Do you have/use a business plan?

[LittleValleyFarm]

Has anyone found a written business plan useful? Also, anyone been audited by IRS after recording farm losses over a few years? Just trying to plan ahead!

 

[wijim]

We've been audited and that is one of the questions they ask. That is the only reason we have one.Jim

 

[B&M Farms]

Any business needs a plan and a budget to be profitable. I use a business plan and software to enable me to better track my costs. I don't make improvements or buy equipment I either can't afford or can't see a way to make it pay. I enjoy raising cattle but I do raise them for a profit be it a small one.

 

[circlebllc]

We had to have one for the USDA loan, at 1.5%.

 

[dun]

Is "Buy high, sell low and make it up on volume" a legitimate business plan?

 

[1wlimo]

Why would you not have one?

even for a "hobby" or house hold budget a quick written plan makes sense, let alone for IRS purposes.

If you do not have plans how do you know costs of production, and how a change in costs etc effects you?
Break even point?

 

[LittleValleyFarm]

Thus far any change in business expenses was easy to evaluate against the total profitability (or lack thereof) of this endeavor. Growing a little bigger changes things. A cash only system can no longer be maintained. B&M, do you recommend any software? Also, do you take a computer/device out to the corral or just transfer information later? It would seem like my iPad could be useful out there, but I haven't downloaded the "manure resistance" application yet!
Dun's strategy sounds very familiar for some reason

 

[B&M Farms]

Thus far any change in business expenses was easy to evaluate against the total profitability (or lack thereof) of this endeavor. Growing a little bigger changes things. A cash only system can no longer be maintained. B&M, do you recommend any software? Also, do you take a computer/device out to the corral or just transfer information later? It would seem like my iPad could be useful out there, but I haven't downloaded the "manure resistance" application yet!
Dun's strategy sounds very familiar for some reason

I use Cattlemax software and I'm pleased with it. There may be some that are cheaper and just as good or better. You can search software on these boards and see some old post. I don't take my computer with me when working cattle but I make notes to enter later. I also use it to track expenses. I use spreadsheets and balance sheets as well. I'm not a large operation. I'm only running 25 head of mamas right now but growing. I just think it makes sense to plan and adjust what your doing to make a profit.

 

[LittleValleyFarm]

Thanks B&M! I'll check that out.

 

[Limomike]

Is "Buy high, sell low and make it up on volume" a legitimate business plan?

:bang: Dang it dun, I KNEW I been doing it wrong all these years....

 

[cowboy43]

Having 10 years of off and on extreme weather , record breaking droughts, for some reason a business plan does not seem to work.

 

[1982vett]

Having 10 years of off and on extreme weather , record breaking droughts, for some reason a business plan does not seem to work.

LOL....plans change practically daily....Getting a nice rain right now that wasn't in "My Plan"...now what? :lol:

 

[cypressfarms]

Maybe because I went to LSU and graduated in Management - but I really believe in planning. That also means planning for the unexpected as well. I had to write a "Emergency Procedure" for a plant that I managed at. It was good real life practice. when you are forced to think of all possible detrimental things that could happen (for the plant that meant fire, train derailment, hurricane, tornado, chemical spill, bomb threat, flood, employee going postal, etc.etc.etc.). Having an idea of what catastrophic events could happen, will inevitably make one prepare for those events.

Maybe I'm anal, but I'm known at work as "Mr. plan B". I also have a second (third or forth) action in my mind just in case things don't go as planned. If they go as planned, great. If not, then at least I've given thought to how they should be handled. Maybe it's the boy scout in me

Why would someone NOT have a plan for their cattle operation? And buy low/sell high is not a plan.....

Heck, I have LIFE goals; one was to be an executive (as in VP or higher) by the time I turned 45. That changed at 39 when I had cancer. My list got "re-arranged", and executive is nowhere on the list. However "good dad" is at the top.

 

[TexasBred]

Having 10 years of off and on extreme weather , record breaking droughts, for some reason a business plan does not seem to work.

Business plans, cash flow projections, etc. etc. require 110% honesty or you can make them say anything you want them to say. Bankes love them....it fills the file up and makes it look "complete". A cigar box works just as well. When all the bills are paid and you have money in it you're making a little money. When it's empty and you still owe money you're in the hole.

In reality I use a simple Quicken accounting program. For a small or even large operation it gives you more infromation than most of us can absorb.

 

[TexasBred]

And buy low/sell high is not a plan.....

The he77 you say Cypress?? It equals profit, staying power and enjoying life.

 

[1wlimo]

Maybe because I went to LSU and graduated in Management - but I really believe in planning. That also means planning for the unexpected as well. I had to write a "Emergency Procedure" for a plant that I managed at. It was good real life practice. when you are forced to think of all possible detrimental things that could happen (for the plant that meant fire, train derailment, hurricane, tornado, chemical spill, bomb threat, flood, employee going postal, etc.etc.etc.). Having an idea of what catastrophic events could happen, will inevitably make one prepare for those events.

Maybe I'm anal, but I'm known at work as "Mr. plan B". I also have a second (third or forth) action in my mind just in case things don't go as planned. If they go as planned, great. If not, then at least I've given thought to how they should be handled. Maybe it's the boy scout in me

Why would someone NOT have a plan for their cattle operation? And buy low/sell high is not a plan.....

Heck, I have LIFE goals; one was to be an executive (as in VP or higher) by the time I turned 45. That changed at 39 when I had cancer. My list got "re-arranged", and executive is nowhere on the list. However "good dad" is at the top.

This is great, thinking about plan B, C, D etc before you start a task really helps. Saves hours of frustration, and cash.

A business plan does not need to be all bells and whistles, just though about and written down. Excel is easier to change than an account book.

 

[Ouachita]

Having 10 years of off and on extreme weather , record breaking droughts, for some reason a business plan does not seem to work.

Business plans, cash flow projections, etc. etc. require 110% honesty or you can make them say anything you want them to say. Bankes love them....it fills the file up and makes it look "complete". A cigar box works just as well. When all the bills are paid and you have money in it you're making a little money. When it's empty and you still owe money you're in the hole.

In reality I use a simple Quicken accounting program. For a small or even large operation it gives you more infromation than most of us can absorb.

I sense both sarcasm and a serious side to this entire thread. Although I have been around cattle most of my life, I am new to what I consider to be the "mechanics" of the day to day operation (and in my thinking, I'll always be a newbie, because there is always more to learn). As for a business plan, I don't have any kind of fancy computer type spread sheet. I use a #2 and a Big Chief yellow tablet. Now that I'm "on my own", since Dad and Granddad passed on, I have realized that there is a whole lot more to cattle than.......you name it; there's just more to it than I had ever considered until recently. My business plan, right now, can only be likened to a chess game; I start out with a plan (of course), but every move I make, and the opponent makes, requires a change in strategy. Knowing the game, playing the game, and being faced with different situations becomes experience, and experience equates to success. Winning and loosing are part of the game. Either way, I enjoy playing it, and will continue to learn and apply that knowledge to improve the operation

 

[cowboy43]

I am not being sarcastic , I am serious, when I retired in 2005 at age 60 I had 70 cows and as many calves paid for. My plan was to improve my herd and hold one years calf crop till the next year and sell as heavy weights, that way I would be raising my own stockers. I managed to do that for one year and then a 2 year drought hit dryest on record. I sold off both calf crops and then all cows keeping 15 heifers. Then the wettest year on record hit had 9 inches in one night and 5 heifers drowned and went down the creek. I bought a few cows back and was way understocked with a large amount of stock piled grass. Then the dryest 2 years on record hit again beating out the other record. After 2 years of no rain and all the stock pyled grass gone, I sold out again the place would not even support 25 cows. I now have 3 cows, 2 calves and one old broken down bull. It is now raining again and at 67 years old and cows selling for 1500 to 2000 dollars a pair, I am making plans to get back in somehow, the moral is the weather will knock all man made plans to hell. :cowboy: :lol2: :cry2: :???: :dunce: all my moods

 

[3legdonkey]

I do not have a formal plan like I create for other non farm businesses or clients. I do use a number of spreadsheets that allow me to plan for and track what is going on. Essentially my planning spreadsheets lay out the inputs to the operation and then the scenario sections use those inputs to tell me what is going to happen. This allows me to change the inputs easily and see what the output scenarios would look like. The tracking spreadsheets are basic cost vs profit spreadsheets that allow me to know if I am making or loosing money.

 

[Ouachita]

I am not being sarcastic , I am serious, when I retired in 2005 at age 60 I had 70 cows and as many calves paid for. My plan was to improve my herd and hold one years calf crop till the next year and sell as heavy weights, that way I would be raising my own stockers. I managed to do that for one year and then a 2 year drought hit dryest on record. I sold off both calf crops and then all cows keeping 15 heifers. Then the wettest year on record hit had 9 inches in one night and 5 heifers drowned and went down the creek. I bought a few cows back and was way understocked with a large amount of stock piled grass. Then the dryest 2 years on record hit again beating out the other record. After 2 years of no rain and all the stock pyled grass gone, I sold out again the place would not even support 25 cows. I now have 3 cows, 2 calves and one old broken down bull. It is now raining again and at 67 years old and cows selling for 1500 to 2000 dollars a pair, I am making plans to get back in somehow, the moral is the weather will knock all man made plans to be nice. :cowboy: :lol2: :cry2: :???: :dunce: all my moods

Your previous post was the one I was referring to as a "serious" post. I think it was dun that posted something about buying high, selling low, making up the difference in volume :lol: Which I think he was injecting sarcasm, and humor, into an otherwise difficult subject to approach with limited information. Now TB on the other hand; I hope he was serious about the shoe box, cause I use a redwing boot box.