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TitleBuilding a Sustainable Business: A Guide to Developing a Business Plan for Farms and Rural
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Table of Contents
                            Building A Sustainable Business: A Guide to Developing a
Business Plan for Farms and
Rural Businesses
	Front Cover
	Title Page
	Copyright
	Preface
	Table of Contents
		List of Figures
			Figure 1.	The Business Life Cycle
			Figure 2.	Example from Cedar Summit Farm—Introduction Worksheet: Why Are You Developing 	A Business Plan?
			Figure 3.	Example from Dancing Winds Farm—Worksheet 1.1: My Values
			Figure 4.	Example from Cedar Summit Farm—Worksheet 1.2: Common Values
			Figure 5.	Example from Cedar Summit Farm—Worksheet 2.1: A Brief History of Our Farm Operation
			Figure 6.	Example from Cedar Summit Farm—Worksheet 2.2: Current Market Assessment (side 1)
			Figure 7.	“Northwind Notes-Apple Growing” from Northwind Nursery Catalogue
			Figure 6.	Example from Cedar Summit Farm—Worksheet 2.2: Current Market Assessment (side 2)
			Figure 8.	Farm map: the Foltzes’ Northwind Nursery and Orchards
			Figure 9.	Example from Cedar Summit Farm—Worksheet 2.3: Tangible Working Assets
			Figure 10.	Example from Cedar Summit Farm—Worksheet 2.4: Institutional Considerations
			Figure 11.	Crop Enterprise Checklist
			Figure 12.	Livestock Enterprise Checklist
			Figure 13.	Example from Cedar Summit Farm—Worksheet 2.5: Describing Crop Production Systems
			Figure 14.	Example from Cedar Summit Farm—Worksheet 2.6: Describing Livestock Production Systems
			Figure 15.	Example from Cedar Summit Farm—Worksheet 2.7: Enterprise/Calendar Matrix
			Figure 16.	Example from Cedar Summit Farm—Worksheet 2.8: Human Resources Matrix
			Figure 17.	Example from Cedar Summit Farm—Worksheet 2.9: Assessing Worker Abilities and Needs
			Figure 18.	Example from Cedar Summit Farm—Worksheet 2.10: Likely Changes in Our 	Human Resources Situation
			Figure 19.	FINBIN Average Expenses for 2001 Farm Family in Minnesota and North Dakota
			Figure 20.	Comparison of Financial Results Based on Tax and Accrual Information
			Figure 21.	Comparison of Net Worth Based on Cost and Market Values for Assets
			Figure 22.	Defining Financial Performance Measurement Areas
			Figure 23.	Example from Cedar Summit Farm—Worksheet 2.12: Income Statement
			Figure 24.	Example from Cedar Summit Farm—Worksheet 2.13: Balance Sheet
			Figure 25.	Example from Cedar Summit Farm—Worksheet 2.14: Earned Net Worth Change Analysis
			Figure 26.	Example from Cedar Summit Farm—Worksheet 2.15: Financial Ratios Based on the 	Balance Sheet and Income Statement (sides 1 and 2)
			Figure 27.	Example from Cedar Summit Farm—Worksheet 2.16: Whole Farm Trend Analysis
			Figure 28.	Common Sources of Agricultural Risk
			Figure 29.	Example from Cedar Summit Farm—Worksheet 2.17: Risk Management
			Figure 30.	Example from Cedar Summit Farm—Worksheet 2.18: Whole Farm SWOT Analys
			Figure 32.	Example from Cedar Summit Farm—Worksheet 3.1: Dreaming a Future Business Vision
			Figure 33.	Example from Cedar Summit Farm—Worksheet 3.2: Creating My Business Mission Statement
			Figure 34.	Example from Cedar Summit Farm—Worksheet 3.4: Identifying Our Family Business Goals
			Figure 35.	Group Goal Setting—Reconciling Different Goals
			Figure 36.	Example from Cedar Summit Farm—Worksheet 3.5: Prioritizing Goa
			Figure 38.	Cedar Summit Farm Marketing Survey, May, 2001
			Figure 39.	Example from Cedar Summit Farm—Worksheet 4.1: Customer Segmentation
			Figure 40.	Example from Cedar Summit Farm—Worksheet 4.2: Potential Sales Volume
			Figure 41.	Example from Cedar Summit Farm—Worksheet 4.3: Product and Uniqueness
			Figure 42.	Example from Cedar Summit Farm—Worksheet 4.4: Competition
			Figure 43.	Direct Marketing Options
			Figure 44.	Intermediary Options
			Figure 45.	Recommendations for Approaching Retail Buyers
			Figure 46.	Example from Cedar Summit Farm—Worksheet 4.5: Distribution and Packaging (side 2)
			Figure 47.	Blooming Prairie Wholesale Produce Pricing List
			Figure 48.	Differentiated Product Pricing Strategies
			Figure 49.	Undifferentiated Commodity Pricing Strategies
			Figure 50.	Example from Cedar Summit Farm—Worksheet 4.6: Pricing
			Figure 51.	Common Pricing Strategy Mistakes
			Figure 52.	Cedar Summit Draft Logo Designs
			Figure 53.	Example from Cedar Summit Farm—Worksheet 4.7: Promotion
			Figure 54.	1998 Educational Classes from Northwind Nursery Catalogue
			Figure 55.	Cedar Summit Farm price list with Minnesota Grown logo posted at their farm stand
			Figure 56.	Cedar Summit Farm holiday flyer/advertisement for cheese and meat boxes
			Figure 57.	Example from Cedar Summit Farm—Worksheet 4.8: Inventory and Storage Management
			Figure 58.	Excerpt from Cedar Summit Farm’s Worksheet 4.9: Marketing Strategy Summary (side 2)
			Figure 59.	Excerpt from Cedar Summit Farm’s Worksheet 4.10: Production System and Schedule
			Figure 60.	Mabel Brelje’s Five Year Crop Rotation Plan
			Figure 61.	Permits Required by Cedar Summit Farm to Build Plant and Process
			Figure 62.	Some Agricultural Licenses and Permits Required by the State of Minnesota
			Figure 63.	Excerpt from Cedar Summit Farm’s Worksheet 4.14: Resource Needs and Acquisition
			Figure 64.	Machinery Acquisition Options
			Figure 65.	New Versus Used Machinery and Equipment
			Figure 66.	Pladot bottle filler used by Valley Fresh Dairy, West Virginia
			Figure 67.	Excerpt from Mabel Brelje’s Business Plan—Crop Yield Projections
			Figure 68.	Example from Cedar Summit Farm—Worksheet 4.16: Estimating Output and Capacity
			Figure 69.	Excerpt from Cedar Summit Farm’s Worksheet 4.17: Operations Strategy Summary
			Figure 70.	Example from Cedar Summit Farm—Worksheet 4.18: Tasks and Workload
			Figure 71.	Florence Minar working on the Minnesota Organic Milk (MOM’s) processing line
			Figure 72.	Labor Acquisition Options
			Figure 73.	Example from Cedar Summit Farm—Worksheet 4.19: Filling Workforce Needs
			Figure 74.	Barriers to Effective Communication
			Figure 75.	Excerpt from Cedar Summit Farm’s Worksheet 4.23: Human Resources Strategy Summary
			Figure 76.	Risk Management Alternatives
			Figure 77.	Example from Cedar Summit Farm—Worksheet 4.24: Risk Management
			Figure 78.	Legal Organization Options
			Figure 79.	Example from Cedar Summit Farm—Worksheet 4.25: Business Organization
			Figure 80.	Finance Alternatives
			Figure 81.	Financial Assistance Options for Beginning Farmers
			Figure 82.	Financial Strategy Issues
			Figure 83.	Excerpt from Cedar Summit Farm’s Worksheet 4.27: Finance
			Figure 84.	Excerpt from Cedar Summit Farm’s Worksheet 4.28: Financial Strategy Summary
			Figure 85.	Example from Cedar Summit Farm—Worksheet 4.29: Summarize a Whole Farm 	Strategic Plan of Action
			Figure 86.	Allocating Whole Farm Expenses
			Figure 87.	Tips for Analyzing Strategic Plans
			Figure 88.	Example for Bed and Breakfast Enterprise—Break-even Analysis
			Figure 89.	Example from Hog Finishing Operation—Worksheet 4.32: Partial Budget
			Figure 90.	Example from Hog Finishing Operation—Worksheet 4.33: Long-Range Income Statement
			Figure 91.	Example from Hog Finishing Operation—Worksheet 4.34: Long-Range Projected Cash Flow
			Figure 92.	Income Sensitivity Analysis Prepared by Mabel Brelje
			Figure 93.	Example from Hog Finishing Operation—Worksheet 4.36: Risk Analysis
			Figure 94.	What to Do if Your Strategy Isn’t Feasible in the Long Run
			Figure 95.	Example from Hog Finishing Operation—Worksheet 4.37:  Transitional Cash Flow
			Figure 96.	Strategy “Best Fit” Tests
			Figure 97.	Example from Cedar Summit Farm—Worksheet 4.38: Scoring and Deciding on a 	Final Business Strategy
			Figure 98.	Example from Cedar Summit Farm—Worksheet 4.40: Executive Summary Statement
			Figure 99.	Example from Cedar Summit Farm—Worksheet 5.1: Business Plan Outline
			Figure 100.	Common Presentation Pitfalls
			Figure 101.	The Minar family began processing their first batch of milk in March, 2002
			Figure 102.	Example from Cedar Summit Farm—Worksheet 5.2: Implementation To-do List
			Figure 103.	Example from Northwind Nursery and Orchard—Worksheet 5.3: Monitoring
			Figure 104.	Record Keeping Ideas
	Introduction
	Structure of This Guide
	Using This Guide
		Before You Begin: Why Develop a Business Plan and Who Should Be Involved in the Planning Process?
			Why Are You Developing a Business Plan? Worksheet
	Identify Values–What’s Important to You?
		Values: What Are They and How Are They Important to the Planning Process?
			identify Your Own Values
			Identify Common Values
			Preparing the Values Section of Your Business Plan
	Farm History and Current Situation–What Have You Got?
		A Brief History of Your Business
		Assess Your Current Situation
			Marketing Situation
				Product: What is our product?
				Customers: What markets do we serve?
				Unique Features: What are the unique features that distinguish our products?
				Distribution: How do we distribute our products?
				Pricing: How do we price our products?
				Promotion: How do we promote our products?
				Market and Industry: How is our market changing?
			Operations Situation
				What physical resources are available for our farm business?
				What production systems are we using?
				What management and management information systems do we have in place 			to support our farm operations?
			Human Resources Situation
				Current Work Force: Who is involved in our business and what roles do they play?
				Skills: What are our unique skills? What skills do we lack?
				Change: Will our labor situation change in the near future? Will someone enter or leave the operation?
			Financial Situation
				Financial Needs: What are our current family living expenses?
				Financial Performance: How well has our business performed in the past, and 			how strong is our current financial position?
				Risk: To what type of risk is the business exposed?
				Financial Environment: What is our current business environment and how is it changing?
		Whole Farm SWOT Analysis
		Prepare the History and Current Situation Section of Your Business Plan
	Vision, Mission and Goals–Where Do You Want to Go?
		Dream a Future Vision
		Develop a Mission Statement
		Set and Prioritize Goals
			What Are Goals?
				Write Out Goals.
				Identify Common Goals.
				Prioritize Goals.
		Prepare the Vision, Mission and Goals Section of Your Business Plan
	Strategic Planning and Evaluation–What Routes	Can You Take to Get Where You Want to Go?
		Develop a Business Strategy
			Marketing Strategy
				Markets: Who are our target customers and what do they value?
				Product: What product will we offer and how is it unique?
				Competition: Who are our competitors and how will we position ourselves?
				Distribution and Packaging: How and when will we move our product to market?
				Pricing: How will we price our product?
				Promotion: How and what will we communicate to our buyers or customers?
				Inventory and Storage Management: How will we store inventory and maintain product quality?
				Develop a Strategic Marketing Plan
			Operations Strategy
				Production and Management: How will we produce?
				Resource Needs: What are our physical resource needs?
				Resource Gaps: How will we fill physical resource gaps?
				Size and Capacity: How much can we produce?
				Develop a Strategic Operations Plan
			Human Resources Strategy
				Labor Needs: What are our future workforce needs?
				Skills: What skills will be required to fill workforce needs?
				Gaps: How will we fill workforce gaps?
				Compensation: How will we pay family and members of our workforce?
				Management and Communication: Who will manage the business and how?
				Develop a Strategic Human Resource Plan
			Financial Strategy
				Risk Management: How will we manage risk?
				Organizational Structure: How will we legally organize and structure our business?
				Finance: How will we finance capital requirements?
				Develop a Strategic Financial Plan
				Whole Farm Strategy
				Evaluate Strategic Alternatives
				Long-Term Outlook
				Profitability: Will this new strategy significantly increase net income from the farm?
				Whole Farm Evaluation for Profitability: Partial budgeting and long-range plann
				Liquidity: Will this new strategy help generate cash flow sufficient to pay back debts in a timely fashion?
				Solvency: Will this new strategy lead to growth in net worth?
				Risk: Will this new strategy affect the risks faced by the farm business and family?
				Transition Period Evaluation
			Choose the Best Whole Farm Strategy
			Develop a Contingency Plan
			Prepare the Strategy Section of Your Business Plan
	Present, Implement and Monitor Your Business Plan–Which Route  Will You Take and How Will You Check Your Progress Along the Way?
		Organizing and Writing Your Business Pl
			Develop an Implementation “To-do” List
			Establish Monitoring Checkpoints.
			Maintain Records
			Review Progress
	Resources
		general Business Planning
		Planning task One:
identify Values
		Planning task two:
History, Current Situation
		Planning task three:
Vision, goals, Mission
		Planning task Four:
Strategic Planning
		Planning task Five:
implementation and Monitoring
		Functional areas: Marketing
		Functional areas: Operations
		Functional areas:
Human Resources
		Functional areas: Finance
	Glossary
	Appendices
		appendix a: Business Plan, Cedar
Summit Farm
		Appendix B: Farm Financial Standards Council Business Performance Measures (Sweet Sixteen)
		Appendix C: Sample Job Description
		Appendix D: Direct Labor Requirements for Traditional Crop and Livestock Enterprises
	Notes
                        

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