Building a
Sustainable Business
A Guide to Developing a
Business Plan for Farms and
Rural Businesses
Developed by:
the Minnesota Institute for Sustainable Agriculture
Saint Paul, MNPublished by:
Sustainable Agriculture Research and Education (SARE)
College Park, MD
Handbook Series
Book 6
Project Coordinators
Gigi DiGiacomo, Economic Consultant
Debra Elias Morse, Consultant
Robert King, University of Minnesota
Authors
Gigi DiGiacomo, Economic Consultant
Robert King, University of Minnesota
Dale Nordquist, University of Minnesota
Contributors
Vern Eidman, University of Minnesota
Debra Elias Morse, Consultant
Susan McAllister, Marketing Consultant
Kenneth Thomas, Professor Emeritus, University of
Minnesota
Farmer Business Plan Participants and Reviewers
Nancy Aspelund
Mabel Brelje
Mary Doerr, Dancing Winds Farms
Frank Foltz, Northwind Nursery and Orchards
Dave and Florence Minar, Cedar Summit Farm
Greg Reynolds, Riverbend Farm
Technical Reviewer
Damona Doye, Oklahoma State University
Editor
Beth Nelson, Minnesota Institute for Sustainable Agriculture
Production
Nancy Goodman, copy editor
Andy Zieminski, cover design
Jim Kiehne, layout
Valerie Berton, SARE Outreach
Front cover photos by (clockwise from upper right): Jerry DeWitt;
Jerry DeWitt; courtesy Florence Minar; Neil Michel. Back cover photos by\
(from left to right): courtesy John Mayne; courtesy Karl Kupers;
Jerry DeWitt; Jerry DeWitt; Mac Martin
2 BUILDING A SUSTAINABLE BUSINESS
This publication was developed by the Minnesota Institute for
Sustainable Agriculture in cooperation with the Center for Farm
Financial Management, with funding from the Minnesota State
Legislature.
This publication was co-published by the Sustainable Agriculture
Research and Education (SARE) program, under a coopera -
tive agreement with USDA’s National Institute of Food and
Agriculture (NIFA).
To order copies of this book ($17.00 plus $6.95 shipping and
handling), contact: (301) 779-1007, sarepubs@sare.org or visit the
SARE WebStore at www.sare.org/WebStore; or contact (800)
909-6472, or misamail@umn.edu. This publication can be viewed
online at www.misa.umn.edu or at www.sare.org/business.
Copyright © 2003, Minnesota Institute for Sustainable Agriculture
Second printing 2006
Third printing 2010
Fourth printing 2013
Fifth printing 2018
Library of Congress Cataloging In Publication Data
Building a sustainable business : a guide to developing a business plan
for farms and rural businesses / by the Minnesota Institute for
Sustainable Agriculture.
p. cm. – (Sustainable Agriculture Network handbook series ;\
bk. 6)
Includes bibliographical references.
ISBN 1-888626-07-0 (pbk.)
1. Farm management. I. Minnesota Institute for Sustainable Agricultur\
e.
II. Sustainable Agriculture Network. III. Series.
S561.B84 2003
630’.68–dc21
2003005514
The SARE program provides information to everyone, without regard to rac\
e,
religion, national origin, sex, age, disability, familial or veteran sta\
tus. Every effort
has been made to make this publication as complete and as accurate as po\
ssible.
It is only a guide, however, and should be used in conjunction with othe\
r infor
-
mation sources and in consultation with other financial and production e\
xperts.
The editors/authors and publisher disclaim any liability, loss or risk, \
personal or
otherwise, which is incurred as a consequence, directly or indirectly, o\
f the use
and application of any of the contents of this publication. Mention, vis\
ual repre
-
sentation or inferred reference of a product, service, manufacturer or o\
rganization
in this publication does not imply endorsement by the USDA, the SARE pro\
gram,
MISA or the authors. Exclusion does not imply a negative evaluation.
3 BUILDING A SUSTAINABLE BUSINESS
Minnesota Institute for Sustainable Agriculture
This publication was developed through the Minnesota Institute for Susta\
inable Agriculture’s (MISA) Sustainable
Agriculture Information Exchange program, a clearinghouse of sustainable\
agriculture information and materials in
Minnesota. MISA is a partnership between the University of Minnesota Ext\
ension and College of Food, Agricultural
and Natural Resource Sciences and the Sustainers’ Coalition, a group \
of individuals and community-based, nonprofit
organizations. MISA’s purpose is to bring together the agricultural c\
ommunity and the University community in a
cooperative effort to develop and promote sustainable agriculture in Min\
nesota and beyond.
Other publications in the Sustainable Agriculture Information Exchange s\
eries include: Collaborative Marketing: A Roadmap & Resource Guide for Farmers
Dairy Your Way: A Guide to Management Alternatives for the Upper Midwest\
Discovering Profits in Unlikely Places: Agroforestry Opportunities for A\
dded Income
Hogs Your Way: Choosing a Hog Production System in the Upper Midwest
Local Food: Where to Find It, How to Buy It
Marketing Local Food
Minnesota Guide to Organic Certification
Minnesota Soil Management Series
Poultry Your Way: A Guide to Management Alternatives for the Upper Midwe\
st
Resources for Beginning Farmers: Building a Sustainable Future
Whole Farm Planning: Combining Family, Profit, and Environment
For more information on this series, the Information Exchange, or MISA, \
contact: Minnesota Institute for
Sustainable Agriculture, 411 Borlaug Hall, 1991 Buford Circle, St. Paul,\
MN 55108-1013; (612) 625-8235, or toll-
free (800) 909-MISA (6472); Fax (612) 625-1268; misamail@umn.edu; \
www.misa.umn.edu.
Sustainable Agriculture Research and Education (SARE)
SARE is a national grants and outreach program working to advance sustai\
nable innovation to the whole of
American agriculture. SARE is part of USDA’s National Institute of Fo\
od and Agriculture (NIFA). For more
information about SARE’s grant opportunities and library of books, bu\
lletins and online resources, contact: SARE
Outreach, 1122 Patapsco Building, University of Maryland, College Park, \
MD 20742-6715; phone (301) 405-7955;
fax (301) 405-7711; info@sare.org; www.sare.org.
Funding for this project was approved by the Minnesota State Legislature\
and the Energy and Sustainable
Agriculture Program of the Minnesota Department of Agriculture.
Center for Farm Financial Management
The Center for Farm Financial Management at the University of Minnesota \
cooperated in the development of this
publication. The Center’s mission is to improve the farm financial ma\
nagement abilities of agricultural producers
and the professionals who serve them through educational software and tr\
aining programs. Contact: Center for
Farm Financial Management,
University of Minnesota, 130 Ruttan Hall, 1994 Buford Avenue, St. Paul, \
MN
55108; (612) 625-1964 or toll-free (800) 234-1111; cffm@umn.edu; www\
.cffm.umn.edu.
Preface
4 BUILDING A SUSTAINABLE BUSINESS
Business planning is an important part of owning and managing a farm.
Producers traditionally go through the business planning process to:
• Evaluate production alternatives;
• Identify new market opportunities; and
• Communicate their ideas to lenders, business partners and family.
As agricultural entrepreneurs define and create themselves away from mor\
e
“conventional” farming models, business planning has become more i\
mportant
than ever.
Producers considering innovative management practices and immature
markets use business plans to map out strategies for taking advantage of\
new
opportunities such as organic farming, on-farm processing, direct market\
ing and
rural tourism. A business plan helps producers demonstrate that they hav\
e fully
researched their proposed alternative; they know how to produce their pr\
oduct,
how to sell what they produce, and how to manage financial risk.
“Building a Sustainable Business: A Guide to Developing a Business Pl\
an for
Farms and Rural Businesses” was conceived in 1996 by a planning team for the
Minnesota Institute for Sustainable Agriculture (MISA), to address the\
evolving
business planning needs of beginning and experienced rural entrepre neurs.
From the onset, the planning team envisioned a truly useful guidebook th\
at
would be relevant to the alternative farm operations and rural businesse\
s of
today. There are certainly more detailed business planning, strategy bui\
lding,
succession planning, marketing and financial planning resources availabl\
e.
It was not our intention to replace these materials. Many of these exist\
ing
resources are listed in an extensive “Resources” section at the en\
d of this
Guide. Instead, our objective was to compile information from all availa\
ble
resources, including farmers and other business experts, that could be u\
sed to
create a business planning primer—a guide that will help today’s a\
lternative
agriculture entrepreneurs work through the planning process and to begin\
developing their business plans.
This Guide was developed over a period of seven years by a team of
University of Minnesota faculty and staff, individual farmers and consul\
tants.
Six farmers developed business plans using the draft materials. This Gui\
de
incorporates recommendations on content, language and organization from \
the farmers as well as examples from five of the review team’s busine\
ss
plans. We are grateful to them for their willingness to share their busi\
ness
planning efforts. This Guide was originally targeted toward Upper Midwes\
t
producers and entrepreneurs, hence the “Resources” section is weig\
hted toward
Midwest organizations. As the project evolved, we realized that the mate\
rial
is applicable to a variety of operations throughout the United States; t\
he basic
business planning process is universal. The Sustainable Agricultural Res\
earch
and Education (SARE) Outreach agreed that this information should reac\
h a
national audience and graciously agreed to co-publish this material. Thi\
s Guide
benefited greatly from a careful review by Damona Doye, Extension Econom\
ist,
Oklahoma State University, and we are grateful for her suggested revisio\
ns.
Parallel to the development of this Guidebook, a business planning softw\
are
package was developed by the Center for Farm Financial Management at the\
University of Minnesota. This Guide and software are complementary.
Ultimately, this Guide is as much about the planning process as it is ab\
out
the creation of a final business plan. MISA followed one of the farm rev\
iewer
families, Cedar Summit Farm owners Dave and Florence Minar and their fam\
ily,
throughout their planning process. The Minars’ planning experience—\
their
initial exploration of values, brainstorming of goals, and research into\
on-farm
milk processing, markets and financing—is incorporated throughout thi\
s
Guide’s text and Worksheets. A completed business plan for the Minars\
’ Cedar
Summit Creamery is attached in Appendix A. This enabled us to “put a \
face” on
the business planning process, and we thank the Minars for their opennes\
s in
sharing so much of their story. Armed with their business plan, the Mina\
rs were
able to obtain financing. We are happy to report that as we go to press,\
Cedar
Summit Creamery is up and running.
We hope this Business Planning Guide will assist today’s alternative \
and
traditional business owners alike with the creation of a holistic busine\
ss plan
rooted firmly in personal, community, economic and environmental values.\
With
a business plan in hand, today’s farmers and rural entrepreneurs will\
be able to
take that first step toward the creation of a successful and sustainable business.
2010 Update. Prior to a 2010 reprinting of the Guide, we updated the
Resources section. We also caught up with the Minars and provide an upd\
ate
on Cedar Summit Creamery on page 243.
5 BUILDING A SUSTAINABLE BUSINESS
Table of Contents
Introduction ............................................................................................. 11
Structure of This Guide .......................................................................................... 12
Using This Guide ............................................................................................... 14
Before You Begin: Why Develop a Business Plan and Who Should Be Involved in the Planning Process? .................. 14
Blank Worksheet ................................................................................................ 18
The Five Planning Tasks:
Task One: Identify Values –What’s Important to You? .................................... 19
Values: What Are They and How Are They Important to the Planning Process? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \
. . . . . . 19
Identify Your Own Values ..................................................................................... 20
Identify Common Values ..................................................................................... 22
Preparing the Values Section of Your Business Plan ............................................................... 23
Blank Worksheets ............................................................................................ 24-25
Task Two: Farm History and Current Situation –What Have You Got? ............... 27
A Brief History of Your Business .................................................................................. 28
Assess Your Current Situation .................................................................................... 30
Marketing Situation .......................................................................................... 30
Product: What is our product? ............................................................................. 32
Customers: What markets do we serve? .................................................................... 32
Unique Features: What are the unique features that distinguish our products? .................................... 33
Distribution: How do we distribute our products? ............................................................. 34
Pricing: How do we price our products? ..................................................................... 35
Promotion: How do we promote our products? .............................................................. 37
Market and Industry: How is our market changing? ............................................................ 38
Operations Situation ......................................................................................... 38
What physical resources are available for our farm business? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \
. . . . . . . . . . . . . . . . 39
What production systems are we using? ..................................................................... 43
What management and management information systems do we have in place
to support our farm operations? ......................................................................... 46
Human Resources Situation .................................................................................... 46
Current Work Force: Who is involved in our business and what roles do they play? ............................... 47
Skills: What are our unique skills? What skills do we lack? ...................................................... 48
Change: Will our labor situation change in the near future? Will someone enter or leave the operation? .............. 49
Financial Situation ............................................................................................ 51
Financial Needs: What are our current family living expenses? ................................................... 51
Financial Performance: How well has our business performed in the past, and
how strong is our current financial position? ............................................................... 52
Risk: To what type of risk is the business exposed? ........................................................... 61
Financial Environment: What is our current business environment and how is it changing? .......................... 62
Whole Farm SWOT Analysis ..................................................................................... 64
Prepare the History and Current Situation Section of Your Business Plan ............................................... 66
Blank Worksheets ............................................................................................ 67-86
Task Three: Vision, Mission and Goals –Where Do You Want to Go? .................. 87
Dream a Future Vision ........................................................................................... 88
Develop a Mission Statement ..................................................................................... 90
Set and Prioritize Goals .......................................................................................... 91
What Are Goals? ............................................................................................ 91
6 BUILDING A SUSTAINABLE BUSINESS
Write Out Goals. ........................................................................................ 94
Identify Common Goals. .................................................................................. 94
Prioritize Goals. .......................................................................................... 95
Prepare the Vision, Mission and Goals Section of Your Business Plan ................................................... 96
Blank Worksheets ........................................................................................... 97-101
Task Four: Strategic Planning and Evaluation –What Routes
Can You Take to Get Where You Want to Go? ........................................... 103
Develop a Business Strategy ..................................................................................... 106
Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Markets: Who are our target customers and what do they value? .............................................. 108
—Segmentation
—Sales potential
Product: What product will we offer and how is it unique? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \
. . . . . . . . . . . . . . . . 112
Competition: Who are our competitors and how will we position ourselves? .................................... 114
Distribution and Packaging: How and when will we move our product to market? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
—Scope
—Movement
—Packaging
—Delivery scheduling and handling
Pricing: How will we price our product? .................................................................... 121
Promotion: How and what will we communicate to our buyers or customers? ................................... 126
—Image or product
—Message
—Tools and delivery
—Timing and frequency
—Costs
Inventory and Storage Management: How will we store inventory and maintain product quality? .................... 131
Develop a Strategic Marketing Plan ......................................................................... 132
Operations Strategy ......................................................................................... 134
Production and Management: How will we produce? ......................................................... 134
—Production system
—Production schedule
Regulations and Policy: What institutional requirements exist? ..................................................137
Resource Needs: What are our physical resource needs? ...................................................... 138
Resource Gaps: How will we fill physical resource gaps? ....................................................... 139
—Land and buildings
—Machinery and equipment
Size and Capacity: How much can we produce? .............................................................. 143
Develop a Strategic Operations Plan ........................................................................ 144
Human Resources Strategy ................................................................................... 145
Labor Needs: What are our future workforce needs? ......................................................... 146
—Tasks
—Workload
Skills: What skills will be required to fill workforce needs? ..................................................... 148
Gaps: How will we fill workforce gaps? ..................................................................... 149
Compensation: How will we pay family and members of our workforce? ........................................ 151
Management and Communication: Who will manage the business and how? ..................................... 152
—Management
—Communication
Develop a Strategic Human Resource Plan .................................................................. 154
Financial Strategy ............................................................................................ 154
Risk Management: How will we manage risk? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Organizational Structure: How will we legally organize and structure our business? ................................ 158
Finance: How will we finance capital requirements? ........................................................... 160
7 BUILDING A SUSTAINABLE BUSINESS
Develop a Strategic Financial Plan .......................................................................... 163
Whole Farm Strategy ........................................................................................ 164
Evaluate Strategic Alternatives .................................................................................... 166
Long-Term Outlook ......................................................................................... 167
Profitability: Will this new strategy significantly increase net income from the farm? ................................ 168
—Enterprise Evaluation for Profitability: Net return and break-evens
—Whole Farm Evaluation for Profitability: Partial budgeting and long-range planning
Liquidity: Will this new strategy help generate cash flow sufficient to pay back debts in a timely fashion? ............. 174
Solvency: Will this new strategy lead to growth in net worth? .................................................. 175
Risk: Will this new strategy affect the risks faced by the farm business and family? ................................ 176
Transition Period Evaluation .................................................................................. 177
Choose the Best Whole Farm Strategy ............................................................................ 179
Develop a Contingency Plan ..................................................................................... 182
Prepare the Strategy Section of Your Business Plan ................................................................. 184
Blank Worksheets .......................................................................................... 186-231
Task Five: Present, Implement and Monitor Your Business Plan –Which Route
Will You Take and How Will You Check Your Progress Along the Way? ........... 233
Organizing and Writing Your Business Plan ........................................................................ 233
Implementation and Monitoring ............................................................................... 238
Develop an Implementation “To-do” List .................................................................... 238
Establish Monitoring Checkpoints. .......................................................................... 240
Maintain Records ........................................................................................ 241
Review Progress ......................................................................................... 242
Blank worksheets .......................................................................................... 245-247
List of Footnote References ....................................................................... 248
Resources ................................................................................................ 249
Glossary .................................................................................................. 257
Appendices .............................................................................................. 263
Appendix A: Business Plan: Cedar Summit Farm .................................................................... 265
Appendix B: Farm Financial Standards Council Business Performance Measures (Sweet Sixteen) .......................... 273
Appendix C: Sample Job Description ............................................................................. 275
Appendix D: Direct Labor Requirements for Traditional Crop and Livestock Enterprises ................................ 276
List of Figures
Figure 1. The Business Life Cycle ............................................................................... 15
Figure 2. Example from Cedar Summit Farm—Introduction Worksheet: Why Are You Developing
A Business Plan? ..................................................................................... 17
Figure 3. Example from Dancing Winds Farm—Worksheet 1.1: My Values ........................................... 21
Figure 4. Example from Cedar Summit Farm—Worksheet 1.2: Common Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \
. . 23
Figure 5. Example from Cedar Summit Farm—Worksheet 2.1: A Brief History of Our Farm Operation .................. 29
Figure 6. Example from Cedar Summit Farm—Worksheet 2.2: Current Market Assessment (side 1) ..................... 31
Figure 7. “Northwind Notes-Apple Growing” from Northwind Nursery Catalogue .................................... 32
Figure 6. Example from Cedar Summit Farm—Worksheet 2.2: Current Market Assessment (side 2) ..................... 37
Figure 8. Farm map: the Foltzes’ Northwind Nursery and Orchards .................................................. 39
Figure 9. Example from Cedar Summit Farm—Worksheet 2.3: Tangible Working Assets ............................... 40
Figure 10. Example from Cedar Summit Farm—Worksheet 2.4: Institutional Considerations ............................. 41
Figure 11. Crop Enterprise Checklist ............................................................................. 42
Figure 12. Livestock Enterprise Checklist .......................................................................... 42
Figure 13. Example from Cedar Summit Farm—Worksheet 2.5: Describing Crop Production Systems .................... 43
8 BUILDING A SUSTAINABLE BUSINESS
Figure 14. Example from Cedar Summit Farm—Worksheet 2.6: Describing Livestock Production Systems .................. 44
Figure 15. Example from Cedar Summit Farm—Worksheet 2.7: Enterprise/Calendar Matrix .............................. 45
Figure 16. Example from Cedar Summit Farm—Worksheet 2.8: Human Resources Matrix ............................... 47
Figure 17. Example from Cedar Summit Farm—Worksheet 2.9: Assessing Worker Abilities and Needs ................... 49
Figure 18. Example from Cedar Summit Farm—Worksheet 2.10: Likely Changes in Our
Human Resources Situation ............................................................................ 50
Figure 19. FINBIN Average Expenses for 2001 Farm Family in Minnesota and North Dakota ............................. 52
Figure 20. Comparison of Financial Results Based on Tax and Accrual Information ...................................... 53
Figure 21. Comparison of Net Worth Based on Cost and Market Values for Assets .................................... 53
Figure 22. Defining Financial Performance Measurement Areas ....................................................... 54
Figure 23. Example from Cedar Summit Farm—Worksheet 2.12: Income Statement .................................... 55
Figure 24. Example from Cedar Summit Farm—Worksheet 2.13: Balance Sheet ........................................ 56
Figure 25. Example from Cedar Summit Farm—Worksheet 2.14: Earned Net Worth Change Analysis .................... 57
Figure 26. Example from Cedar Summit Farm—Worksheet 2.15: Financial Ratios Based on the
Balance Sheet and Income Statement (sides 1 and 2) ...................................................... 58
Figure 27. Example from Cedar Summit Farm—Worksheet 2.16: Whole Farm Trend Analysis ........................... 60
Figure 28. Common Sources of Agricultural Risk ................................................................... 62
Figure 29. Example from Cedar Summit Farm—Worksheet 2.17: Risk Management ..................................... 63
Figure 30. Example from Cedar Summit Farm—Worksheet 2.18: Whole Farm SWOT Analysis .......................... 65
Figure 31. Envisioned Northwind Nursery and Orchard Map ........................................................ 88
Figure 32. Example from Cedar Summit Farm—Worksheet 3.1: Dreaming a Future Business Vision ....................... 89
Figure 33. Example from Cedar Summit Farm—Worksheet 3.2: Creating My Business Mission Statement .................. 90
Figure 34. Example from Cedar Summit Farm—Worksheet 3.4: Identifying Our Family Business Goals ..................... 93
Figure 35. Group Goal Setting—Reconciling Different Goals ......................................................... 94
Figure 36. Example from Cedar Summit Farm—Worksheet 3.5: Prioritizing Goals ...................................... 95
Figure 37. Market Segmentation Alternatives ..................................................................... 108
Figure 38. Cedar Summit Farm Marketing Survey, May, 2001 ....................................................... 109
Figure 39. Example from Cedar Summit Farm—Worksheet 4.1: Customer Segmentation ............................... 110
Figure 40. Example from Cedar Summit Farm—Worksheet 4.2: Potential Sales Volume ............................... 111
Figure 41. Example from Cedar Summit Farm—Worksheet 4.3: Product and Uniqueness ............................... 113
Figure 42. Example from Cedar Summit Farm—Worksheet 4.4: Competition ......................................... 114
Figure 43. Direct Marketing Options ............................................................................ 116
Figure 44. Intermediary Options ................................................................................ 117
Figure 45. Recommendations for Approaching Retail Buyers ........................................................ 118
Figure 46. Example from Cedar Summit Farm—Worksheet 4.5: Distribution and Packaging (side 2) ...................... 120
Figure 47. Blooming Prairie Wholesale Produce Pricing List ......................................................... 122
Figure 48. Differentiated Product Pricing Strategies ................................................................ 123
Figure 49. Undifferentiated Commodity Pricing Strategies .......................................................... 124
Figure 50. Example from Cedar Summit Farm—Worksheet 4.6: Pricing .............................................. 125
Figure 51. Common Pricing Strategy Mistakes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Figure 52. Cedar Summit Draft Logo Designs ..................................................................... 127
Figure 53. Example from Cedar Summit Farm—Worksheet 4.7: Promotion ........................................... 128
Figure 54. 1998 Educational Classes from Northwind Nursery Catalogue ............................................. 129
Figure 55. Cedar Summit Farm price list with Minnesota Grown logo posted at their farm stand ......................... 129
Figure 56. Cedar Summit Farm holiday flyer/advertisement for cheese and meat boxes ................................. 130
Figure 57. Example from Cedar Summit Farm—Worksheet 4.8: Inventory and Storage Management ..................... 132
Figure 58. Excerpt from Cedar Summit Farm’s Worksheet 4.9: Marketing Strategy Summary (side 2) ..................... 133
Figure 59. Excerpt from Cedar Summit Farm’s Worksheet 4.10: Production System and Schedule ....................... 135
Figure 60. Mabel Brelje’s Five Year Crop Rotation Plan ............................................................. 136
Figure 61. Permits Required by Cedar Summit Farm to Build Plant and Process ....................................... 137
Figure 62. Some Agricultural Licenses and Permits Required by the State of Minnesota ................................. 137
Figure 63. Excerpt from Cedar Summit Farm’s Worksheet 4.14: Resource Needs and Acquisition ....................... 139
Figure 64. Machinery Acquisition Options ........................................................................ 141
Figure 65. New Versus Used Machinery and Equipment ............................................................ 141
Figure 66. Pladot bottle filler used by Valley Fresh Dairy, West Virginia ............................................... 142
9 BUILDING A SUSTAINABLE BUSINESS
Figure 67. Excerpt from Mabel Brelje’s Business Plan—Crop Yield Projections ......................................... 143
Figure 68. Example from Cedar Summit Farm—Worksheet 4.16: Estimating Output and Capacity ....................... 144
Figure 69. Excerpt from Cedar Summit Farm’s Worksheet 4.17: Operations Strategy Summary .......................... 145
Figure 70. Example from Cedar Summit Farm—Worksheet 4.18: Tasks and Workload ................................. 147
Figure 71. Florence Minar working on the Minnesota Organic Milk (MOM’s) processing line ............................. 148
Figure 72. Labor Acquisition Options ............................................................................ 149
Figure 73. Example from Cedar Summit Farm—Worksheet 4.19: Filling Workforce Needs .............................. 150
Figure 74. Barriers to Effective Communication ................................................................... 153
Figure 75. Excerpt from Cedar Summit Farm’s Worksheet 4.23: Human Resources Strategy Summary . . . . . . . . . . . . . . . . . . . . 154
Figure 76. Risk Management Alternatives ......................................................................... 156
Figure 77. Example from Cedar Summit Farm—Worksheet 4.24: Risk Management .................................... 157
Figure 78. Legal Organization Options ........................................................................... 158
Figure 79. Example from Cedar Summit Farm—Worksheet 4.25: Business Organization ................................ 159
Figure 80. Finance Alternatives ................................................................................. 160
Figure 81. Financial Assistance Options for Beginning Farmers ....................................................... 162
Figure 82. Financial Strategy Issues .............................................................................. 162
Figure 83. Excerpt from Cedar Summit Farm’s Worksheet 4.27: Finance .............................................. 163
Figure 84. Excerpt from Cedar Summit Farm’s Worksheet 4.28: Financial Strategy Summary ............................ 163
Figure 85. Example from Cedar Summit Farm—Worksheet 4.29: Summarize a Whole Farm
Strategic Plan of Action .............................................................................. 165
Figure 86. Allocating Whole Farm Expenses ...................................................................... 166
Figure 87. Tips for Analyzing Strategic Plans ...................................................................... 167
Figure 88. Example for Bed and Breakfast Enterprise—Break-even Analysis ........................................... 170
Figure 89. Example from Hog Finishing Operation—Worksheet 4.32: Partial Budget ................................... 172
Figure 90. Example from Hog Finishing Operation—Worksheet 4.33: Long-Range Income Statement .................... 173
Figure 91. Example from Hog Finishing Operation—Worksheet 4.34: Long-Range Projected Cash Flow .................. 174
Figure 92. Income Sensitivity Analysis Prepared by Mabel Brelje ..................................................... 176
Figure 93. Example from Hog Finishing Operation—Worksheet 4.36: Risk Analysis .................................... 177
Figure 94. What to Do if Your Strategy Isn’t Feasible in the Long Run ............................................... 177
Figure 95. Example from Hog Finishing Operation—Worksheet 4.37: Transitional Cash Flow ........................... 178
Figure 96. Strategy “Best Fit” Tests .............................................................................. 180
Figure 97. Example from Cedar Summit Farm—Worksheet 4.38: Scoring and Deciding on a
Final Business Strategy ............................................................................... 181
Figure 98. Example from Cedar Summit Farm—Worksheet 4.40: Executive Summary Statement ........................ 185
Figure 99. Example from Cedar Summit Farm—Worksheet 5.1: Business Plan Outline ................................. 236
Figure 100. Common Presentation Pitfalls ......................................................................... 237
Figure 101. The Minar family began processing their first batch of milk in March, 2002 ................................... 238
Figure 102. Example from Cedar Summit Farm—Worksheet 5.2: Implementation To-do List ............................. 239
Figure 103. Example from Northwind Nursery and Orchard—Worksheet 5.3: Monitoring ............................... 240
Figure 104. Record Keeping Ideas ................................................................................ 241
10 BUILDING A SUSTAINABLE BUSINESS
