PREPARE FOR SUCCESS
BY EMILY R. JOHNSON • PHOTO: SHUTTERSTOCK
According to research from Farm Management Canada (FMC), less than one in four Canadian farmers have a written farm business plan. Such a document serves as a decision-making roadmap. While it can be used to manage and mitigate risk, it also sets a course to achieve goals.
A comprehensive plan outlines important aspects of a farm that include environmental considerations, financial projections, market analysis, strategy and vision. With a regularly updated plan, a farmer may improve operations, increase profitability and ensure long-term success. It can be adjusted as a farmer faces change in the agricultural landscape and provides a clear guide for a farm’s future. Overall, it helps farmers remain flexible, adapt to new challenges and seize opportunities. Whether it includes experimentation with a new crop, investment in high-tech equipment or a farm succession strategy, a business plan can guide the way.
A VALUABLE INVESTMENT
The planning should be tackled by farmers for their own benefit, said Heather Watson, executive director of FMC. The national organization acts as a service for farmers that draws upon the resources of many industry groups, businesses and governments. She noted a plan can act as a communication tool that spells out shared goals and direction. “It is a fantastic tool for engaging with other members of the farm team and family by coming together in meaningful discussions about the future of the farm and everyone’s role within it,”
said Watson.
Such plans may help farmers expect the unexpected and guide decision-making amid overwhelming situations. “Research from Farm Management Canada shows that having a farm business plan is associated with increased profitability, confidence in decision-making, family and farm team harmony and peace of mind,” said Watson. A well-crafted business plan can act as a guide during turbulent times, offering a structured approach to the management of unforeseen challenges and to ensure all team members are aligned with the farm’s vision and goals. “When stress runs high or decision-making becomes clouded or a new risk or opportunity surfaces, your business plan provides a reference point to play out alternative paths forward.”
Corey Henderson, a business advisor with Farm Credit Canada (FCC), emphasized it is important to document clear objectives in a business plan. “A lot of farms get sidetracked from what they were trying to achieve because they didn’t have that North Star to follow,” said Henderson. Without a concrete plan, it’s easy for farmers to lose sight of their original goals amid the myriad of daily tasks and unexpected events. “A farm business plan can be that check for farmers. Every so often you go back to it, and you say, ‘Is this still where we want to be,’ and, ‘What’s standing in our way?’”
ESSENTIAL COMPONENTS
Plans should encompass essential elements such as goals, strategic priorities, mission and vision. It should also provide a brief history of the farm and list key members along with their roles and responsibilities.
According to Watson, a farmer should think critically about what’s important to their operation. “A farm business plan can include an in-depth analysis around strengths, weaknesses, opportunities and threats [SWOT] to the farm. Details on production, market and financial performance along with a farm budget may also be useful,” she said.
Henderson emphasized a farmer gets the best results from a plan that focuses on what’s most important to that farm. And don’t feel the need to adhere strictly to a given template. “Leave it blank if it doesn’t work for you,” he advised. “I’d rather have a half-completed business plan than no business plan at all.
“Farmers should focus on what they’re aiming for and where they’re headed.” Financial projections or budgets are also crucial, and a SWOT analysis can be very important to see how farmers can take advantage of opportunities.
Jamie Christie is a fourth-generation farmer and managing partner of Arn’s Brae Farms, a 5,000-acre mixed farm near Trochu. In 2016, he completed the Canadian Total Excellence in Agricultural Management (CTEAM) program offered by Agri-Food Management Excellence. It offers structured guidance for strategic business plan development. As part of a 30-farmer cohort, he learned from his peers as he built his own plan. He has since updated it every two years. For ongoing feedback, he shares each iteration with family members and farm advisors.
Christie feels the effort put into a business plan directly correlates to the outcome. “You get out of it what you put into it,” he said. “Commitment to completing and regularly revisiting the plan brings the most benefits. It’s a living document that needs to be actively used. We wrote down our goals, and revisiting them helps us stay on track and figure out how to achieve them.”
By including these critical components, a farmer can create a robust business plan that serves as a roadmap and allows them to manage risk and seize opportunity.
OVERCOMING HESITATIONS
Many farmers hesitate to create a plan because they perceive it to be a time-consuming task that doesn’t immediately pay off. “A lot of farmers look at example farm business plans and think, ‘This is going to take me a lot of time, and I’m not willing to spend that time right now,’” said Henderson.
Farm Management Canada research reveals the primary reason farmers do not create a business plan is the belief they are already succeeding without one. This raises the question of how each farmer defines success, which may hinge on profitability, stress level or family harmony.
Additional reasons for not having a business plan include a lack of time or uncertainty about where to start, and farmers often struggle to get team members on board with the planning process. “A lack of effective communication and communication skills is a significant barrier to engaging in more formal farm business management activities like planning,” said Watson. “This is particularly true for women and young farmers.”
Both Watson and Henderson agree it’s crucial a farmer regularly revisit a business plan once it is created. Henderson advises farmers to review it at least twice a year—once in the fall to compare seasonal outcomes and again in the spring prior to seeding. “Feeling prepared before challenges arise is key to keeping everything running smoothly,” he said.
Christie consistently reviews his farm business plan at various intervals depending on the goal. “I try to review it quarterly,” he said. “Opportunities are presenting themselves faster and faster, so when they do we ask if they fit within our goals or if they limit us from doing something else.”
ADVICE TO FARMERS
When writing a plan, it’s important to tailor it to your own needs. The plan should benefit the farmer more than anyone else. “A perfect business plan that they’re never going to look at really doesn’t work,” said Henderson. He emphasized a plan should be practical and useful for the farmer. “If you’re writing the business plan to appease somebody else, you’re probably not going to use it. It’s probably something you complete and then put in a drawer and never look at again.”
Henderson advised that if keeping the plan short and to the point makes it more useful, then go for it. “Maybe there’s less information, but more meaningful information. Ultimately, it’s more about what is going to work for that operation and that producer.”
Watson said the biggest mistake farmers make is not writing it down. “Too often, farmers like to keep their plans in their heads. The problem is, nobody else knows the plan and can feel disconnected, compromising dedication and engagement in the farm’s path ahead. This is also detrimental to farm transition planning and engaging future generations.”
ACCESSIBLE RESOURCES
Online resources are a good place to start the business plan development process. The FCC website offers a planning bundle as well as articles, podcasts and videos on the importance of the process. The organization also offers business advisors and relationship managers who can assist in the process. “Start by looking at samples of other farm business plans and templates to build your own,” said Watson who also cited templates from specialized programs such as CTEAM. “Don’t hesitate to ask for help. We know farmers are busy, so if business planning isn’t your thing, hire an expert to guide you and keep things moving.”
PLAN FOR THE FUTURE
Related to business planning, in late 2023, FCC introduced a free online Will and Estate Pre-Planning Tool designed for Canadian farmers. With it, the user can evaluate their current estate planning status to reveal gaps and identify areas that require attention.
FCC business advisor Corey Henderson stressed the value of such preparation. “Many farms face significant risks,” he said. “By having powers of attorney and wills in place, you ensure business continuity and fulfil estate desires. A lot of people feel confident about their estate plan until they realize there’s more to consider.”
It’s about peace of mind, said Henderson. FCC encourages farmers to use the tool as a starting point to secure the legacy of their farm and ensure a smooth transition of assets.
Comments