Tennessee Master Meat Goat Producer

1. Tennessee Master Meat Goat Producer

2. Business and Financial Planning and Management for Meat Goat Operations John Campbell Rob Holland Aaron Robinson

3. Teaching Objectives • Producers will learn basic principles of business planning • Producers will learn the importance of farm records and how to use them for making management decisions • Producers will learn types of business risk and how planning and management can reduce such risk

4. Teaching Objectives • Producers will learn the value of developing farm financial plans and utilizing enterprise budgets in decision-making. • Producers will learn how herd performance measures are calculated and how these measures can be used as a basis for making improvements in both production and financial management

5. Business and Management Planning • Successful business requires solid business planning and management • Most successful businesses have some type of business management plan • Goat producers should make overall business planning a routine part of the management of their enterprise

6. Mission, Goals & Tactics • The mission should clearly state why you have the enterprise and how raising meat goats fits with your personal and professional priorities • Goals for meat goat enterprises should be concise statements that describe certain performance measures which, once achieved, will help meet the overall mission of the enterprises • Tactics are the production and management activities that must be performed to run the enterprise and meet the goals

7. Mission • Refer to Chapter 2, Page 2 in manual • ________________________________________________________________________________________________________________________________________________________________________________________________________________________________

8. Mission, Goals & Tactics • The mission should clearly state why you have the enterprise and how raising meat goats fits with your personal and professional priorities • Goals for meat goat enterprises should be concise statements that describe certain performance measures which, once achieved, will help meet the overall mission of the enterprises • Tactics are the production and management activities that must be performed to run the enterprise and meet the goals

9. S. M. A. R. T. Goals • Specific - - goals should be well-written, concise, straightforward and definitive • Measurable - - goals should be measured in quantitative terms so progress can be monitored • Attainable - - goals must be achievable and not in conflict with other goals • Rewarding - - the achievement of a goal should be rewarding in some way • Timed - - goalsshould have a time limit for achievement

10. Goals • Refer to Chapter 2, Page 3 in manual • Increase kid crop percentage by 20% in 2 years • ________________________________________________________________________________________________________________________________________________________________

11. Mission, Goals & Tactics • The mission should clearly state why you have the enterprise and how raising meat goats fits with your personal and professional priorities • Goals for meat goat enterprises should be concise statements that describe certain performance measures which, once achieved, will help meet the overall mission of the enterprises • Tactics are the production and management activities that must be performed to run the enterprise and meet the goals

12. Tactics • Refer to Chapter 2, Page 3 in manual • Analyze forage and grain for nutrient levels • ________________________________________________________________________________________________________________________________

13. Business Plan • Proper identification and written descriptions of a mission, goals and tactics for a meat goat enterprise will provide a strong foundation for the development of a complete business plan • A business plan provides a structure that guides the business planning and on-going business management process

14. Business Plan • A written business plan is a tool that describes and defines the many details of a meat goat enterprise • Development of a business plan should be a basic management practice for goat producers • A business plan does not have to be long nor expensive, but it does require an investment of time and attention

15. Business Plan Format • Overall description of the business • Management overview • Description of the products planned to market • Market analysis and development of marketing strategies • Financial plan • Tax returns, legal documents, contracts and agreements

16. Obtaining Financing • Insufficient planning and lack of capital are the most frequently cited reasons that businesses fail • Whether you are starting or expanding a goat enterprise, sufficient capital is essential • But knowledge and planning are required to manage capital well • Significant start-up costs can make the early days (and years) of a new enterprise stressful

17. Funding the Enterprise • Comes from either one or a combination of two primary sources • Equity • Debt

18. Equity • The owner’s contribution to the start up of the enterprise • Money that stays in the business and does not have a definite repayment schedule • Critical component of an enterprise that is in need of additional funds

19. Debt • Debt funding (or a loan) is critical for enterprises that do not have sufficient equity to finance the business needs • Loans are generally set-up with a fixed payment schedule • Lenders may require that equity represent 25 to 50 percent of the total start-up costs for a new business

20. Loans • Generally obtained from commercial banks, government agencies or some other third party that sets a specific repayment schedule • Secured or non-secured • Non-secured loans are based entirely on the borrower’s financial strength and past performance • Secured loans require that assets be used as collateral to secure the loan

21. Where do you get the money?

22. Sources of Start-Up Capital for Starting a New Business Venture • Personal Resources 60% • Commercial Lending 23% • Friends & Relatives 9% • Other Sources 4% • Outside Investors 3% • Government Agencies 1%

23. Five C’s of Credit • Character • Capacity • Collateral • Conditions • Capital See manual for additional details.

24. “Keeping records and preparing budgets is about as exciting as watching paint dry.” Rosemary Harter, Illinois farm wife who helped save the farm by improving records and developing marketing plans.

25. Farm Financial Record-Keeping • Effective management of a farming operation today requires that records be kept so managers can make informed decisions affecting the profitability of their farms • Farm business decisions that are not based on accurate farm records may lead to less profit

26. Why keep records? • Proof • Decision-aids • Institutional requirements • Environmental regulations

27. Record Tips • Selecting a record-keeping system should depend on the expected use of the records; no "best" system • Record systems should emphasize decision making, not tax preparation • Regularly and accurately post transactions • Make all financial transactions through checking account; reconcile checkbook with records

28. Whole Farm Record System

29. Enterprise Record System Contain all the income and expenses associated with a single enterprise.

30. Enterprise Record System An enterprise can be any crop or type of livestock produced on the farm.

31. Enterprise Record System Should contain all cash income and direct cash expenses for that particular enterprise.

32. Enterprise Record System In-direct enterprise expenses are more difficult to assign.

33. Direct Goat feed Goat medicine Auction fees Trucking Seed Fertilizer Lime In-direct Fuel Repairs Labor Insurance Utilities Rent Types of Expenses

34. Uses of Enterprise Records • Compare the profitability of different enterprises • Developing enterprise budgets or

35. Sales Records • Estimating income from sales is an important aspect of overall management • Income estimates are almost always more accurate when there is historical information on which to base projections • The dollar amount of sales may not tell a farm manager much about what was really sold

36. Information in Sales Records • Date • Description of animal/animals sold • Number sold • Weight (if sold by pound) • Price • Sale expenses • Market name/buyer

37. Whole Herd Sales Record

38. Kid Sales Record

39. Cull Breeding Stock Sales Record

40. Breeding Stock Sales Record

41. Assessing Risk • Agricultural enterprises are subject to both price and production risk • Higher returns are generally consistent with higher levels of risk • Goal is to manage risk and reduce risk to an acceptable level • Can not completely eliminate all risk

42. What are some types of risk? ________________________________________________________________________________________________________________________________________________________________________________________________________________________________

43. What are some types of risk?

44. Types of Risk • Production and yield risk • Market and price risk • Business and financial risk • Technology and obsolescence • Casualty loss risk • Social and legal risk • Human risk

45. Developing Farm Plans • An outline of the proposed operation of the farm business • Indicates what to produce, how much to produce and how to produce it • Two types of farm plans • Long-run plan • Short-run plan

46. Long-run Plans • Estimate of the resource allocation that is likely to yield greatest net returns over a period of years • Based on family goals • Shows the changes in farm business organization that must take place to attain those goals • Revise if technology or input or output prices change materially

47. Short-run (Annual) Plans • Made to fit the individual year • Implements the transition from the present farming system to the proposed long-run plan

48. Intensive Planning • Long-run and short-run farm plans must be flexible if they are to be realistic and serve the purpose for which they are intended • UT Extension’s MANAGE Program assists in developing farm plans • Helps producers understand their financial situation and make informed decisions

49. Answers to these questions • Where am I? • Where do I want to be? • How do I get there?

50. Addresses Major Financial Objectives • Profitability – ability to generate net income • Liquidity – provide cash when needed • Solvency – financial growth and security