Business plan or strategic plan—which is right for your farm business?

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Many years ago, I was president of a marketing services division for a Fortune 500 company. And every year I had to create a strategic plan that would have made Tolstoy proud. Always in excess of 150 pages, chock-full of financial recaps and projections, capital allocation plans, market assessments, key performance goals and indicators, human resource plans, and the like.

It was grueling.

A few pages were helpful to position and propel our division. But honestly, 98% of them were CYA pages designed to impress the board of directors.

Later, I rebelled against big business and quit that job. I wanted to start my own business. A business that I bootstrap financed with a wallet full of credit cards.

It had to work—I had everything riding on it. Just as you do if you’re a business owner.

So I needed to make clear strategic choices and focus on the factors most critical to our success. But only on those factors.

Since there was no one to impress at my one-person start-up, I ditched what I had learned and created a far simpler strategic planning process.

And it worked.

Five years later we had 450 employees, offices in six countries, and Inc. Magazine named us the 130th fastest growing company in the United States.

Later, I applied the same strategic lessons to starting and growing our farm business. I’d like to share a few lessons I’ve learned on how to make strategic choices for any small business.

  1. A business plan is not a strategic plan. When someone dreams of starting a business, farm, or otherwise, they often search for a business planning template. Lenders and investors always request a business plan. It’s the document that explains the “who and what” of a business. Who are the founders, what are the products, etc. And boilerplate business plans ask you to list your competitors and so on. But that’s really the problem with business plans—they’re fill-in-the-blank. They really don’t help an entrepreneur to make strategic choices. By contrast, a strategic plan is the “how, why, and when” of a business. Done properly, a strategic plan requires the owner to make clear strategic choices. That’s important in any business, but it may be more important in farming than any industry I’ve seen. There are just so many product, enterprise, and go-to-market choices in farming. If choices aren’t made clearly and decisively, the farm business can suffer for years.
  2. Simplify. There may be nothing more critical to the success of a business than choosing a clear strategy and executing well. But that doesn’t mean it has to be complicated—or 150 pages. In fact, I argue that creating a plan on one-page is a better approach. One thing I’ve learned about starting anything is that it’s important to focus. It makes sense that getting your plan on one-page makes it easier to focus than scrolling through 50 or more pages. So get the essence of your entire business strategy on one page so you can see it, assess it, and revise as needed.
  3. Get clear on your why – In business planning, there is a lot of talk (and confusion) about vision, mission, and core values. And it’s okay for others to be confused. But when you own a business you must be clear on where you’re going, why you’re going there, and your non-negotiable values. That vision, mission, and core values will inspire others to help you achieve your vision. “Others” could be family members, apprentices, employees, lenders, or advisors. And it includes your community and customers. Trust me—you need a team to build an impactful business. And you’re their tribe leader. But they’ll want to know where they’re going and why. Invest the energy to nail your vision, mission, and core values so you can attract your tribe.
  4. Choose your competitive advantage – I cover this issue in great detail in my book The 1-Page Strategic Plan. But the gist is this: you need to either commit to being a low-cost producer or a value-added producer. Either can work. Getting caught between those two is a business death trap. In the farming world, this means it’s hard to succeed by selling low-price chickens and also offer value-added services such as shipping.
  5. Define your top critical success factors – There are lots of little things that impact business success. But it’s not the little things that keep you from falling asleep. It’s the big things. These are the critical success factors to define. For example, a critical success factor could be rapidly growing your email list. Or finding and negotiating an agreement with a USDA processor. Or securing farm liability insurance and buffering your personal assets. There are many possible critical success factors, unique to each business and owner. But these are the things that you worry about. Instead of worrying about them, create a plan to address them.
  6. Create key performance goals (KPGs) – KPGs differ from key performance indicators—those are metrics that relate to the goals. You’ll want to create a KPG for each critical success factor. This allows you to develop a plan to address each worry you have. And when you do that, my goodness, will you feel liberated. There’s nothing better than taking something that worries the hell out of you and creating an actionable plan for addressing that concern. That’s what a SMART KPG does. You stop worrying. You start acting. And you move in the direction of your vision.
  7. Actually USE your strategic plan – The problem with those boilerplate business plans is that no one looks at them once completed. They get filed away. Don’t misunderstand me—I’ve created those plans too. I used to borrow against lines of credit in the millions of dollars each month. Those lenders required business plans. And I gave them what they wanted. And then filed it away, never to look at it again. Why? Because, again, it was a CYA document for the bank. It had nothing to do with how I would successfully operate my business. I needed a clear, 1-Page Strategic Plan for that. But completing that initial plan is just the start. Things change in business all the time. Opportunities arise. We fail to execute the way we expect. Crises emerge. These are opportunities to escape our business for a moment—to sit, reflect, and plan. So whatever approach you use for planning, keep your plan alive. Make your plan a tool you use frequently, just as you would, oh, I don’t know—a wheel hoe.

Some people make business look easy. I’m sure you’ve seen this. Whether it’s another farm or an entrepreneur in another industry, some people just seem to have a knack for business. Their business prospers and we wonder, “why them and not me?

I was speaking with a friend recently who has created a remarkable farm business. His farm has passed $30 million in annual sales selling all sorts of pastured protein. And I’ve followed their story for many years, watching them take risks and make big strategic bets. Yet, this farmer doesn’t think of himself as a strategist. He just “does it.” And he does it well.

Honestly, most people aren’t like that.

Not everyone is an intuitive and decisive decision-maker or an innately strong strategic thinker. The rest of us need to follow a process to help us. A process, guide, or plan can give us the confidence we need to make better decisions.

The good news is that there are tools out there to help. And no, I’m not just talking about my book on the subject. You can find a mentor. And there are other books on strategic planning.

The important lesson is to simplify and clarify your strategy. To succinctly describe how your business will succeed.

“How” is the essence of strategy. The word is simple, short, and easy to understand. And that’s exactly what your strategic plan should be.

Small Farm Nation creates beautiful farm websites and offers online farm marketing courses that help farmers grow profitable farm businesses.