Effective business planning: Optimizing strategy and adaptability for Canadian dairy producers

In the ever-evolving landscape of Canadian agriculture, dairy producers face a myriad of unique challenges. From market fluctuations to environmental considerations, there are always a lot of irons on the fire.

To navigate this complex terrain, it is important to employ effective business planning that serves as a roadmap to guide you through strategic decision-making and foster adaptability.

What is a business plan?

Every operation will have different goals they want to achieve through a business plan but there are a few key elements that can help the process go smoothly.

At its core, a business plan is a strategic document. It explains how your farm operates, how you bring in revenue, and details your business objectives and how you plan to reach those goals.

Think of a business plan as a blueprint that provides a structured approach to achieving success and sustainability. It should go beyond financial projections and dive into the entire spectrum of farm operations, from production to risk management and everything in between.

What questions should a business plan answer?

Think of your business plan as a roadmap to success. It should answer these three questions:

1. Who are you?
2. Where do you want to go?
3. How do you get there?

The first thing you need to know to answer all these questions is where you are within the industry. Understanding the external environment that your farm is operating in – the trends and challenges – will give you a jumping off point that can contextualize the document.

Strategic elements of an effective business plan

SWOT analysis

A SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis helps you dig into your own operations. This element should cover both internal strengths and weaknesses and external opportunities and threats in the marketplace. The results of a SWOT analysis enable critical thinking and will set you up to complete other parts of the business plan.

Risk identification

The weaknesses and threats identified in the SWOT analysis make way for contingency planning as it relates to risk. In this section, it’s helpful to look at your operations realistically. What if you become unable to work? What if a key member of your staff quits or retires? What if you’re unable to sell your product or can’t afford new loan terms? Each challenge will have a unique solution that only forward-thinking can identify.

Mission and vision

This section will be your anchor and purpose that explains to external parties what your core values are. It should answer what you do, why you do it, and what is important to you. It may seem trivial but it’s vital in aligning, for the whole team, the work itself with why you do it.

Goals and objectives

Setting clear and attainable goals and objectives empowers you to make informed decisions based on what you want to achieve. It should provide a structured framework for aligning your day-to-day activities with long-term objectives. Consider setting these goals and objectives in areas such as operations, people, finance, marketing, and transition, to name a few.

Financial position

Most think that assessing finances will be the main outcome of a business plan. In reality, it’s one piece of a much larger puzzle. Comprehension of your financial position and projections will help you understand why financial reporting is important, what key stakeholders are looking for, and how your financial situation either supports or detracts from your mission and goals. Having an experienced advisor by your side for this section will help you objectively determine where you’re at financially and where you need to be to reach your goals.

In Canada’s dairy industry costs have soared in the last few years. From production and staffing to high interest rates, the impact of the economy has been felt deeply by the agriculture sector.

While it’s impossible to predict the future, planning for the unexpected gives you the peace of mind that whatever might come your way, you have a solid base from which to respond and move forward.

Why do dairy producers need a business plan and what value does it bring?

Of all the benefits of a business plan, the most important might be the peace of mind it brings business owners. There’s genuine comfort in knowing you have a plan for yourself, your business, and your family.

Business plans enable you to be prepared with strategic thinking and informed decision-making so that you’re not caught off guard when an unexpected scenario arises.

Accessing financing is another big benefit of business planning in that a well-prepared plan demonstrates to lenders that your operation is a sound investment with thoughtful leadership at the helm.

Lastly, you are given the gift of adaptability when you have built a roadmap for your operation. A dynamic business plan encourages versatility, helping you respond effectively to changes in consumer preferences, technology, and industry regulations, among others. This flexibility is crucial for staying competitive in an evolving market.

For an entrepreneur operating a business, it’s also personal. For dairy producers, work and personal life are often so intertwined that separating the two can be next to impossible.

Having a team of professionals to support you with these processes ensures you have access to an objective, unbiased third-party to help you see where there’s room for improvement and to share any vital market information at their fingertips.

MNP and FCC have developed a series of face-to-face workshops, virtual webinars, and self-paced resources that introduce business planning, providing valuable resources to get started. To learn more about opportunities to attend in your area, visit the FCC website, and click under knowledge and FCC events.