Candid Conversations

DEVELOPING A BUSINESS PLAN

Laying Groundwork for the Future

By David Rocha, Senior Vice President, Tulare County

Beginning a career in agriculture is an exciting

journey. There is a lot to learn — like the intricacies of the crop, weather and soil. Getting your hands dirty at an existing agricultural operation is a great place to start learning, and as your knowledge grows over time, you may be ready to make the leap and start your own business venture. This is where real-world experience meets thoughtful planning and can be captured in an important document — a business plan. At Farm Credit West, this is the first document we look at when considering a new loan to beginning farmers.

The purpose of a business plan is to identify a strategic roadmap for your business and articulate your vision. It does not need to be overly complicated  — oftentimes an overview of 1-2 pages can be enough. The best business plans include the operation’s production targets, cost estimates — like labor and equipment — and a sustainable revenue model. It also outlines the long-term goals and objectives of the operation. At first glance goals and objectives may seem identical, but there are some key differences. Goals are broad, abstract and difficult to measure and need to be complemented by a set of SMART objectives. SMART stands for: specific, measurable, achievable, relevant and time-bound.

S M A R T

Specific Measurable Achievable Relevant Time-bound � � � � �

State exactly what you want to accomplish (Who, What, Where, Why) How will you demonstrate and evaluate the extent to which the goal has been met? Is your goal challenging, but within your scope? How does the goal tie into your key responsibilities? Set one or more target dates. Include deadlines, dates and frequency.

The plan should also demonstrate an understanding of market trends and potential risks for future years. This information can be found at research institutions like the University of California, Davis, who publish annual cost studies on various commodities. Your local Farm Service Agency (FSA) offices can also assist with previous published reports and analyses. You may also check with the commodity board or association for your crop. We encourage new farmers to seek mentors and others in the agricultural industry to review the draft business plan and offer suggestions. Nothing beats candid feedback from experts who have been in the industry for decades and weathered market fluctuations. These individuals will provide a wealth of knowledge from an outside perspective that is less familiar with the day-to-day operations of your business. Once your plan is finalized, visit a local Farm Credit West office to begin the lending process. Our experienced staff will guide you through the journey and review your business plan, budget, credit history, financial statements and tax returns. We also take into consideration your field experience and understanding of market trends. By establishing an open dialogue and trusted relationship with your lender in the early stages of your business, you will have a contact to reach out to as your business progresses and someone you can lean on in good times and bad.

As you continue along the path as a new farmer, consider becoming active in your community and attending industry events. Meeting others who are on the same journey as you or established in their farming operation can lead to greater opportunities and information sharing. UC Cooperative Extension, local farm bureau and other agricultural associations provide ample networking opportunities and educational seminars and are great resources to explore. Remember, every operation in agriculture started with a new and beginning farmer. If you do your research, have the tenacity to keep going and develop trusted partners along the way, you will find the pathway to success. ■

By establishing an open dialogue and trusted relationship with your lender in the early stages of your business, you will have a contact to reach out to as your business progresses and someone you can lean on in good times and bad.

David Rocha has served as Senior Vice President—Portfolio Manager for Tulare County 1 portfolio since March 2020 and has been with Farm Credit West for 12 years. David was previously Sr. VP Operations in Tulare overseeing Equipment Finance, Loan Documentation and Collateral Services departments in Tulare and before that was a Vice President — Loan Officer in the Tulare Dairy portfolio. David earned a Bachelor of Science from Cal Poly San Luis Obispo and a Master of Business Administration from Penn State University. He is also a member of the Farm Credit Council Young, Beginning and Small Farmer Workgroup.