Business plan builds foundation for profit
'Cultivating Success' teaches farmers to be proactive on issues
By STEVE BROWN
OLYMPIA, Wash. -- Jerry and Janelle Stokesberry didn't start out planning to become farmers. Back in the mid-1970s, they just wanted to grow good food. One of the big steps for turning their project into a going concern was writing a business plan.
"The business plan opened our eyes to what was possible," Janelle Stokesberry said. "We made it a success."
The Stokesberry Sustainable Farm, near Olympia, Wash., produces about 3,000 broilers, 1,000 ducks and 150 to 200 turkeys every year. It also has 800 laying hens and a growing population of beef cattle and pigs.
"We thought we just raised food," Jerry Stokesberry said. "But when you put it down on paper, you really look busy. It's surprising how much you do."
Now, a few years in, he said, "We need to update the plan. It's a living thing, changing all the time."
Staying ahead of the curve is one advantage of having a business plan, Washington State University Extension educator Kirsten Workman said. "In farming it's easy to become reactive. A business plan allows you to be proactive."
About 200 people have taken her "Cultivating Success" classes in recent years, including the Stokesberrys four years ago. Teaching in cooperation with the Mason Conservation District in Shelton, Wash., Workman has guided farmers and prospective farmers in building business plans specific to their situations.
She has also taught farm-planning "Sustainable Small Farm and Ranching Overview" courses and business-planning "Small Farm Entrepreneurship" courses.
"It's really important," Workman said. "Smaller producers don't think about cash-flow analysis or paying themselves a wage. We deal with all the things that can affect business, (such as) legal issues, zoning, marketing, taxes, records, the IRS and the Department of Revenue."
Having a business plan helps to avoid getting into a reactive mode. "Things can take you by surprise. Taxes can sneak up on you," she said.
The intense eight-to-12-week course addresses specifics that help producers get a handle on exactly what they want to do, Workman said. "Preparing a plan helps them define their visions and goals."
Janelle Stokesberry said a business plan builds a good foundation, but it can do only so much.
"Nothing could prepare you for the excruciatingly long hours and hard work," she said. "But it allowed me to have the basis that we could look at the farm and figure out what was going on. It got us focused on what we wanted."
The course helps students state their values and define their mission. They identify their current situation, look at where they want to go and how to close the gap. They learn how to implement their plan and how to constantly re-evaluate it.
"You're limiting yourself if you don't plan for growth," Workman said. "As you grow, you may see a major change in scale or scope. You can start over if you need to, if you start doing something different or take a new direction in marketing.
"Costs of production may change. As you learn how to minimize costs, as you move into direct marketing or value-added, you can capture the most dollar for your product."
Janelle Stokesberry said her biggest surprise in writing a business plan was finding out "that farming could pay."
Workman said banks often want to see the financial structure of the business before considering financing. Without a business plan, there is likely no documentation.
Courses in business planning are offered all over the West, she said, through extension offices, small-business development centers and community colleges. "All of them are low-cost, with one-on-one help and technical assistance."
The course Workman teaches costs $200, with scholarships and sliding-scale fees available. That includes a review at the end of the course, when trainers and bankers look over the completed business plans.
Probably the most valuable thing in the classes doesn't come from the text or the teacher, she said. "It's the networking, the contacts you make in the classes."