years?
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Target:
How will you reach your goal?
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Critical Success Factors:
The areas of performance that determine the long-term success of an organization, and its development, growth and achievement. For each Critical Success Factor, you must define one or more Key Performance Indicators in the form of a metric that you will use to determine whether you have met the Critical Success Factors. These factors are expressed as a general statement of purpose ("Maintain customer satisfaction"), while the Key Performance Indicators are more specific ("Reduce the number of complaints against packaging.")
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Develop a work plan:
Strategies and actions that are implemented to achieve the goals that have been set.
In short, you don't need to bother answering "all" of the questions above. Answer the three simple questions in Step 4 as a tool for answering the standard 8 business plan questions
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Operational Plan. This is a daily activity plan including what is to be done, who will be doing and when the work is to be completed. These plans are short term and generally address production. There are four important sub-plans, namely the production plan, marketing plan, financial plan, and human resource plan:
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Production plan:
What will be kept or processed for sale? For the farmer, this includes two main components: the animals and the farming system. For the first component, you explain things like breeding, rejecting, weaning, caring for newborns, health of farm animals, etc. The second component includes the area of land and the type of commodity grown to support livestock (straw, silage, green fodder, grass, grain, etc.). Identify “all” types of businesses on your farm.
Production resources are also important to mention: land, equipment, and buildings and infrastructure
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Marketing Plan:
Where and how will you sell your commodities? Remember, selling is simply getting rid of what you have. When you market, you have to plan sales at the right price.
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Financial plan:
This plan includes budget analysis, income and expenses, debt, unpaid labor, opportunity costs, comparative analysis of your business with other businesses, cash flow statement, depreciation of machinery, animals, buildings, etc., salaries, family living expenses, etc.
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Human Resources Plan:
Most farms depend on one worker (owner) to run the operation. However, the human resources plan should highlight the recruitment issues your business is facing and how to deal with them. This plan describes what kind of employees are needed to run the business (general responsibilities, job titles, abilities, availability and required training programs.)
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Quality plan:
Quality control is the ability to define what you will produce and the quality your product should achieve. When controlling quality, you define the processes required to do both things. Periodically, you compare the product against quality parameters, recognize when you are not achieving the expected quality and have the tools to improve the process so that problems can be resolved and return the product to the desired quality level. There are many quality frameworks and methods, but one of the simplest is Dr. Continuous Quality Improvement. W. Edward Deming. This framework has four steps that are repeated continuously to improve the quality and maturity of the process.
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Plan:
Set goals for whatever you are going to do, the processes that must be followed to achieve those goals, and the metrics and measurements needed to control the process and prove that the goals have been achieved.
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Do:
Implement the plan and collect the metrics and measurements defined in the previous step.
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Check:
Review results, metrics, and measurements and determine whether improvements to the plan can and should be made.
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Repair:
Implement improvement plans so that when the process is repeated, the results will be better.
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- Succession Plan. This is probably the most difficult part of a business plan because you have to plan what will happen if the main operator is injured or, worse, dies. A succession plan includes developing a sustainability plan for your business and defining the process of moving the business to a new owner. This transfer can be either a sale to an outside party (equipment and land auction) or an inheritance (passing the business on to the next generation).
Step 6. Identify the type of farm ownership
There are seven main types of ownership: sole proprietorship, firm, limited partnership, joint partnership, joint venture, limited liability company, or trust. The types of ownership are briefly described below:
- sole proprietorship: This is the simplest form of business. This form of business is held by one person who takes care of everything. Debts and negligence committed by employees are the responsibility of the business owner. However, legal complications and expenses, negotiations for agreements, and business names are not required in this form of business.
- Firm: This form of business is run by two or three people. Since there is more than one person running the business, this business must register a business name, and each partner is responsible for debts, liabilities and operating expenses. This form of business is automatically broken if one of the partners dies, goes bankrupt, or is unable to pay.
- Limited partnership: This form of business consists of two groups of parties. One group of parties is fully responsible for the business (compartmentary partners), while the other group only provides capital and does nothing else (complementary partners). The complementary partner does not have an active role in day-to-day activities, but he or she can check financial records and provide management advice.
- Fellowship together or Co-ownership: It is a form of property ownership between two or more people.
- Joint venture or joint venture: This form is commonly used in livestock business when there is cooperation between two or more parties to run a particular business without forming a partnership company. Generally this form of business is temporary.
- Limited liability company: It is a legal business entity that is owned by a group of people through shareholding. It is a separate business entity from the owners of capital. The liability of the owner of the capital is limited to the amount of the investment he has, unless the owner of the capital personally provides a guarantee against the obligations of the company. Such companies can provide a very flexible framework in terms of succession to the next generation. Owners can also give employees a share of growth and operating profit without giving up management rights.
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Trusts:
In this form of business, legal ownership of a property is separate from ownership of the profits generated by the property.
Step 7. Hook them all together
Don't be afraid to make changes. A business plan is not a standard of rigid rules that cannot be changed. This document can be changed as the business grows and new ideas and issues emerge. Usually, a business plan is reviewed at least once a month or a year to see what has been written and what changes should be made.
Tips
- Ask for help when writing a business plan. Ask a professional or someone with a lot of experience in analyzing and writing business plans to help you out when you're having trouble writing a particular section.
- A business plan is required when you borrow money from a bank. The bank will be more interested in the financial part of your business plan to see how your business will benefit him or her financially.
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The business plan can be changed. You have to remember to save it so you can access it and change parts of the plan in case the unexpected happens.
Every good business must change and continue to analyze the business plan whenever needed. New business owners and people just starting out will look at their business plans more often than people or businesses that have been around for a long time
- Put “all” in writing. There's nothing worse than not writing something down and suddenly forgetting it. Place your business plan document in a separate file so you know where it is when you access it in the future. If you type a plan, save it on a hard disk or USB flash drive so that if the computer crashes and you can't access the documents, you've saved them in a separate place.
Warning
- Don't push yourself and try to write the entire business plan at one time. It may take you a week or so to complete, don't rush. Many established businesses spend six months or more preparing a business plan; rushing will only hurt your business in the end.
- Don't think that you don't need to look at the plan again while running the business. You should always try to analyze what you and your business have done well and what you are still struggling with.
