1. Agribusiness Library LESSON L060016: PREPARING A BUSINESS PLAN

2. Objectives 1. Describe the reasons for establishing business goals, identify the types of goals, and examine ways to accomplish goals. 2. Explain how to develop smart business goals. 3. Explain the purpose and importance of a business plan. 4. Describe the parts of a business plan, and develop a quality business plan.

3. Terms Appendix Business plan Business plan introduction Business regulations Company description Financial plan Goal Immediate goals Legal plan Location analysis Long-term goals Management plan Marketing plan Mission statement Operating plan Short-term goals Venture capital

4.  For a business to function successfully, it must set realistic goals.  A goal is the end result of effort toward a specific achievement.  The goals and methods of achieving goals can be found in the mission statement —a brief summary of the business goals and objectives.

5.  A. Goals can be used to help set policy and to provide decision-making guidelines.  Consistency is important in setting policies in businesses of all sizes.  Policies regarding hiring, training, retention, and promotion should be reflected in the goals.  B. As with personal goals, business goals should be reviewed periodically.  Business goals may be affected by economic, political, and social changes within the business sector.

6.  C. For goals to be effective, objectives should be set to help meet the goals.  Objectives should be stated in terms that are identifiable by periods of time, such as quarterly or yearly.  At that time, the business performance should be compared to the stated objectives.  Based on the given performance, management has to determine if the goals have been met and, if not, decide what changes need to be made to meet the goals.

7.  D. Before a mission statement can be written and objectives can be determined, a business has to set goals.  There are immediate, short-term, and long-term goals.  Understanding these categories and how to go about accomplishing the goals within each category is what makes a business successful.  1. Immediate goals are what you aim to accomplish in the near or immediate future, such as within a day, week, or month.  A business should have immediate goals to have a successful start to the operation.

8.  2. Short-term goals are what a business aims to accomplish within one to two years.  Short-term goals help a business work toward its long-term goals.  3. Long-term goals are what a business aims to accomplish in a number of years.  A business can use long-term goals to determine its overall performance after a number of years.

9.  For a business to accomplish its goals, the goals must first be prioritized.  SMART is an acronym that is often used to identify and prioritize important goals for business or personal reasons.  SMART goals are specific, measurable, attainable, realistic, and timely.

10.  A. Goals should be very specific.  A specific goal provides details that an individual or business can strive to achieve.  B. Goals should be measurable because this enables a business to constantly evaluate its progress toward attaining the goals.

11.  C. Goals must be attainable within a specific time period.  Attainable goals should be established for achievement based on an immediate, short- term, and long-term basis.  D. Goals must be realistic in nature.  A business should set lofty goals, but the goals should be capable of being achieved within a specific time period or with the financial means of the business.  E. Goals should be designated to a specific time period based on complexity.  Goals should be evaluated weekly, monthly, and annually.

12.  A business plan serves many important purposes for the potential success of the business operation.  It is also important for the development, growth, and advancement of the business.  A. A business plan should specify future projects and establish objectives to achieve the projects.  Goals for future projects can be defined on an immediate, short-term, and long-term basis.  The future projects outlined in the business plan should also define where the owner would like for the business to be and how he or she plans to achieve the goals or projects.

13.  B. A business plan should evaluate past progress in achieving its goals.  Previous goals should be reviewed and discussed to establish the effectiveness and progress of the business.  C. One of the most important functions and purposes of a financial plan is to generate interest and to raise money from prospective investors to build financial stability.  Without financial backing for future projects, it is challenging for any business to realize growth, progress, and prosperity.

14.  A business plan is the written description of all aspects of a business.  The business plan, like the mission statement and goals, is essential in starting a successful agribusiness.  Each business has its own unique business plan.

15.  A. The business plan introduction is an overview of the agribusiness.  It should describe the agribusiness and list its goals and objectives.  B. If the proposed agribusiness is a franchisee of a current company, then a company description should be included.  A company description is a statement that describes the company as it currently exists, the company history, and the type of services or products offered.  Products and services should be detailed as much as possible.

16.  C. Five specific types of plans should be included within the business plan: management, marketing, legal, financial, and operating.  1. A management plan is a document that identifies the individuals who will manage the proposed agribusiness.  It should also include an organizational chart of employees and their job descriptions.

17.  2. The marketing plan is a document that describes the type of competition a business will face and the types of customers the business hopes to attract.  In identifying its competition, an agribusiness should determine how well it will be able to compete within the market.  Therefore, a marketing strategy should be included within the marketing plan.

18.  3. A legal plan is a document that identifies the rule-oriented organization of the agribusiness.  Potential legal organizations may include sole proprietorship, partnership, corporation, cooperative, or franchise.  4. A financial plan is a document that projects the income, expenses, and profits of a business over a multi-year period.

19.  5. An operating plan is a document that describes how an agribusiness will run on a daily basis.  Facilities, personnel, materials, and processing requirements should be included within the operating plan.

20.  D. A location analysis is a study that evaluates specific areas, possible consumers, traffic patterns, accessibility, and visibility.  E. Business regulations are local, state, and federal restrictions and insurance requirements.  They should be included in the business plan.

21.  F. The capital required to begin an agribusiness should be detailed within the business plan.  Financial arrangements (e.g., loans, personal investments, and venture capital) should also be detailed.  Venture capital is the money invested in an agribusiness by an investor.  G. The appendix is a document that should include all of the marketing research and serve as a reference of the materials used in compiling the business plan.

22. REVIEW Why should business goals be established? How do you develop smart business goals? What is the purpose and importance of a business plan? How is a business plan used? What are the major parts of a business plan? How do you develop a quality business plan?