One of the pleasures of my academic career has been working with Farm Credit University’s Ag Biz Planner Program designed for young and beginning agriculture producers. Over 1,000 participants have completed the business and financial management classes consisting of 10 online courses. Recently, we talked via videoconference with two graduates of the program, who discussed how they have applied this education to their agriculture businesses and the subsequent benefits. We’ve pulled out some highlights from the conversation to demonstrate the value of planning for success. Benefits they gained include:
A major benefit of the program for these graduates was gaining insight on finance, whether the knowledge was applied to their business or while working with their lender. They both chuckled and agreed that farming was more fun when the business generated positive cash flow. They both benefitted from:
Developing projected cash flows and monitoring the results.
Taking the principles and concepts stored in their heads and applying them on paper.
Using spreadsheets with different price, cost and production scenarios.
Having a record of the expected timing of revenues, expenses, debt service and operating loan needs, which was invaluable when navigating the current business environment where there is a surprise around every corner.
Another benefit of the program was a more structured approach to record-keeping. Writing down records such as yields, weight gain, cost, and production during hectic times allows this information to be entered into electronic records at a later date. These records can be used to track performance over time and assist in developing projections and assumptions for the future. The records also were used to pinpoint mistakes, such as lost production, missed marketing opportunities or expense overruns.
A huge benefit of the educational program was that it improved overall communication. Workbook application exercises required the graduates to ask critical questions and have crucial conversations in areas such as finance, marketing and transition management. Improved communication with spouses concerning finance and the direction of the business was an additional direct benefit. As a result of the program, they also had increased communication with their lenders, suppliers and advisory teams. Understanding business financials and operations created a side-by-side trust factor, allowing them to work through growth opportunities and decide when to cease operations of an unprofitable enterprise of the business.
Strategies for improvement
The graduates enjoyed the ability to benchmark their business performance to other similar agribusinesses. This allowed them to focus on their strengths and develop strategies for improvements. Another useful strategy they learned was to build cash reserves in profitable years to provide room for error during growth or when financial hiccups occur.
Building a network
Perhaps one of the most significant benefits for these participants was the ability to network with other young farmers, often outside their specific industry segments. They were able to network both online and at special face-to-face meetings. These relationships have lasted many years after graduation. As one graduate said, "In these difficult and challenging times, it was nice to be able to reach out to others who are facing similar issues."
Recently, a speaker at an agriculture conference said: "A business mindset and high business IQ will drive bottom line profits in the future." These two graduates learned that firsthand from the Ag Biz Planner program.
If you’re thinking of enrolling in this program, keep these tips in mind for success:
Set aside time and resources to follow through on assignments so you can receive optimum benefits from the program.
The results are better if you do not wait until the last minute to complete assignments for your business.
Apply the program materials in your business operations to find blind spots.
Take advantage of the program’s collaborative spirit. Having another set of eyes on your business plan provides a mechanism for prioritizing opportunities.
Ag Biz Planner takes time and commitment, but the peace of mind more detailed planning can bring is invaluable for your business