What’s New in Your Business Plan?
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Collapse ▲I write this article following the first session of a Risk Management Workshop Series you may recall being highlighted by my colleague, Nelson Brownlee. The session provided an overview of business planning and the benefits of the process. No matter what business you are in, I’m sure there has been some need to update your business plans at some point over the last two years with the impacts of COVID-19. The point being, things change and obstacles arise. Nothing new to the agriculture industry, but the question remains, what’s new in your business plan for 2022?
If you are involved with farming, you have grown familiar with the challenges with mother nature and markets. Recent discussions are more focused on input costs and supply chain issues. Although commodity prices are currently strong, pressure is mounting on managing risk to ensure business profitability.
It is important to understand business planning is a process of formalized thoughts that assess current situations, specify goals, and identify alternatives to reach those goals. The more it is written down and the more monitoring is done, the more beneficial it will be. As a reminder, the five key areas of risk to consider are production, marketing, financial, human resource, and legal.
The realization is, our current situation is much different than before considering things like fertilizer prices, fuel costs, crop protection availability, and labor issues, just to name a few. I would encourage individuals to take an inventory of your current business situation. How would your operation deal with a 203 percent increase in potash, 182 percent increase in 30 percent liquid nitrogen, or 162 percent in Diammonium phosphate (DAP)? What do your herbicide programs look like if you are not able to source the needed crop protection products you normally use? Are the alternatives of any economic benefit? What is your break-even yield with current input cost? Does this influence your planting rotations and overall cash flow of the business? How would your farm continue to operate if one or more of your employees were out of work for an extended time due to illness? Do you have a written operating plan that would allow someone to step in and keep things running smoothly? Do you have the ability to maintain family living expenses with growing inflation?
It will take some effort to gain the insight to help make informed decisions to answer these previously mentioned questions. Creating or updating your business plan will be a powerful mechanism to assist with this process. NC State University’s Department of Agricultural and Resource Economics has useful enterprise budgets and a new Crop Comparison Tool that are highly recommended to assist with planning. Other resources are available to help with other areas of risk as well.
In addition to the Risk Management Workshop Series, North Carolina Cooperative Extension, Robeson County Center, has upcoming crop production meetings for various commodities over the next few weeks. A series of educational programs focused on cotton and soybean will be held at the Southeastern NC Agricultural Events Center located at 1027 US-74 Alt. in Lumberton. Presentations will focus of researched-based solutions that will hopefully allow producers to make the best decisions needed for their individual needs and operation looking forward to 2022. I hope you will include attending some of these educational activities in your business planning as action steps to help manage your risks.
The Production Meetings are as scheduled:
- Cotton Production Meeting- Thursday, February 3, 5:30 – 8:00 p.m.
- Soybean Production Meeting- Thursday, February 24, 6:00 – 8:00 p.m.
Registration is required for these meetings. Visit our website or call the office to register. For more information contact Mac Malloy, Extension Field Crop Agent with North Carolina Cooperative Extension, Robeson County Center, at 671-3276, by E-mail at Mac_Malloy@ncsu.edu, or visit our website at https://robeson.ces.ncsu.edu/.