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You're Being Tested

Feb 5th 2016, Kevin Spafford

eLegacyConnect: In 2016, promote a future perspective and strategic thinking.  Photo courtesy of Legacy Livestock Imaging.Down cycles in the economy, like any other crises, test a person’s mettle, assess their will, and measure their desire.

Down cycles also represent a multitude of opportunities for those who are prepared to act. It’s the ‘preparing to act’ that seems to stymie most. Ask any professional engaged in farming, ranching, or agribusiness about their business plan and you may get a blank stare with a half-interested shrug of the shoulders. However, planning is important and preparing for opportunity is smart business. So, during the downturn, what’s your plan and how are you going to increase the bottom line?

There are a few basic avenues for business development and growth. You may consider growing the operation in size (i.e.: add more acres), but that’s a difficult suggestion given today’s land values and rent costs. On the other hand, you may devise a niche product or specialization. Many farmers are tapping into the local food movement and developing a branded product to sell directly to consumers. Through specialized skills and/or equipment, you may consider offering custom farming services to neighboring farmers and other producers.

Whether your objective is to grow the operation, develop the business, or capture an opportunity, you should start with a complete written business plan. The act of creating a plan helps you decide which direction to take, the actions necessary for success, the investment required, a timeline for achievement, and an expected bottom line result. A business plan is comprised of ten basic parts, including:

  1. Vision – Define in writing the ideal the farm is striving to achieve as it serves the end customer. What does the operation look like, how is it perceived in the community, who works there and how do they feel about the work environment, etc.?
  2. Company history and guiding values – Describe the founder’s ideals, what motivates the desire for achievement, define the work ethic, list the character traits associated with the personnel, and comment on methods used to manage the operation.
  3. Analyze the strengths of the operation – What are the distinct, and difficult to replicate, strategic advantages of this particular operation? Analyze people, resources, materials, intellectual capital, experience, operational advantages, and anything else that may give this operation an edge in the market place.
  4. Analyze the weaknesses of the operation – Focusing on weaknesses allows you to see the operation unemotionally, not as you wish it to be, but as it really is. Some things that limit growth cannot be overcome and we shouldn’t spend a lot of time or money trying.
  5. Analyze the opportunities for the operation – Examining the strengths of the operation may give us an idea of what is possible. Looking a bit deeper we can see what is most profitable and can we create a pathway to the market. There may be a multitude of unexplored opportunities that, until now, were hidden or well disguised.
  6. Analyze the competition in the current and prospective market – The possibilities are as endless as your imagination, but a keen eye on the competition and trends in the market will determine best actions and profitable positions.   
  7. Define specific goals and objectives –Goals are the stepping stones of achievement. Nothing is achieved without them and everything is possible with them. Business objectives must be specific, measurable, and timed.
  8. Action plan to accompany each goal - Each goal is supported with a complete set of action steps to accomplish the goal. Some objectives can be overwhelming, but a complete set of action steps will help you to focus on the actions necessary for achievement.
  9. Budget – Change isn’t cheap. Growth is an investment that must be judiciously management. How much does it cost, over what period of time and where will the money for a business investment come from.
  10. Review schedule – Regular reviews with constant refinements may be the key to consistent growth and long-term success. A scheduled follow-up and a fresh look will cause all decision makers to respond to opportunities and remain accountable for results. 

In 1854, Dr. Louis Pasteur said, “Fortune favors the prepared.” For farmers, ranchers and agribusiness owners, the prepared are those who have written a plan, know where they’re going, and are able to discern between an opportunity and a distraction.   

 

Penton Agriculture's LegacyConnection

Published as "You're Being Tested", by Kevin Spafford for "Farm Progress Magazines", February 2016.

 

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