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Business Planning as a Risk Management Strategy for Livestock and Specialty Crop Producers in Underserved Communities

Duncan M. Chembezi and E'licia Chaverest

Summary

A business plan is an essential road-map for business success. This living document generally projects 3-5 years ahead and outlines the route a company intends to take to grow revenues and enhance profitability. A business plan is a formal statement of business vision, mission, goals (reasons why you believe they are attainable) and plans for reaching these goals. It may also contain background information about the business, organization or team attempting to reach those goals. A business plans may target changes in perception and branding by the customer, client, taxpayer, or larger community. While it is important to know how to develop and write a farm business plan, it is equally important that the business owner (entrepreneur) knows and understands how to use it. When the existing business is to assume a major change or when planning a new business venture, a 3-5 year business plan is required, since investors or bankers will look for their annual return on investment in that time-frame. Simply stated, a farm business plan is one’s compass. It will help you map out a new course, and navigate through uncharted territory. Whether a farm producer or business owner is writing a business plan for the first time or the fifth time, it does not have to be hard nor long. In fact, if you write a lean plan or a one-page pitch first, you may find you actually enjoy doing it.

Over the past several years, the Small Farms Research Center at Alabama A&M University has witnessed a surge in requests for business planning and marketing education assistance from agricultural producers in Alabama’s Strike-Force and hard-to-reach communities. The majority of the request comes from individuals who specialize livestock and specialty crop production. These individuals often lack basic knowledge about production requirements, post-harvest handling and processing, and marketing. They also lack the business planning and record-keeping knowledge and skills to start and operate a viable farm or backyard garden. This poster presents a simplified business planning template and offers basic steps in developing and using a business plan.by livestock and specialty crop producers. It shares preliminary lessons and observations from our current risk management education project funded by a grant from USDA-RMA-RMED. The project addresses the unique business planning needs of underserved livestock and specialty crop producers, some of whom are transitioning and/or converting to urban vegetable production. The assertion is that a business plan is a critical risk management tool as it ensures producers have aligned their marketing, production, and financing capacities or strategies in ways that minimize risks. Although the discussion focuses on livestock and fresh produce farmers, the application of the business planning concept can easily be extended to and adopted by any business owner.

Details

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