1 / 36

Farm Business Planning and Management

Farm Business Planning and Management. Our goal?. To help you improve the management of your business through business planning. Introduce some management tools. Record-keeping alternatives Trend analysis Three year income and expense summary Calculating cost of production for enterprises

necia
Télécharger la présentation

Farm Business Planning and Management

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Farm Business Planning and Management

  2. Our goal? • To help you improve the management of your business through business planning.

  3. Introduce some management tools • Record-keeping alternatives • Trend analysis • Three year income and expense summary • Calculating cost of production for enterprises • Damona’s 30 + 1 plan

  4. Can You Answer These Questions? • Is the business headed in the right direction? • Does it provide enough income to: • Show a profit? • Cover your loan payments? • Pay family living expenses? • What are your production costs? • What price do you need to receive for your product to break even?

  5. Strategic Plan Component Personal Vision, Mission, Goals Family Vision, Mission, Goals External Scanning Internal Scanning Business Vision, Mission, Goals Strategic Plan

  6. Producers having a long-term business plan*** OSU

  7. Components of a business plan • History and general description • Mission or vision statement • Goals and objectives • Key planning assumptions • Market analysis • Marketing plan • Operations • Organization and management • Financial plan

  8. Key Planning Assumptions • List the family and ranch resources – land, labor, financial capital, other capital assets, management • Identify planning restrictions and constraints • Name expected products or services • Identify market outlets

  9. Operations, Organization, and Management • Define each individual’s role in the business • Develop an organizational chart for large operations

  10. Dan Small may not be simple! Nancy Dan or Nancy or Dan Nancy

  11. Operations, Organization, and Management • Identify most appropriate legal arrangement: sole proprietorship, partnership, corporation, etc. • Develop plans for allocation of profits

  12. The Financial Plan • Initial financial requirements • Historical and projected financial statements • Enterprise analysis • Risk assessment • Break-even analysis

  13. How would you rate your current record-keeping system? • Good? • Bad? • Ugly?

  14. Producers’ financial record-keeping systems** OSU

  15. Why keep records? • Provide facts about the business • Include both financial and production records • Measure business performance • Allow producers to meet legal obligations, support loan applications, and arrange for insurance coverage

  16. Historical assessment • Three year trend worksheet

  17. Record-Keeping Alternatives • Computerized Records • Software is not expensive • Easy to keep • Easy to generate reports • Hand Records • Don’t have to learn to use software • Very low cost • Difficult to sort and summarize

  18. Why Quicken? • A popular personal financial records software package • Inexpensive • User-friendly • Flexible

  19. Quicken’s shortcomings for agricultural producers • Not built to keep production records • No separate physical data field (can use memo) • Cash accounting (not double entry, no depreciation records) • No payroll or invoicing features in basic version

  20. Accounts Budgeting Loan tracking Tax planning Reports and graphs Online banking, bill payment, investment features Quicken features

  21. Financial Planning Features • Budgets • Reconciliation • Loans • Savings • College • Retirement • Refinance Quicken Reports • Cash flow • Tax schedule • Transactions • Account balances • Comparison • Balance sheet

  22. Financial Records Needed • Inventory of assets and liabilities • Transaction journal of income and expenses • Copies of tax returns filed • Employment records

  23. How Long to Keep Records • Cancelled checks: • At least 6 years (consider keeping longer) • Investment records: • 6 years after tax deadline for the year of sale • Loan agreements: • Until updated • Receipt for large purchases: • Until item is sold or discarded • Tax returns: • 6 years from the filing date

  24. Enterprise Analysis • With income and expenses sorted into enterprises, analysis is easy. • Profit and loss centers are now visible. • Might find out that it is cheaper to buy hay than it is to bale your own.

  25. Calculating Cost of Production • Identify enterprises • Cow-calf • Stocker • Breeding bulls • Native pasture • Improved pasture • Custom work • Horses

  26. Calculating Cost of Production • Identify enterprises • Allocate cash expenses • Identify non-cash expenses • Allocate non-cash expenses • Add them up!

  27. Calculating Cost of Production • Allocate cash expenses • Identify most appropriate method to match expenses with an enterprise. • Number of bales of each type of hay to divide out baling expenses. • Number of acres of each crop with the application rate to allocate fertilizer costs. • Number of times over field by crop to allocate tractor expenses

  28. Calculating Cost of Production • Identify non-cash expenses • Accrual adjustments • Account for changes in beginning and ending inventories. • Pre-paid expenses, supplies, accounts payable, ad valorem taxes, employee payroll withholding taxes, accrued interest, loan balances • Need to have a balance sheet • List of items that are owned and owed.

  29. IFMAPS • A free, confidential service assisting Oklahoma farmers and ranchers with financial planning since 1985 • Trained financial specialists work with families one-on-one to develop financial statements and evaluate alternative plans • Contact the local Extension office, an area Agricultural Economics specialist, or call the IFMAPS office in Stillwater at 1-800-522-3755

  30. Damona’s 30+1 plan • Spend 30 minutes each week maintaining records • Take one step each month to improve your record-keeping system

  31. Monthly items • Update your will • Specify medical directives • Update life insurance beneficiaries • Update beneficiaries on retirement accounts • Have a durable power of attorney in place • Check depreciation schedule for accuracy • Develop and/or update farm asset list • Develop and/or update household asset list • Develop a list of account numbers and contacts

  32. Monthly items • Take photographs or video of assets and place in safe deposit box • Notify family members of location of important papers • Relax and enjoy peace of mind knowing that your family is prepared for emergencies!

  33. Using the Business Plan • Distribute copies to those involved in business • Review plan periodically • Monitor progress, meet with planning team • Keep records • Compare actual outcomes to projected outcomes • Make changes to plan as needed

  34. Just do it! References: • OSU Ag Econ Department, http://agecon.okstate.edu/websites.asp • OSU Extension publications, www.osuextra.com • National Ag Risk Management Library, http://www.agrisk.umn.edu/ • Annie’s Project, http://www.extension.iastate.edu/feci/annie/ • Business Planning Guidebook, Minnesota Institute for Sustainable Agriculture, http://www.misa.umn.edu/vd/bizplan.html • FINPACK Business Planning Software, http://www.cffm.umn.edu/Software/BusinessPlan/

More Related