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How to Make Business Plans

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How to Make Business Plans Powered By Docstoc
					     Marketing and Economics for
      Small-acreage Properties




Developed by:
Cinda Williams, University of Idaho Extension
Bob Hamblen, Colorado State Cooperative Extension
Kevin Laughlin, University of Idaho Extension
Susan Donaldson, University of Nevada Cooperative Extension   UNCE, Reno, Nev.
                 What we’ll learn today
                Reexamine your property goals
                Do you want to make a buck?
                Can you make a buck?
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                Business plans
                Marketing methods
                Keys to success
                Resources

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            So, you want to make a buck?
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                  http://fruithome.com/pictures/money_t3.jpg




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                      Reexamine your
                       property goals
                    Look at the map you made in
                        Module 1, Lesson 1
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                You’ve added, revamped and changed
                     the plans for your property
                    Now comes the time to ask,
                    “Can I make a buck at this?”


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Legend
          Acres = 25          Soils = sandy clay     Property    Map
  Well    Animals = 6 cows,   loam, silt
          1 horse, 3 goats    Grasses present = Tall
 Trees                        fescue, orchardgrass,
          Pastures = 1
 Weedy                        clover, bentgrass
          Months animals                                 House
 Bare                         Weeds present = Canada
          grazed = 9
 ground                       thistle, pigweed

 Marshy
           Barn
 Stream
 Water
 trough
 Gate                                    Barn




                                                  Barn
 Fence
 Septic
 Manure
 pile
    Legend                                                   Property Map
     Well       GH Greenhouses (high tunnels)
                                                       Acres = 25
                --- Wildlife planting area
     Trees
                     Hot-wire fence
     Weedy      Animals = 2 cows, 1 horse, 10 dairy goats
     Bare       Grasses present = Tall fescue,                House
     ground     orchardgrass, clover, bentgrass
P    Pasture    Soils = sandy clay loam, silt
     Marshy                                 New gravel road for access

     Stream            Processing   GH   GH GH
                       shed
     Water trough
                             GH
     Gate                    GH
                                                          Barn
     Fence




                                                                         Barn
     Septic
     Manure
     compost area
C    Cropping area

GC   Ground cover planted
                      Reexamine your
                      personal goals
                Why do you want to sell a product?
                Do you have the skills and resources
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                to grow, raise, manage and market a
                product on your property?
                Why do you want to do this? Is it
                going to be FUN?


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        What are you going to sell?




www.sustainablepoultry.ncat.org    http://blogs.venturacountystar.com




          www.eatapples.com       http://blog.americanfeast.com
                Are your physical resources
                adequate for the enterprise?
                Irrigation water?
                Soil?
                Climate?
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                Length of growing season?
                Vicinity to buyers or
                consumers?
                Equipment?
                Storage?                    yourproduceman.com


                Property access?


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            You are a physical resource
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                                  USDA NRCS




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                Does your family share your
                enthusiasm for the product
                    and this venture?
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Time and money
                What about external factors?
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                                       USDA NRCS




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                So, you still want to make a
                           buck?
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                 How are you going to
                       decide?
                Guess
                Throw dice
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                Use a dart board
                Use a decision-
                making process
                Use a SWOT
                analysis


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                   Another approach:
                 Develop a business plan
                Mission statement
                Goals (short-term and long-term)
                Marketing plan
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                Production and operating plans
                Financial plan
                Staffing and labor plans
                Management plan
                Contingency plan

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Why write a business
       plan?
A business plan becomes the
road map for your enterprise




                        www.internest.com
                It is specific to each
                 particular business
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                 It serves as the basis for
                obtaining financing for the
                    proposed enterprise
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                                 www.communitybank.net




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A business plan is most useful if
you put it in writing and can refer
       back to it regularly




                            www.realhomebusiness.com
                  Why spend so much time on
                         planning?
                                  70 to 80 percent
                                  of new
                                  businesses fail in
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                                  the first year
                                  Failure is often
                                  attributed to a
            www.sheepcrc.org.au   lack of adequate
                                  planning


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                Start by knowing your product
                 Crops
                  Traditional (acres
                   of a single crop)
                  Multiple crops
                  Specialty
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                 Livestock
                  Traditional
                  Specialty
                 Value-added            NCSU


                 products

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            Do your product homework!
                Read, research and explore everything
                you can find about the product
                Research similar enterprises
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                Talk to your family and get their input
                Ask yourself: Why might consumers buy
                my product? What makes it stand out?



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                  Why buy my product?
                Take five minutes to develop a plan to
                “tell your story” as a PRODUCER to
                explain why someone would want to
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                buy product A, B, C, etc.
                Then, take five minutes to develop a
                plan to “tell your story” as a
                CONSUMER to explain why you would
                want to buy product A, B, C, etc.

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                Understand your market
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                Village Market, Calif.




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                          An example:
                         niche markets
                Ethnic vegetables
                Kid goats for religious holidays
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                Heirloom vegetables or fruits
                Pesticide-free fruit
                Free-range chicken eggs
                Duck or turkey eggs

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                Direct-marketing methods
                Roadside stands
                U-pick
                Community-supported agriculture (CSA)
                Custom livestock
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                Restaurants or grocery stores
                Institutional customers (schools,
                prisons, colleges and corporations)
                Farmers’ markets
                Value-added processing

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                               On-farm or
                                roadside
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                                 stands


                 Rural Roots




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                                  U-pick
                     Farm-fresh treats
                      and U-pick fun
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                Travel Oregon




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                Community-supported
                  agriculture (CSA)
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                          Great Basin Basket CSA




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Custom livestock




                   UNCE, Reno, Nev.
       Restaurants or grocery stores
bonappetitnetworks farm to fork   Rural Roots
                             Institutional customers




bon appetitnetworks farm to fork
Farmers’ markets




                   Jonathon Demcak
Value-added processing




                     Lavenderridgereno.com
Agritourism




              H. George, UCCE
You’re only limited by your creativity and
  your ability to successfully market!

                                 gunsncoffethestranger.com
                More marketing alternatives

                 Web-based ordering
                 Mail ordering
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                 Catalogs
                 Cooperative partnerships
                 Cooperative marketing
                 Etc…


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        Don’t discount word of mouth




UNCE, Reno, Nev.
Collaborate with the
    competition
                 Now you’re finally ready to
                  develop a business plan!
            Remember, the parts of a business plan are:
                Mission statement
                Short-term and long-term goals
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                Marketing plan
                Production and operating plans
                Financial plan
                Staffing and labor plans
                Management and contingency plans

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 What’s
  your
mission?
            Examples of mission statements

                Our mission is to bring additional net
                income into our enterprise by providing
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                the highest-quality product.
                Our mission is to provide vegetables
                for local consumption, which increases
                the financial security of the operation.




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What are your goals?
                Examples of goals
                       Increase the sales of
                       apples by 5 percent for
                       the next fiscal year
                       Increase the overall
                       return on investment by
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                       10 percent for the next
                       fiscal year
                       Increase the sales
                       volume by 5 percent in a
                       selected region by next
                       fiscal year

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                 Now you’re ready to write a
                mission statement and goals!

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                Marketing plans
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                What’s missing from your
                    business plan?
                  Production and operating
                  plans
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                  Financial plan
                  Staffing and labor plans
                  Management plan
                  Contingency plan

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                       Production and
                       operating plans
                To complete a production and
                operating plan, you need to collect
                information about:
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                The cost to grow or produce your
                product
                The average yield for your area
                The going rate, or average sales price

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                Basic financial questions
                 How much do you want to make?
                 (A gazillion dollars?)
                 How much will it cost to produce?
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                 What can you sell it for?
                 What do you need to sell it for?
                 (What’s the net profit?)



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            Determining production costs so
               you can set a selling price
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                                 www.pnwchees.com




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                    Production costs
                Supplies         Taxes
                Equipment        Permits and fees
                Labor            Advertising and
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                Land             marketing

                Insurance        Wages

                Transportation



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                Determining a selling price
                What does it cost to produce?
                What is a reasonable profit?
                Remember, making a profit is not a
                crime. Your time has value!
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                What will the market bear?
                  What is the price of similar products?
                  What allows you to charge more for your
                   product?


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            What methods of payment will
                   you accept?
                Cash and carry
                Credit/debit cards
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                Checks
                Running a tab
                (financing)
                Barter


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                Making a reasonable profit

                 How do you figure a profit?
                 Markup or gross margin?
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                 What is the difference?
                 What will the market allow?




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A marketing example
       If you want to sell a
   bushel of carrots that cost
   $50 to produce, what is the
        selling price if the
     markup is 50 percent?

   Cost ($50) + 50% Markup ($25) =
         Selling Price ($75)
       A marketing example
            What is the selling price
       if the gross margin is 50 percent?

             Selling Price ($100) =
Cost ($50) + Profit (50% of selling price, or $50)


  Markup profit is $25
  Gross margin profit is $50
                 Financial
                   plans
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                 Financial plans generally
                         include:
                Balance sheet – What you own versus
                what you owe
                Income statement – A snapshot of
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                your income
                Cash flow statement (really
                important!) – Income and expenses for
                a specific time period


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                 Funding your enterprise
                                   Personal funds
                                   Debt financing
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                                   Equity
                                   financing
                                   Traditional
            www.wannanetwork.com
                                   lenders


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                 Funding your enterprise
                Small, farm-friendly banks
                Small Business Administration
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                Rural economic development
                agencies
                Grant sources




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                Staffing and labor plans
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                           www.ces.ncsu.edu/chatham




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                      Management plans
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                UNCE, Reno, Nev.




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                Contingency plans
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                          www.sure-it.co.uk




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                      Keys to success
                Do something that you love
                Provide quality
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                Start small and grow incrementally
                Keep good records – production, financial
                and regulatory




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                       Keys to success
                Provide what the customer wants
                Maintain a loyal, preferably local, customer
                base
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                Provide more than just a product – consider
                the social aspects
                Involve others




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                       Keys to success

                Stay informed and up-to-date
                Plan for the future
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                Evaluate and adjust continually (practice
                adaptive management)
                Persevere
                Obtain adequate capitalization



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                  Where can I get help in
                developing a business plan?
                 Small Business Administration
                 Small Business Development Centers
                 Chamber of Commerce
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                 State Departments of Agriculture, Marketing
                 Divisions
                 State Economic Development Agencies
                 USDA Sustainable Agriculture Research and
                 Education (SARE)
                 Colleges and universities
                 Libraries


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Peer resources
 and support




                 NRCS
                           Summary
                Understand your
                product
                Understand your
                resources
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                Understand your market
                Understand your
                customers                USDA NRCS




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                           Summary

                Create and use a business plan, and
                adjust it as needed
                Be flexible and open to new
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                opportunities
                Check out free resources available to
                you
                Network!


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                           Homework
                Select three “new” enterprises that you are
                interested in exploring for your property.
                Fill out the Proposed Enterprise
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                Development Activity Sheet for the three
                proposed enterprises for your property.
                Evaluate each enterprise based upon the
                site plan you developed for your property.



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DOCUMENT INFO
Description: How to Make Business Plans document sample