Setting Goals for the Future – Ag Business Enterprise
Most enterprises expect to grow and expand. In some businesses this can be a gradual increase as you add more customers or you hire additional sales people. In agriculture businesses the growth typically comes in large chunks at a time. If you’re in production agriculture you don’t add one or two acres, expansion comes in lots of 160 acres or more. The same normally happens with Ag processing. If you take on an additional customer they bring to you thousands of bushels or tons of product to be processed.
To have a successful growth strategy in agriculture you typically have to have quick access to thousands of dollars of reserves. Additional acres of production or a new customer may require expensive equipment, additional labor and cash reserves to handle the transaction. The time to act may be short and unpredictable. Seldom do you have the luxury to cautiously plan your next move. Managers in Ag related enterprises thus need to anticipate possible expansions well in advance to take advantage of opportunities. This requires thoughtful planning for possible loan applications. Cash reserves should be maintained when possible and studies conducted to secure needed equipment quickly.
Historically agriculture has been done with family-run enterprises. While many small entities have been swallowed up by large corporations, the traditional family-run businesses still exist. As older generations plan to slow down, a realistic and thoughtful succession plan should be devised. These plans should take into consideration family members that are active in the farm or family-run business and those that have chosen to follow a different path. Failing to plan this transition may put everything into turmoil if the unexpected happens. Many great family-run businesses have ended in failure when the advanced planning wasn’t taken care of properly.