RANCH BUSINESS PLAN by BudCrain

VIEWS: 655 PAGES: 3

									Ranch Business Plan Executive Summary Outline
              Present Situation
                     -       Business description and ownership
                     -       Resources and financial statements summary
                     -       Performance: production and financial
                     -       Proposed Activity
              Mission Statement, Objectives, and Goals
              Management and Personnel
                     -       Family and hired personnel
                     -       Supporting accountant, lawyer, lenders, and consultant
              Products/Services Produced and Marketed
                     -       Uniqueness of the business
                     -       Description of major input supplies
              Market Analysis and Plan: Customers and Products’ Uniqueness
                     -       Market strategy
                     -       Cost competitiveness
                     -       Major competitors
              Summary of Financial Projections
                     -       Historical Summary
                     -       Projected capital requirements
                     -       Long-term strategic plan
              Implementation Plan
              -      Outline of activities and schedule of initiation through completion

       Business plans are only “valid” if they are written and updated as the implementation
progresses. Plans that are not written are normally not taken seriously because they are neither
commitment nor show the willingness to be held accountable for performance.

       The development of the ranch business plan is one of the components of business
management activities as outlined below.
Business Management Activities
              -            Planning
                     -     Decision making
                     -     Measuring results
                     -     Setting expectations for the business and employees
                     -     Accountability of all involved
                     -     Responsibilities taken
              -            Self evaluation
              -            Business evaluation
              -            Time management
              -            Management information system development and use
              -            Motivating people to excel
              -            Communications
_________________
Prepared by Jim McGrann, Professor Emeritus, Texas A&M University, 8-10- 2008


                                               1
        Written and timely
                                Commitment
                                Accountability
                                Evaluation
                                Responding to underachievement

       Business planning is a dynamic activity that defines the direction and expectations that
guide participants and their expectations toward the goals of ownership.


                         Ranch Business Plan and Where It Is Used?

        The business plan development is not a one-time event, but a process that has a number
of uses. The plan may address an ongoing business to identify areas for change due to changing
goals or missions of the business. It may involve a change in business activity, which requires
investment analysis and a projection of its affect on the existing operation. A new ranch business
investment or transfer of ownership is most frequently, and rightfully so, a primary motivation to
develop a comprehensive business plan. Outlined below are the areas where a business plan is
frequently very cost effective.

    1. Ongoing business evaluation and projection.
                     -     Current assessment
                     -     Projection under current operations
                     -     Basis for evaluation of current situation
    2. Change in the business activity.
                     -     Investment analysis, or the consideration of the affect on the current
                             operation for the change
    3. New ranch business.
                     -     Investment
                     -     Operations and management
                     -     Financing
    4.    Add outside activities to generate income and investment diversification.

    5.      Estate planning

                                     Objectives and Goals

       Objectives are general statements describing what the desire is to achieve over time.
Goals are specific statements that describe what has to be done to achieve the objectives. Doan’s
Agriculture Report describes objectives as having the following characteristics:
               Directional: Moves you in the general direction of finding ways to complete
                       your mission
               Reasonable: Intended accomplishments are practical and attainable
               Inspiring:     Outcomes are positive and challenging
               Visible:       Accomplishments are easy to imagine
               Eventual:      Long-term outlook (ten or more years) in fulfilling mission


                                                2
Goals are what are important to achieve success. Doan’s defines the goal attributes as follows:
              Specific:       States only one intention
              Measurable: An observation can be made to indicate fulfillment
              Attainable: Is realistic, yet challenging
              Rewarding: Accomplishment must be valued to maintain persistence
              Timeliness: Time constraints encourage the development of work strategies

        Given the fact that ranching is both a way of life as well as an economic endeavor, clearly
stating objectives that are consistent and realistic are important in developing useful plans.

        Defining realistic attainable goals are critical for a business plan to be implemented, as
well as the commitment and accountability that are achieved from participants.

        A frequent objective of ranching is to operate in a way to minimize the necessity to
provide non-ranch equity to sustain the business and lifestyle, and to conserve or improve the
natural resources. A specific goal could be to increase weaned calf crop five percent while
cutting supplemental feed cost 20% in a production cycle.

       As margins between revenue and cost narrow, the business management objective and
associated goals rise to greater importance. Realistically, the quality of lifestyle determines if
income shortcomings increase financial risk or owners’ work and stress to keep things together.

       The vision of the future should not be limited by the past. Rangeland uses are changing.
Wildlife management, recreation, resource stewardship, and water quality are all issues that have
important economic and resource management roles.

        When the business plan is being developed for family businesses or for a new ranch
investment endeavor, it is highly advisable to develop financial information before writing
objectives and specific goals. The entry and exit conditions need to be written. Realistic
measures of success reflect the earning capacity of assets invested in ranching and the long-term
nature of land appreciation. It also helps planners reflect on the multi-revenue use and lifestyle
objectives.

Set three or four clearly communicated goals with priorities. Realistic achievable goals motivate
execution – getting the job done. More on execution follows.

Execution
        The business plan is only successful if it is executed. This is accomplished by insuring
the plan links the strategy to people and results. All the people that will be held accountable for
execution need to participate in the planning and goal setting activities. This promotes
participant’s “buy in”. Participation should reflect realism in goals and priority selection.
Accountability can then be identified with people and specific goals. Execution is promoted by
developing and using a measuring system to reward the doers.

        Leaders in the business must place a premium on getting things done – execution - turns a
plan into accomplishments.



                                                  3

								
To top