Acknowledgements

ThisworkbookhasbeensuppliedforuseinNovaScotiabyBritishColumbia.Thecontentwasmodified
foruseinBritishColumbiafromtheoriginaldevelopedbytheSaskatchewanMinistryofAgriculture,
RegionalServicesBranch,FarmBusinessManagementServices.Thismaterialisbasedontheoriginal
GrowingYourFarmProfitsworkbookcreatedbytheOntarioMinistryofAgricultureandRuralAffairs
incooperationwiththeGovernmentofCanadaandtheAgriculturalAdaptationCouncil.

TheNovaScotiaversionwaspreparedfromtheBritishColumbiaversionpreparedbytheBritish
ColumbiaMinistryofAgricultureBusinessDevelopmentTeamthataredeliveringtheGrowingForward
AgrifoodBusinessDevelopmentProgram.

Foradditionalinformationpleasecontact:
NovaScotiaDepartmentofAgriculture
www.gov.ns.ca/agri

ThisresourcewasoriginallyfundedbyGrowingForward,afederalprovincialterritorialinitiative.

INTRODUCTION
INTRODUCTIONTOTAKINGSTOCK

VALUEOFPLANNING
Wheredoyouwantyourfarmtobe5,10,or15yearsfromnow?Whatdoesyourfarmbusinesslook
liketoday?Howdoyougofromwhereyouaretodaytowhereyouwanttobeinthefuture?What
levelofprofitwillyouneedtoaccomplishyourbusinessandpersonalgoals?Asyouwilllearnthrough
thisprocess,planningisanecessarypartofmaintainingandincreasingyourfarmprofits.
Farmersarenostrangerstoplanning.Youcannothavefuturecropswithoutplantingandpruningin
advance.Therewouldbenofuturelivestockwithoutabreedingplan.Onadaytodaybasis,farmers
keepaneyetothesky,makingsuretheyarepreparedwithalternateworkplans,comerainorsnow.
Whileexcellentproductionisimportanttothefarmbusiness,therearealsoanumberofbusiness
managementskillsrequiredtohelpfarmerssuccessfullymeettheirbusinessandpersonalgoals.
Thefirststepinanorderlyplanningprocessisaselfassessmentoffarmbusinessmanagement
practices.Thesepracticesincludethenineidentifiedareaslistedbelow:
1.BusinessStrategy
2.MarketingStrategy
3.ProductionEconomics
4.HumanResources
5.FinancialManagement
6.SocialResponsibility
7.SuccessionPlanning
8.BusinessStructure
9.RiskAssessment

Asyougothroughtheworkbookyouwill:

Assesscurrentfarmmanagementsystems,knowledge,andskills;Understandhowplanningprovides
theframeworkforeffectivedecisionmaking;SetandPrioritizegoalsforthefarmsfuture;Identify
resourcesthatcanhelpmeetthesegoals;Buildonyourfarmsstrengths;andCreateaFarmAction
Plantoimproveyourfarmmanagementskillsandknowledge.

 INTRODUCTION
HOWTOUSETHISWORKBOOK
TheTakingStockFarmBusinessPlanningWorkbookinvolvesansweringaseriesofquestionstohelp
youidentifystrengthsandweaknessesinyouroperationinninefarmbusinessmanagementareas.
Completingthisselfassessmentandthesubsequentfarmactionplanisintendedtoprepareyouto
makethebestchoicesforthedevelopmentofyourbusiness.

Eachsectioncontainsanintroductiontohelpyouanswertheselfassessmentquestions.Possible
answersareprovidedforeachquestiontoguideyouinassessingthesituationforyourfarm,andare
ratedaccordingtoatrafficlight:green(strength)meansyouunderstandandaredealingwiththe
issue;yellow(caution)meansthatsomeimprovementsshouldbemade(proceedwithcaution);anda
red(weakness)answerimpliesthatyouneedfurtherunderstandingandthatspecificactionis
required.Ifthequestiondoesnotapplytoyouroperation;indicatethisintheblue(notapplicable)
box.

Onceyouhaveselectedthemostappropriateanswerthenindicatewhetherthisissueisahigh,
mediumorlowpriorityforyourfarmoperation.

Attheendofeachsectiontherearetwoworksheets.Thefirstworksheetisusedtolistthehighpriority
strengths,cautionsandweaknessesforyourfarm.Thesecondworksheetistodevelopaction
statementstoaddressthehighprioritiesforthatareaoffarmbusinessmanagement.

PriortocompletingyourFarmActionPlanyouwilltransferthemostimportantactionitemsfromthe
worksheetsineachofthe9sectionstotheTakingStockSummaryActionItemsonpage44.In
addition,werecommendyoualsoconductabriefreviewofexternalopportunitiesandthreatsand
identifyyourkeybusinessandpersonalgoals(page45).

BUSINESSSTRATEGY

1.BusinessStrategy
Whatdoyouhopetoaccomplishwithyourbusiness?
Businessstrategyplanningisthefirststepdowntheroadofsuccessfulfarmmanagement.
Asabusinessowner,havingasetofbusinessgoalsgivesyouthepowertosteeryourbusinessactivitiesin
thesamedirectionasyourhopesandintentions.Thisforwardwayofthinkingcanbecomparedtoplanting
afield:inexperiencedfarmerswilloftenfocusonwhatisgoingonwiththeplantingbehindthem,onlyto
endupwithaverycrookedseedrow.Withsomecoaching,aninexperiencedfarmerwilllearntopickouta
treeoralandmarkinthedistancethathecanlineupwiththetractorsmuffler.Suddenlytherowsare
straighter,andthenewfarmerisabletocompletethejobfasterthanbefore.Similarly,businessmanagers
needtohaveaclearvisionofthefuturetocreateabusinessthatisinlinewiththeirstrategicgoals.This
visioncouldincludethingssuchasmachineryorlandpurchases,newventuresorexpansionplansand
shouldincludewhenyouwouldliketoachievethem.
Whatcanyoudo?
Knowwhereyouhavebeen
Thesuccessesandfailuresofthepastgiveyouvaluableknowledgetohelpplanyourfuture.Lookatyour
successesandaskyourself,Whatwentright?Lookatyourfailurestounderstandwhatwentwrong.
Manyofusarenotawareofthethingswedoright,simplybecausewedonotconsistentlyevaluatepast
activities.

Knowwhereyouare
Youarenotgoingtobeabletochangeyourcurrentbusinessimmediately,norshouldyouwanttochange
itimmediately.Youhavedonegoodthingstogetyouwhereyouare.Knowingwhatstrengthsyouhaveto
buildonwillhelpshapethewayyoumovetowardsyourbusinesspriorities.
Knowwhereyouwanttobeyourbusinessgoals!
Takethetimetolookforward.Knowwhetheryouwanttounderstandyourproductionandaccounting
statements,changeyourfocus,expandyourbusinessorincreaseyourvalueaddedactivities.Youmustbe
specificaboutyourbusinessgoals,sothatyoutravelinthedirectionyouwanttogo.
Knowhowtogetthere
Understandinghowyouaregoingtoachieveyourbusinessgoalsisasimportantashavingthegoalinthe
firstplace.Sometimesitbecomesdifficulttoseethestepsneededtoreachyourbusinessgoals.Beingable
toseeoverahillishardtodo.Youknowyouhavetogettotheotherside,butyouarenotsureexactly
whereyouneedtobeontheotherside.Figureoutwhatyouknoworcansee,evaluatewhetheryouthink
itislikelytobeasuccess,startonthepathtowardsthisgoal,buildinflexibility,andreevaluateas
informationaboutthepathtoyourbusinessgoalbecomesclearer.

Knowhowtotellwhenyouarethere
Itisentirelypossibletopassyourbusinessgoalswithoutknowingyouhaveachievedthem.Eachofyour
goalsmusthaveatleastoneclearobjective,sothatyoucanrecognizewhenyoureachsuccess.
Abusinessgoaltoimproveyourefficiencyisagoodtarget,butwithoutadefinedobjective,likereducing
thenumberoflabourhoursperacrefarmedfromonehourperacretohalfanhourperacre,youwillhave
noideawhenyouhavearrivedatthistarget.
Lookforthattreeonthehorizon!Lookbackonlytomakesureyouhavebenchmarksandareawareofyour
strengthsandweaknesses.Otherwise,focusyourattentiononthoseactivitiesthattakeyoufromwhere
youare,towardstheendyouhaveinmind.
4

 BUSINESSSTRATEGY
BusinessStrategyAssessmentQuestions
BusinessStrategyassessment(Goalsforthebusinessandfamily)

1. Doyouknowyourpastbusinesssuccessesandfailures?
GREEN YELLOW RED SELF PRIORITY
Weareabletoclearly Weareabletoidentifypast Wearenotalways ASSESSMENT High
identifysuccessfulpast successandfailuresbutwe surehowtojudge Green Medium
decisionsandactivities dontknowhowour ourbusiness Yellow
butwearealsoawareof decisionsimpactedthe decisions. Low
unsuccessfulbusiness outcome. Red
decisionsandwehave N/A
learnedfromthem.

2. Doyouknowwhereyourbusinessistodayandhowwellyouaredoing?
GREEN YELLOW RED SELF PRIORITY
Wearesatisfiedwithour Ourbusinessisdoingwell,but Wedonotknowhow ASSESSMENT High
businessperformance wearenotconfidentabout ourbusinessisdoing. Green Medium
today. thenextonetothreeyears. Yellow Low
Ourbusinessisableto OR Red
adapttochanges. Ourbusinessisnotdoingwell, N/A
butwehavebeenworkingon
aplanforimprovement.

3. Whatisyourpurposeforbeinginthefarmbusiness?
GREEN YELLOW RED SELF PRIORITY
Wecaneasilylist Wedonotknowhowto Wedonotknowwhy ASSESSMENT High
reasonswhywearein describeourpurposeforbeing wehaveafarm Green Medium
business. inbusiness. business. Yellow Low
Red
N/A

4. Areyousatisfiedwiththeperformanceofyourfarmbusiness?
GREEN YELLOW RED SELF PRIORITY
Wearesatisfiedwithour Ourbusinessisdoingwell,but Notsure.Wedonot ASSESSMENT High
businessperformance wearenotconfidentabout knowhowour Green Medium
today. thenextonetothreeyears. businessisdoing. Yellow Low
Ourbusinessisableto OR Red
adapttochanges. Ourbusinessisnotdoingwell, N/A
butwehavebeenworkingon
aplanforimprovement.

5. Doyourbusinessgoalssupportyourfamilygoals?
GREEN YELLOW RED SELF PRIORITY
Yes,wecanidentifythat Wecanidentifythatour No,wekeepour ASSESSMENT High
ourbusinessgoals businessgoalsimpactour businessactivities Green Medium
supportourfamilygoals. familygoalsbutwehavenot separatefromour Yellow
plannedforthiseffect. personalactivities Low
anddonotseethe Red
relationshipbetween N/A
them.

6. Howdoyouknowwhenyouhavereachedyourgoal?
GREEN YELLOW RED SELF PRIORITY
Wehavespecific Wehavesomeobjectivesin Wedonothaveany ASSESSMENT High
measurableobjectives mind,butdonothaveallthe writtenmeasurable Green Medium
foreachofourgoalsso detailsthatwouldidentify goals. Yellow
thatweknowexactly success. Low
whenwehavereached Red
them. N/A

BusinessStrategyAssessmentHighPrioritySummary
Fromyourassessment,listthehighprioritystrengths,cautionsand/orweaknessesforyourfarmwith
respecttoBusinessStrategy.Onthefollowingpageidentifyspecificactiongoalstoaddressthese
priorityissues.Attheendoftheworkbookyouwillusetheseactiongoalstodevelopanoverallfarm
actionplan.

High Priority Business Strategy Strengths (Green High)

1

High Priority Business Strategy Cautions (Yellow High)

1

High Priority Business Strategy Weaknesses (Red High)

1

BusinessStrategyAssessmentActionPlanItems
PriorityDescription ActionStatement
(indicatewhetherastrength,cautionorweakness) (Goals)

TransferyouractionplanitemswithrespecttobusinessstrategytoyourSummaryActionItemsonpage44.

MARKETINGSTRATEGY

2.MarketingStrategy
Whyismarketingvitaltotheoverallsuccessofyourfarmbusiness?
Whyshouldyoubeconcerned?
Marketneedscreatebusinessopportunities,nottheotherwayaround!
Marketingyourproductsandservicesisanecessarypartofyouroverallbusinesssuccess.Itisimportantto
understandtheissuesrelatingtothemarketingandsalesofyourproductsinordertomaximizeyour
profits.Unlessyouhaveagoodknowledgeofthesectoryouoperateinandhowyourproductsfitintothat
sector,itisdifficulttofocusonanythingotherthanproduction.
Increasingglobalcompetitionandotherinternationalissuesareaffectingyourbusinessenvironmentand
futuresuccess.Itisthereforeveryimportanttohavetheknowledgeandinformationyouneedtomake
informeddecisionsaboutthemarketingofyourproducts,whetheryoushould(orcan)diversifyinto
anotherproductarea,andwhethertoincreasethepriceofyourexistingproducts.
Inorderforyourbusinesstothrive,itiscrucialthatyouunderstandyourbuyersneeds,takinginto
considerationwhetheryouaredealingwithlocal(farmersmarkets),regional,national,orinternational
distributorsandretailers.Knowingwhatyourbuyersneedsareandwhereyoucanprovideforthose
needsisbecomingincreasinglyimportantandwillkeepyouonestepaheadofyourcompetition.

Commoditymarketersneedtounderstandglobalsupply/demand,worldweatherpatterns,stock/useratios
andotherfactorsaffectingdistribution.Thesevariablesaffectproductionintentionsandmarketing
decisions.
ThethreeareasofselfassessmentinMarketingareGeneral,CommodityandDirectMarketing.Whether
youhavebeeninbusinessforseveralyears,aretryingtoexpandyourcurrentbusiness,orarelookingto
startanewventure,assessingyourmarketingskillsandabilitieswillhelpyoudeterminewhatareasof
marketingyouneedtoexamineanddevelop.

Whatcanyoudo?
Constantlyworktounderstandyourbuyersneedsandwhataffectsyourmarket.
Worktounderstandwhattheconsumerwantsandiswillingtopayfor,andhowtomarketyour
productsinmorethanonesizeorform.
Lookforwaystopartnerwithotherstocollectivelydevelopmarketingstrategies.
Lookforwaystousemarketingexperts.
Developandfollowawrittenmarketingplan.

 MARKETINGSTRATEGY
MarketingStrategyGeneral(OptionalforSupplyManagedCommodities)
MarketingStrategyassessment

1. Doyouhaveawrittenmarketingplan?
GREEN YELLOW RED SELF PRIORITY
Yes,anditisfollowed. Aplanexistsbutitisnot Noplanexists. ASSESSMENT High
alwaysfollowed. Green Medium
Yellow Low
Red
N/A

2. Doyouhavethedesireandskillstomakegoodmarketingdecisions?
GREEN YELLOW RED SELF PRIORITY
Wehaveastrong Wehavesomemarketingand Wehaveverylittle ASSESSMENT High
backgroundandtraining trainingbackgroundandtryto trainingor Green Medium
inmarketingandusethis usethisskillinourdaily backgroundin Yellow
skillinourdailybusiness. business. marketingandhave Low
littledesiretouse Red
thisskillinour N/A
business.

3. Doyouestimateyourunitcostofproduction(COP)toinformyourpricingoptions?
GREEN YELLOW RED SELF PRIORITY
Yes,wereviewCOP Yes,annuallyfromthe No,wesellatthe ASSESSMENT High
informationafterevery financialstatements. prevailingmarket Green Medium
productioncycle. priceandhopefor Yellow
thebest. Low
Red
N/A

4. Doyoucheckmarketinformationregularly?
GREEN YELLOW RED SELF PRIORITY
Yes,wereceiveregular Sometimes. No,wedontcheck ASSESSMENT High
pricebulletinsandalso marketsandusually Green Medium
checkworldmarketsand acceptpricesgiven Yellow
reviewtheseinrelation bybuyer. Low
toourmarketingplan. Red
N/A

 MARKETINGSTRATEGY
5. Doyouusemarketresearchtodeterminecommoditychoice?
GREEN YELLOW RED SELF PRIORITY
Yes,andwefollow Occasionally,butonlywhen No,weusually ASSESSMENT High
marketstofindtrends wehavetime. producethesame Green Medium
thatwillincrease commoditieseach Yellow
profitabilityandalsofit yearorfollowwhat Low
withinourproduction ourneighborsare Red
plans. doing. N/A

DirectMarketing(IfApplicable)
1. Haveyouinvestigatedthedifferenttypesofdirectfarmmarketing(upick,onfarmretail,farmers
markets,etc.)?
GREEN YELLOW RED SELF PRIORITY
Yes,weuseoneormore Wehavealimited No,wehavenot ASSESSMENT High
ofthesesuccessfullyin understanding,butwehave investigatedthese Green Medium
ourdailyoperations.We notresearchedhowthese options. Yellow
arealsolookingforand canassistorcreateprofitsin Low
researchingnewwaysto ouroperation. Red
marketourproducts. N/A

2. Doyourefineyourproductofferingtomeetanidentifiedmarketniche?
GREEN YELLOW RED SELF PRIORITY
Yes,weactivelyresearch Somewhat,howevergiven No,wehavenot ASSESSMENT High
newtrendsandhowour ourcurrentoperationswe researchedthisarea Green Medium
operationcanfillaneed dontknowwhere becauseour Yellow Low
inthemarketplace.We diversificationwouldbe productionisvery
alsolookforwaystoalter beneficial. limitedorwearenot Red
ourproducttofillcurrent interestedin N/A
ornewcustomerneeds diversifying.
andincreaseprofitability.

3. Doessomeoneinyourfarmbusinesshavetheinterestandskillrequiredtododirectmarketing?
GREEN YELLOW RED SELF PRIORITY
Yes,wehavecompleted Ourknowledgeislimitedbut Wehaveverylittle ASSESSMENT High
trainingandhaveagood wewanttolearnmoreabout knowledgeandare Green Medium
understandingand directmarketingandthe notinterestedin Yellow
experienceindirect positiveimpactthiscanhave pursuingthisoption Low
marketing. onouroperation. forouroperation. Red
N/A

10

 MARKETINGSTRATEGY

Marketing Strategy Assessment - High Priority Summary

Fromyourassessment,listthehighprioritystrengths,cautionsand/orweaknessesforyourfarmwith
respecttoMarketingStrategy.Onthefollowingpageidentifyspecificactiongoalstoaddressthese
priorityissues.Attheendoftheworkbookyouwillusetheseactiongoalstodevelopanoverallfarm
actionplan.

High Priority Marketing Strategy Strengths (Green High)

1

High Priority Marketing Strategy Cautions (Yellow High)

1

High Priority Marketing Strategy Weaknesses (Red High)

1

11

 MARKETINGSTRATEGY
MarketingStrategyAssessmentActionPlanItems

PriorityDescription ActionStatement
(indicatewhetherastrength,cautionorweakness) (Goals)

TransferyouractionplanitemswithrespecttomarketingstrategytoyourSummaryActionItemsonpage44.

12

PRODUCTIONECONOMICS
3.ProductionEconomics
Howcanyouimproveyourproductionsystemandyourcostofproduction?
Whyshouldyoubeconcerned?
Makinganddeliveringyourproductorservicetothemarketcapturestheprofitopportunityforyour
business.Productqualityshowsthevaluethatcustomerswant.Productionsystems,facilitiesand
equipment,andpurchasingskillsallaffectthequality,yield,andcostofproduction.Inacommodity
market,itisincreasinglyimportanttomanageandmaintainalowcostofproduction.
Inbusiness,thereareneverenoughhoursinthedaytogetproductiondone,soitisimportantthatthe
productionsystemisasorganizedandefficientaspossible.
Anorganizedproductionsystemhelpsto:
Createtimetomanagetheotheraspectsofthebusinesssuchasmarketing,financial,humanresources,
businessstrategy,andstructure.
Createtimeforpersonal,family,andcommunityactivities.

Areasofproductionorservicefocusdiscussedinproductionare:
Productorservicequality.
Productionsystem.
Benchmarking.
Costofproduction.
Facilitiesandequipment.
Transportationsystems.
Purchasingandsupplierrelationships.

Whatcanyoudo?
Setproduction,serviceandqualitygoals.
Havearecordsystemthatprovidescostofproduction,yieldandqualityinformationinatimelymanner.
Identifythecostsofproductionforthedifferententerpriseswithinyouroperation
Ifsomeenterprisesinyourfarmoperationaresubsidizingothers,considerwhetheritispossibleto
purchaseratherthanproducetheseproducts.
Compareyourresultstoyourpastrecordsandtoindustrybenchmarkswhereavailable.
Developpositiverelationshipswithyoursupplierssotheycanprovideproductinformation,production
advice,training,markettrendinformationandmarketreferrals.

13

 PRODUCTIONECONOMICS

ProductionEconomicsAssessmentQuestions
ProductionEconomicsassessment

1. Areyousatisfiedwithyourcurrentlevelsandqualityofproduction?
GREEN YELLOW RED SELF PRIORITY
Yes,productionmeetsthe Someproductionlevelsare No,wearenot ASSESSMENT High
goalsofourplan. metandothersarenot. satisfiedwiththe Green Medium
levelandqualityof Yellow
productionbutare Low
unsurehowtodeal Red
withit. N/A

2. Doyoukeeparecordofyourproduction?
GREEN YELLOW RED SELF PRIORITY
Yes,wekeepcomplete Wekeepsomeproduction No,wedonotkeep ASSESSMENT High
productionrecords. recordsbuttheyarenot productionrecords. Green Medium
complete. Yellow Low
Red
N/A

3. Doyousetannualgoalsfortheleveland/orqualityofproduction?
GREEN YELLOW RED SELF PRIORITY
Yes,wesetannual Someproductiongoalsare No,wedonotset ASSESSMENT High
productiongoalsand setandothersarenot. productiongoals. Green Medium
targets. Yellow Low
Red
N/A

4. Doyouknowyourcostofproductionforeachcommodity?
GREEN YELLOW RED SELF PRIORITY
Yes,inputcostsare Somespecificproduction No,wedonotknow ASSESSMENT High
directlytiedtoproduction costsareknownandothers ourcostof Green Medium
recordsshowing arebasedonentire production. Yellow Low
profit/lossforeach operation.Wedonotknow
commodity. whichcommoditieshave Red
higherproductioncosts. N/A

14

5. Doyouusetheservicesofproductionadvisors(i.e.suppliers,agrologists,consultants)?
GREEN YELLOW RED SELF PRIORITY
Yes,weregularlyuse Occasionallyweuseadvisors No,wedonotuse ASSESSMENT High
theseservicestoimprove butonlywhenincrisis. advisors. Green Medium
farmoperationsand Yellow
increaseprofitability. Low
Red
N/A

6. DoAreyourproductionrecordsdesignedtoinform/improveyourproductionmanagement?
GREEN YELLOW RED SELF PRIORITY
Yes,productionrecords Ourrecordsarevaguebutin No,wedonotkeep ASSESSMENT High
areusedtoimprove someinstancesareusedto productionrecords. Green Medium
operations,forbench improveproductionand Yellow
marks,andtotrackboth profitability. Low
costsandsalesfigures. Red
N/A

7. Doyouhaveaplanforequipmentandfacilitiesreplacements?
GREEN YELLOW RED SELF PRIORITY
Yes,wehaveaplanfor Wetrytoextendlifespanas Wehavenospecific ASSESSMENT High
equipmentandfacilities muchaspossibleandreplace planforrepairand Green Medium
maintenance,repairand whenprofitabilityisgood. replacement. Yellow
replacement. Low
Red
N/A

8. Doyouhaveaqualityassuranceprogram(QualityStartsHere)?Doyoumeetthestandards?
GREEN YELLOW RED SELF PRIORITY
Yes,allproductshave Somequalityandtraceability No,qualitygoalsdo ASSESSMENT High
minimumstandardsthat standardsexistbuttheseare notexistinour Green Medium
mustbemet.Inspections notalwaysfollowedand operation. Yellow
arecompletedregularly checksarenotroutinely Low
toensurestandardsare completed. Red
beingmet. N/A

9. Doyouutilizenewproductiontechnologydemonstratedtobeeffectiveinyourarea?
GREEN YELLOW RED SELF PRIORITY
Newtechnologyis Newtechnologyhashad Littleornosuccess ASSESSMENT High
broughtinonlyifitis mixedsuccess. hasbeen Green Medium
proventowork;benefits experiencedwith Yellow
outweighthecosts; newtechnologyin Low
supportsgoalsand ouroperation. Red
providescompetitive N/A
advantages.

15

10. Isyourproductionordeliverysystem(s)operatingefficientlyandeffectively(e.g.inventory
management,timelinessofoperations,etc.)?
GREEN YELLOW RED SELF PRIORITY
Yes,thesystemprovides Sometimesthesystem Oursystemdoesnot ASSESSMENT High
resultsthatareprofitable, provideshelpfulresultsbutis workorwedont Green Medium
timely,andhelpsto notusedconsistently. haveoneinplace. Yellow Low
consistentlymeetour
goals. Red
N/A

Production Economics Assessment - High Priority Summary

Fromyourassessment,listthehighprioritystrengths,cautionand/orweaknessesforyourfarmwith
respecttoProductionEconomics.Onthefollowingpageidentifyspecificactiongoalstoaddressthese
priorityissues.Attheendoftheworkbookyouwillusetheseactiongoalstodevelopanoverallfarm
actionplan.

High Priority Production Economics Strengths (Green High)

1

High Priority Production Economics Cautions (Yellow High)

1

High Priority Production Economics Weaknesses (Red High)

1

16

 PRODUCTIONECONOMICS
ProductionEconomicsActionPlanItems

PriorityDescription ActionStatement
(indicatewhetherastrength,cautionorweakness) (Goals)

TransferyouractionplanitemswithrespecttoproductioneconomicstoyourSummaryActionItemsonpage
44.

17

HUMANRESOURCES

4.HumanResources
Howcanyouorganizeandmotivatepeopletoachieveyourfarmgoals.

Whyshouldyoubeconcerned?
Aninputcostthatfarmbusinessownersoftenoverlookisthecostoflabour.Dependingonthetypeof
farm,labourcostscanaccountforasmuchas70percentofthetotalcostofproduction.Availabilityof
skilledlabourisbecomingamajorproblemonmanyfarms.
Humanresourceplanningwillencourageyoutodoaselfassessmentaspartofaneedsassessmentfor
youroperation.Ahumanresourceplanwillidentifygapsandneedsintrainingaswellasintheoverall
requirementsforthefarm.
Humanresourceplanningisavaluabletoolforensuringthehealthandsafetyofemployeesandfarm
familymembers.Todaysmodernfarmoperatesunderregulationsdealingwithallaspectsoffarmingfrom
healthandsafetytotheenvironment.Ahumanresourceplanwillmakesureallapplicableregulations
undertheOccupationalHealthandSafetyRegulation,theEmploymentStandardsAct,andpayroll
regulationsarefollowed.
Aswithanyotherpartofagoodbusinessplan,spendingsometimecreatingandimplementingahuman
resourceplanwillhelpmaintainaprofitableandsuccessfulfarmbusiness.
Writtenjobdescriptionscanbeveryvaluableforfamily,employeesandowners.Paygridsand
compensationpackageswilleliminatemisunderstandings.Trainingneedsandplansareidentifiedand
agreedtobyallaffectedparties.

Whatcanyoudo?
Implementinggoodhumanresourceplanningwillnotonlyreduceyourcosts,butitwillalsogiveyoupeace
ofmindthroughouttheyear.Staffingmistakessuchastoomanyortoofewworkerswillimpactonthenet
profitsofanyfarmbusiness.
Considerfarmsafetyinyourmanagementpracticesanddevelopafarmsafetyplantoincorporategood
safetypracticesonyourfarm.Thiswillprovideasafeworkenvironmentandreducecostsfromfarm
accidents.
Oneofthekeystorunningasuccessfulfarmbusinessistoknowyourrequirementsregardingtypesof
skills,numberofworkersandlengthofemployment.Staffturnovercancreatemajorproblems(thisalways
seemstohappenatcriticaltimessuchasplantingorharvest).
Selfassessmentandunderstandingyourmanagementstylewillhelpyoutomaketherightdecisionswhen
hiringemployeesandsettingpoliciesforyourbusiness.Understandingyourmanagementstylewillenable
youtohireandkeepthebest,ensurethatyougettherightmixofpeoplethatsuityourpersonalneeds
andgiveyouthetoolstomotivateyouremployeestotheirpotential.

18

 HUMANRESOURCES

HumanResourceAssessmentQuestions
HumanResourceassessment
1. Doyouhaveahumanresourcemanagementplaninplace?
GREEN YELLOW RED SELF PRIORITY
Yes,wehaveaplanin Wehaveaplanwhenwelook No,wedonothavea ASSESSMENT High
placeandweregularly athiringpeopleandhavean humanresourceplan Green Medium
reviewandupdateit.Our ideaonhowwewouldliketo inplace.Employees Yellow Low
plantakesinto trainouremployees. areexpectedto
considerationour followourexamplein Red
managementstyleandit howtodothings N/A
isconsultedeverytime aroundthefarm.
wemakeahuman
resourcedecision.

2. Doyouclearlydefinetheresponsibilitiesofeachfamilymemberandemployee?
GREEN YELLOW RED SELF PRIORITY
Yes,wehaveawrittenjob Wedonothaveawrittenjob No.Theyareadvised ASSESSMENT High
descriptionforeach descriptionbecauseour onaneedtoknow Green Medium
familymemberand familymembersand basis. Yellow Low
employee.They employeesknowtheirjob.
understandtheir Red
responsibilitiesandour N/A
expectations.

3. Doyouhaveaplantoobtainandretainemployeesifapplicable?
GREEN YELLOW RED SELF PRIORITY
Yes,wehaveahuman Weknowthatwewillneed Werelyonwordof ASSESSMENT High
resourceplaninplace employeesatpeak mouthtorecruit Green Medium
thatincludeswhen,how productionperiods,butwe anddependonfamily Yellow Low
many,howlong,skills, donottakestepstoplanfor memberstopickup
training,andwagegrid recruitment,training,and theslack. Red
foremployeesofour retention. N/A
operation.

4. Haveyoutakenstepstoensureasuitablework/familybalanceforself,familymembersandstaff?
GREEN YELLOW RED SELF PRIORITY
Wehaveawork/life Spendingtimewithfamily Spendingtimewith ASSESSMENT High
balanceforfamilyand andfriendsawayfromthe familyandfriends Green Medium
employeesthatincludes farmbusinesshappensonly awayfromthefarm Yellow
timewithfamilyand onrareoccasionswhen businessisnevera Low
friendsaswellas farmingactivitiespermitthe priority. Red
scheduledholidays. timeaway. N/A

19

 HUMAN RESOURCES

Human Resources Assessment - High Priority Summary

Fromyourassessment,listthehighprioritystrengths,cautionsand/orweaknessesforyourfarmwith
respecttoHumanResources.Onthefollowingpageidentifyspecificactiongoalstoaddressthese
priorityissues.Attheendoftheworkbookyouwillusetheseactiongoalstodevelopanoverallfarm
actionplan.

High Priority Human Resource Strengths (Green High)

1

High Priority Human Resource Cautions (Yellow High)

1

High Priority Human Resource Weaknesses (Red High)

1

20

HUMANRESOURSES
HumanResourceAssessmentActionPlanItems

PriorityDescription ActionStatement
(indicatewhetherastrength,cautionorweakness) (Goals)

TransferyouractionplanitemswithrespecttohumanresourcestoyourSummaryActionItemsonpage44.

21

FINANCIALMANAGEMENT

5.FinancialManagement
Howcanyouhelpyourfarmbusinessbefinanciallystable?
Whyshouldyoubeconcerned?
Mostfarmbusinessownerswouldagreethatfinancialmanagementisanimportantpartofmanaginga
business.Manywouldalsoagreethattheprocessofrecording,gathering,andanalysingtheirfinancial
informationissometimesatediousjobthattheyattimesevenneglect.Financialdecisionshowever,are
mucheasiertomakewhenyouhaveinformationabouttheperformanceofyourbusiness.Soeventhough
itcanseemtobeanunproductivetaskwhencomparedtoahostofotherpressingandurgentissuesthat
requireyourattention,financialmanagementisacriticalcomponentofyourbusiness.
Iffinancialmanagementisnotyourpassion,thenyoushouldconsiderworkingwithafinancialadvisorwho
isabletogatherandorganizeyourbusinessinformationforyou.
Thefinancialmanagementofabusinesshasseveralcomponents:
Regularrecordingandmonitoringfinancialtransactions.
Analysisofpastandcurrentperformance.
Forecastingfutureperformance,includingcashflowanddebtservice;and
Settingandmonitoringfinancialgoals.
Financialmanagementisimportanttootheraspectsofthebusinessaswell.Itallowsyoutoestablishacost
ofproduction,whichinturnhelpsyoudetermineyourmarketingstrategies.Financialmanagementallows
youtomonitordebtserviceandtodecideifasuccessionplanthatincludesworkingwithadditionalfamily
membersispossible.
Financialmanagementstartswiththedevelopmentofasuitablefinancialinformationsystem.Thiswill
allowyoutoanalyzetheinformationandestablishfinancialgoals,whicharerequiredtosetfuture
performancebenchmarks.
Financialmanagementisthebackboneofanysuccessfulbusiness.Thissectionlooksatanumberofkey
areasthatbusinessownersmustfocuson:
Improvingcashflowtheabilitytopayyourbillsandlivingexpenses.
Increasingprofitabilitytheabilityofthebusinesstogenerateareturnafterexpenses.
Taxationbusinessesshouldstrivetopaytheoptimumleveloftax.
Capitalinvestmentbusinessesstrivetoallocateavailablecapitaltothebestuse.
Recordswithoutgoodrecords,analysisandfinancialgoalsettingisimpossible.
Riskmanagementidentifyingfinancialrisksisthefirststepinmanagingthem.
Resourcesandskillsknowingyourstrengthsandskillshelpsyoumanagethefinancesofthebusiness.
Understandingyourweaknessesallowsyoutofindalternatives.
Whatcanyoudo?
Evaluateyourcurrentrecordkeepingsystem.
Determinewhatinformationyouneed.
Determinewhatinformationyouneedtomeettherequirementofthelendinginstitutions.
Assessyourskilllevelforanalysisandifneeded,gettrainingorhelpfromatrustedadvisor.
Monitoryourfinancialprogressonaregularbasistodetermineifyouaremeetingyourfinancialgoals.
Establishapersonalbenchmarkforthedifferententerpriseswithinyourfarmoperation,fromwhichyear
toyearperformancecanbereviewed.
22

 FINANCIALMANAGEMENT
FinancialManagementAssessmentQuestions
FinancialManagementassessment

1. Isthefarmasprofitableasyouexpectedorhopedfor?
GREEN YELLOW RED SELF PRIORITY
Yes.Thefarmbusiness Notreally.Thefarmbusiness No. ASSESSMENT High
hasbeenprofitableevery hasbeenabletogrow Green Medium
yearandprovidesan financiallyeveryyearbuthas Yellow
increasingincomefor notmetourexpectations. Low
familymembers. Red

2. Doyouhaveafinancialrecordkeepingsystem?
GREEN YELLOW RED SELF PRIORITY
Wemaintainadetailed Weenterourinformation No,ourbookkeeping ASSESSMENT High
financialrecordkeeping intoarecordkeepingsystem issporadicandwe Green Medium
system.Weareableto wheneverwehavetimeand havetroublepaying Yellow Low
monitortheprogressof takethisinformationintothe billsontime.
thefarmbusinessatall accountantattheendofthe Red
times. year.

3. Doyouconsiderhowyourbusinessactivitiessuchasexpandingordownsizingcouldaffect
revenuesandcosts?
GREEN YELLOW RED SELF PRIORITY
Yes,weconsiderour Werecognizerevenuesand Wehavenoidea,or ASSESSMENT High
capacitytoservicedebt costsmightbeimpacted. dontconsiderhow Green Medium
ormeetcashobligations changestoour Yellow
andincreasesincosts. businesswillimpact Low
costsorrevenues. Red

4. Doyouconsidertaximplicationswhenmakingdecisions?
GREEN YELLOW RED SELF PRIORITY
Weconsultwithourtax Werecognizetheimportance No,wetakeour ASSESSMENT High
advisorsonaregular oftaximplicationsbutonly financialinformation Green Medium
basisandconstantly reviewthemannuallywith intoouraccountant Yellow Low
reviseourplanto ouraccountant. everyyearwith
minimizetaximplications instructionstodo Red
overtime. whateveris N/A
necessarytolimitour
tax.

23

 FINANCIAL MANAGEMENT

Financial Management Assessment - High Priority Summary

Fromyourassessment,listthehighprioritystrengths,cautionsand/orweaknessesforyourfarmwith
respecttoFinancialManagement.Onthefollowingpageidentifyspecificactiongoalstoaddressthese
priorityissues.Attheendoftheworkbookyouwillusetheseactiongoalstodevelopanoverallfarm
actionplan.

High Priority Financial Management Resource Strengths (Green High)

1

High Priority Financial Management Cautions (Yellow High)

1

High Priority Financial Management Weaknesses (Red High)

1

24

FINANCIALMANAGEMENT
FinancialManagementAssessmentActionPlanItems

PriorityDescription ActionStatement
(indicatewhetherastrength,cautionorweakness) (Goals)

TransferyouractionplanitemswithrespecttofinancialmanagementtoyourSummaryActionItemsonpage
44.

25

SOCIALRESPONSIBILITY

6.SocialResponsibility
Howcanyourfarmbusinesscreateapositiveinteractionwiththenaturalenvironment?
Whyshouldyoubeconcerned?
Environmentalstewardship
Afarmbusinesssharesthelandscape,groundandsurfacewater,andairwiththelocalcommunity.Inmost
cases,thefarmersand/oremployeesfamiliesalsoliveinthecommunity.Stewardshipofnaturalresources
createsanadvantageforboththefarmandthecommunity.
Assessingyourfarmsenvironmentalstewardshipmanagementcanhelp:
maintainandimprovetheland,water,air,nonfarmingareas,andwildliferesourcebases;
ensurecompliancewithregulations;
managetheimpactriskoffarmingpracticesonneighbors;and
createbusinessopportunities.

Whatcanyoudo?
Environmentalstewardship
Environmentalstewardshipneedstocreateabalanceamongallaspectsofthefarmsoperation.
Incorporatebestmanagementstewardshippracticestoimproveandmaintaintheland,water,air,non
farmingareasandwildliferesourcebases.
Meetregulationsandindustrystandards.
Managetheimpactriskoffarmingpracticesonneighbors.
Maximizebusinessopportunitiesthroughenvironmentalstewardshipactivities.

Communityinvolvementandindustrylevelinvolvement
Whilebenefitingyourcommunityandindustrybytakingpartineventsandorganizations,lookforwaysto
improveyourbusinessandindividualskills.

26

 SOCIAL RESPONSIBILITY
SocialResponsibilityAssessmentQuestions
SocialResponsibilityassessment

1. Haveyoucompletedanenvironmentalfarmplan?
GREEN YELLOW RED SELF PRIORITY
Yes,wehavecompleted Wehavecompletedan Wehavenot ASSESSMENT High
anenvironmentalfarm environmentalfarmplanbut completedan Green Medium
planandhavefollowed havenotyetfollowed environmentalfarm Yellow
throughwiththeactions. throughwithallofthe plan. Low
recommendedactions. Red

IFGREENMOVETONEXTSECTION

2. Areyouawareoftheenvironmentalregulationsthatapplytoyourfarm?
GREEN YELLOW RED SELF PRIORITY
Wearefamiliarwiththe Weareawareofsome Weareunawareof ASSESSMENT High
environmental environmentalregulations theenvironmental Green Medium
regulationsthatapplyto butarenotclearonour regulationsthat Yellow
ourfarmandour responsibilitiesunderthose applytoourfarm Low
responsibilitiesunder regulations. operationandifour Red
thoseregulations. farmpractices
promote
environmental
stewardship.

3. Doesyourfarmrecordsystemenabletraceabilityofyourfarmproducts(organics,herd
verification,etc.)?
GREEN YELLOW RED SELF PRIORITY
Yes,wekeepdetailed Wemaybeabletotrace Wedonotplanfor ASSESSMENT High
farmrecordsthatenable someofourfarmproducts traceabilityanddo Green Medium
traceabilityofourfarm usingourcurrentfarmrecord notseethe Yellow
products. system,butwehavenever importanceofit. Low
reallyconsideredthe Red
importanceofthis. N/A

27

 SOCIAL RESPONSIBILITY

Social Responsibility Assessment - High Priority Summary

Fromyourassessment,listthehighprioritystrengths,cautionsand/orweaknessesforyourfarmwith
respecttoSocialResponsibility.Onthefollowingpageidentifyspecificactiongoalstoaddressthese
priorityissues.Attheendoftheworkbookyouwillusetheseactiongoalstodevelopanoverallfarm
actionplan.

High Priority Social Responsibility Resource Strengths (Green High)

1

High Priority Social Responsibility Cautions (Yellow High)

1

High Priority Social Responsibility Weaknesses (Red High)

1

28

 SOCIALRESPONSIBILITY
FinancialManagementAssessmentActionPlanItems

PriorityDescription ActionStatement
(indicatewhetherastrength,cautionorweakness) (Goals)

TransferyouractionplanitemswithrespecttosocialresponsibilitytoyourSummaryActionItemsonpage44.

29

SUCCESSIONPLANNING

7.SuccessionPlanning
Therearethreeleadingquestionsdependingonwhereyouareinthefamilybusinesslifecycle.
Ifsuccessiontothenextgenerationisnotcurrentlyanissue,thequestionis:
Doyouhaveatleastabasicplaninplacetoensuretheongoingoperationofthefarmbusiness?
Ifsuccessionisnotcurrentlyanissuebutcouldbeinthenextfiveto15years,theninadditiontoabove,
thequestionis:
Howdoyoukeepsuccessioninmindandensurethebusinessisinapositiontodealwithitinthefuture?
Ifsuccessioniscurrentlyanissue,inadditiontothefirstquestion,thequestionis:
Doyouhaveaplaninplacetoensurethesmoothtransitionofownershipandmanagementtothenext
generation?

Whyshouldyoubeconcerned?
Everyfarmbusinessandfarmfamilyisdifferentandtherefore,everysuccessionplanisdifferent.The
concernistheeffectofaneventwhenthereisnoplaninplaceandtheuncertaintycreatedastothefuture
viabilityandcontinuityofthefarmbusiness.Thiswillaffectnotonlythefarmbusinessbutalsothefamily
bothfinanciallyandemotionally.
Successionplanning,inthepuresenseofthewords(i.e.planninghowtotransfermanagement,labourand
ownershiptothenextgeneration),maynotbeappropriateforeveryfarmbusinessbecauseofdifferences
inwhereoperationsareatinthefamilybusinesscycle.Forexample,anoperationjustestablishingitselfis
probablynotconsideringsuccession.Ontheotherhand,someonewithyoungchildrenisinadifferent
situationandneedstothinkaboutdifferentissues(i.e.thelongertermandwhatneedstobedonetoday
tobepreparedincaseachildwantstofarm).Ofcourse,otherfarmbusinessesneedtothinkabout
successionplanningnow.

Whatcanyoudo?
Themostimportantthingistostarttheconversation.Youshouldbethinkingstrategicallyabouthowto
positionthebusinessforthefuture.Isthereanobvioussuccessor?Aretheyready?Howwillyoutransfer
labour,managementandownership?Howwillyoutreatthefarmingandnonfarmingchildren?Issuesto
discussincludeplanningforvariouscontingencieslikedeath,disability,divorce,disagreementanddisaster.
Thisselfassessmentwilltakeyoudownthepaththatbestfitsyourparticularsituation.

30

 SUCCESSIONPLANNING

SuccessionPlanningAssessmentQuestions
SuccessionPlanningAssessment
1. DoyouhaveacurrentWillandpowerofattorney(updatedeveryfiveyears)?
GREEN YELLOW RED SELF PRIORITY
Yes,ourWillandpowerof Wehaverecentlyupdated No,neitherourWill ASSESSMENT High
attorneydocumentsareup oneofeithertheWillor norourpowerof Green Medium
todate. powerofattorney attorneydocuments Yellow
documentsorhaveatleast areuptodate. Low
putsomethoughtinto Red
doingso. N/A

Areyougoingtosellyourfarmorpassitontothenextgeneration?
I. Sellingthefarm
1. Doyouhaveaplantodealwiththetaxissuesrelatedtodisposingofthefarmassets?
GREEN YELLOW RED SELF PRIORITY
Yes,weknowthetaxrules Weareawarethatifwe Weareunawareof ASSESSMENT High
surroundingthedisposalof disposeofourfarmassets thetaxissuesrelated Green Medium
farmassetsandhaveaplan therewillbeincometax tothedisposalofour Yellow Low
inplacetodealwiththis consequences;however, farmassetsanditis
issue. wedonothaveaplanto notaconcernforus Red
dealwiththis. atthistime. N/A

II. Passingonthefarm
1. Doesyourbusinesshaveaformalwrittensuccessionplanforthebusiness?
GREEN YELLOW RED SELF PRIORITY
Yes,ourfarmhasaformal Wehavestarteda Wedonothavea ASSESSMENT High
writtensuccessionplan successiondiscussionbut writtensuccession Green Medium
addressingthetransferof thereisnotyetawritten plan. Yellow
managementand successionplan.Westill Low
ownership.Thisincludeslife havemanyquestions. Red
cycle,family N/A
communicationissues,
successorselectionand
development.

2. Doyouhaveaplantodealwiththetaxissuesrelatedtotransferringfarmassetstothenext
generation?
GREEN YELLOW RED SELF PRIORITY
Wehavedevelopedaplan Wehaveageneral No,wedontknow ASSESSMENT High
todealwithtaxissuesin awarenessofsomeofthe howtaxesmight Green Medium
consultationwithatax taxconsiderationsrelative affectfarmtransfer. Yellow
advisor. tosuccessionbutaplan Low
hasnotbeenputinplace. Red
N/A

31

3. Haveyoudevelopedcontingencyplansforsuchthingsasdeath,divorce,disability,disagreement
anddisaster?
GREEN YELLOW RED SELF PRIORITY
Wehavediscussedand Wehavedeveloped Wedealwithissues ASSESSMENT High
knowhowwewoulddeal contingencyplansforsome astheycomeupand Green Medium
withissuessuchas issues,suchasdeathand donthavetimeto Yellow Low
divorce,death,disability, disasterbutsometopicsare planforeventsthat
disagreementand toosensitiveforustodiscuss. mayneverhappen. Red
disaster. N/A

Succession Planning Assessment - High Priority Summary

Fromyourassessment,listthehighprioritystrengths,cautionsand/orweaknessesforyourfarmwith
respecttoSuccessionPlanning.Onthefollowingpageidentifyspecificactiongoalstoaddressthese
priorityissues.Attheendoftheworkbookyouwillusetheseactiongoalstodevelopanoverallfarm
actionplan.

High Priority Succession Planning Resource Strengths (Green High)

1

High Priority Succession Planning Cautions (Yellow High)

1

High Priority Succession Planning Weaknesses (Red High)

1

32

 SUCCESSIONPLANNING
SuccessionPlanningAssessmentActionPlanItems

PriorityDescription ActionStatement
(indicatewhetherastrength,cautionorweakness) (Goals)

TransferyouractionplanitemswithrespecttosuccessionplanningtoyourSummaryActionItemsonpage44.

33

BUSINESSSTRUCTURE

8.BusinessStructure
Howcanyouachievetheideallegalstructureforyourfarmbusiness?
Whyshouldyoubeconcerned?
Thestructureofabusinessisimportantformanyreasons.Whiletaxationisoftenaprimeconcernfor
businessowners,itshouldnotbetheprimaryreasontoconsideraparticularlegalstructure.For
example,otherimportantconsiderationsincludesuccessionplanninggoals.Somebusinessowners
maythinksimpleisbest;othersmayconsidertheflexibilityinimplementingasuccessionplanasthe
toppriorityinchoosingaparticularlegalstructure.
Eachkindoflegalstructurehasadvantagesanddisadvantages.Asabusinessgrowsorbusinessgoals
change,aparticularbusinessstructuremaybecomemoreorlessattractive.

Legalstructure
Thelegalstructurereferstothelegalbusinessentityunderwhichthebusinessoperates.Thethree
mostcommonbusinessstructuresaresoleproprietorship,partnership,andcorporation.Jointventure
isalesscommonentity,butisusefulincertaincircumstances.
Thetypeofstructurethatabusinessownerchooseswilldecideforexample,howdecisionsaremade,
whowillreporttheincomeofthebusiness,whowillpaythetaxes,orwhoislegallyresponsibleforthe
business.Thelegalstructurealsoinfluencesthecontrolofthebusinessandthemethodoftransferring
thebusiness.

Ownershipstructure
Theownershipstructureofafarmbusinessreferstohowtheassetsareowned.Whileownershipmay
appeartobeobvious,itisnotalwaysthecaseinafarmbusiness,especiallyifasecondgenerationis
workinginthebusiness.Itisnotuncommontoencounterfarmbusinesseswheresomeassetsare
ownedbytheindividualandusedbyacorporationthatoperatesthebusiness.Partnershipssometimes
ownveryfewassets,whilepartnersretaindirectassetownership.Understandingtheownershipof
assetsiscriticalfortaxplanning,financing,successionplanning,andexitingorchangingthebusiness
structure(suchaswhenabusinesspartnerwishestoleavethebusiness).
Writtenagreementsshouldclearlydocumentthecontributionsofassetstothebusinessandexplainif
andhowtheowneroftheassetswillbecompensatedforthecontributionoftheassetstothe
business.Agreementsclarifyhowsomeonemayenterorexitthebusinessstructureinthefuture.
Agreementsalsooutlineaprocessintheeventofdeathorillness.

Whatcanyoudo?
Understandyourcurrentbusinessstructure.
Considerifyourcurrentstructurefitsyourbusinessgoals.
Understandtheprosandconsofotherbusinessstructures.
Discussdifferentstructureswithyouradvisors.

34

 BUSINESSSTRUCTURE

BusinessStructureAssessmentQuestions
BusinessStructureAssessment

1. Doesyourbusinesslegalstructure(soleproprietor,partnership,corporation,etc.)meetthegoals
ofyourbusiness?
GREEN YELLOW RED SELF PRIORITY
Ourbusinesslegal Ourbusinesslegalstructure Wedonotknowif ASSESSMENT High
structuremeetsallofthe meetssomeofthegoalsfor ourlegalbusiness Green Medium
businessgoals,andthe thebusiness. structuremeetsthe Yellow
businessstructureis goalsforthe Low
reviewedperiodically. business. Red

2. Doyouhavewrittenbusinessagreements?
GREEN YELLOW RED SELF PRIORITY
Wehavewrittenupto Thewrittenagreementswere Therearenowritten ASSESSMENT High
datebusiness developedinitiallyandmost businessagreements Green Medium
agreements;allofthe ofthebusinessownershave forthebusiness. Yellow Low
businessowners ageneralunderstandingof
understandthe theagreements. Red
agreementsandhowthey N/A
applytothebusiness.

3. Doyouhaveawrittendescriptionofwhoownswhatinyourbusinessincludingcompensationof
useofassets?
GREEN YELLOW RED SELF PRIORITY
Thereisaclearwritten Thebusinessownersknow Theownersofthe ASSESSMENT High
descriptionofwhoowns whoownsthemajorassetsof businessarenotclear Green Medium
thecurrentbusiness thebusiness,buttheyarenot aboutwhoownsthe Yellow Low
assets,includingany clearaboutwhat assets.
compensationforuseof compensationtheownersof Red
thoseassetsinthe thoseassetsreceive. N/A
business.

35

 BUSINESS STRUCTURE

Business Structure Assessment - High Priority Summary

Fromyourassessment,listthehighprioritystrengths,cautionsand/orweaknessesforyourfarmwith
respecttoBusinessStructure.Onthefollowingpageidentifyspecificactiongoalstoaddressthese
priorityissues.Attheendoftheworkbookyouwillusetheseactiongoalstodevelopanoverallfarm
actionplan.

High Priority Business Structure Strengths (Green High)

1

High Priority Business Structure Cautions (Yellow High)

1

High Priority Business Structure Weaknesses (Red High)

1

36

 BUSINESSSTRUCTURE
BusinessStructureAssessmentActionPlanItems

PriorityDescription ActionStatement
(indicatewhetherastrength,cautionorweakness) (Goals)

TransferyouractionplanitemswithrespecttobusinessstructuretoyourSummaryActionItemsonpage44.

37

RISKMANAGEMENT
9.RiskManagement
Howdoyouhandlerisktosecureyourfarmoperations?
Riskcanoccurinvariousaspectsofyourfarmbusinessoperation.Youmayneedtoassessyour
securityofoperationsinthefollowingareas:

ProductionRisk
Howwelldoyoufollowgoodproductionpracticessuchastimelyoperations,diseasepreventionand
pestmanagement,machineryreadinessforoperation,andlabouravailability?Doyoumanagethe
productionriskthroughgovernmentprograms(ProductionInsurance)forthemaximumbenefitof
youroperation?

MarketRisk
Doyouhaveawrittenmarketriskstrategicplanandknowledgeofmarketingtools?Doyoureceive
currentandaccuratemarketinformation?Canyouidentifytrendsinprices?Doyouknowthe
breakevenpriceforallyourcommodities?Areyouabletoassessiffuturepricingopportunities
(deferreddelivery,contracts,hedges,options)areadvantageoustoyourbusiness?

FinancialRisk
Howsecureareyourfinancialarrangementswithlendingagencies?Doyoumeetwiththemregularly
todiscussyourbusinessplan?Willthecurrentlevelswithinyourproductioninsurancecoveragemeet
yourcashflowrequirements?Whatistheworstcasescenarioforproductionloss?Doyouincorporate
otherriskmitigationstrategies?Doyouparticipateingovernmentbusinessriskmanagementprograms
whenavailable?Doyouhavefireandbusinessinterruptioninsurance?Howmuchofanincreasein
interestratescanbetolerated?

HumanResourcerisk
Domembersofyourfarmingoperationunderstandthebusinessmodel?Wouldyouroperationbeat
riskifanyonememberbecameillordisabled?Willyoubeabletofindandtraincapableemployees?
Couldanaccidentordeathofafamilymemberoremployeeaffecttheviabilityofyourfarm?Isthere
lifeinsurancecoverage?

PolicyRisk
Aretherenationalorinternationalpoliciesthatwillnegativelyaffectyourmarkets?

Whatcanyoudo?
Categorizerisksasproduction,market,financial,humanorpolicyareas.
Addresseachareaofrisk.Decideiftheriskisahighorlowpossibility,whattheimpactonyourfarm
isanddevelopastrategytomitigatethatrisk.
Besureallmembersofyouroperationareknowledgeableoftheriskconsiderations.

38

 RISK MANAGEMENT
RiskManagementAssessmentQuestions
RiskAssessment

1. Doyouhaveaplantodealwithproductionrisk?
GREEN YELLOW RED SELF PRIORITY
Yes,wemanageour Yes,wetrytofollowgood No,wedonothavea ASSESSMENT High
productionriskbyfollowing productionpracticesand plan. Green Medium
goodproductionpractices takeadvantageof Yellow Low
suchastimelyoperations, productioninsurance
diseasepreventionandpest wheneverwecan. Red
management,machinery N/A
readiness,andlabour
availability.Whenitis
available,wetakeadvantage
ofproductionriskinsurance.

2. Doyouhaveaplantodealwithmarketrisk?
GREEN YELLOW RED SELF PRIORITY
Yes,wehaveawritten Wehaveageneralideaon No,wedonothavea ASSESSMENT High
marketcontingencyplan.We howtousemarketing plan. Green Medium
prepriceourproductwhen toolsbutareunsureon Yellow Low
possibleandsellintothetop howtousethem.
thirdofthemarket. Red
N/A

3. Doyouhaveaplantodealwiththelossoflabourormanagementskills?
GREEN YELLOW RED SELF PRIORITY
Yes,wehaveawritten Wehaveoptionsavailable No,wedonothavea ASSESSMENT High
humanresourcecontingency buthaveneverdiscussed plan. Green Medium
plan.Wehavealternate thesewithfamilyor Yellow Low
resourcesavailable. employees.
Red
N/A

39

 RISKMANAGEMENT

Risk Management Assessment - High Priority Summary

Fromyourassessment,listthehighprioritystrengths,cautionsand/orweaknessesforyourfarmwith
respecttoRiskManagement.Onthefollowingpageidentifyspecificactiongoalstoaddressthese
priorityissues.Attheendoftheworkbookyouwillusetheseactiongoalstodevelopanoverallfarm
actionplan.

High Priority Risk Management Strengths (Green High)

1

High Priority Risk Management Cautions (Yellow High)

1

High Priority Risk Management Weaknesses (Red High)

1

40

 RISKMANAGEMENT
RiskManagementAssessmentActionPlanItems

PriorityDescription ActionStatement
(indicatewhetherastrength,cautionorweakness) (Goals)

TransferyouractionplanitemswithrespecttoriskmanagementtoyourSummaryActionItemsonpage44.

41

SUMMARY,GOALS&ACTIONPLANS

TAKINGSTOCKGETTINGTOTHEFARMACTIONPLAN
Nowthatyouhavecompletedtheselfassessmentquestions,youwillproceedthroughafewmore
stepsbeforeyoudevelopyourfarmactionplan.
1. TransfertheactionitemsidentifiedineachfarmbusinessmanagementsectiontotheTakingStock
summarytable.
2. Assesspotentialexternalopportunitiesandthreatsthatmayimpactyourfarmyoumayconsideras
partoftheplanningprocess.
3. Determineyourkeypersonalandworkgoals.
4. DevelopaFarmActionPlan.

TakingStockSummaryInstructions
YourresponsestoeachoftheproceedingsectionsshouldnowbecarriedforwardtotheTakingStock
SummaryActionItemsonthefollowingpages(seeexamplepage).
TocompletetheTakingStockSummary:
1. StartwithBusinessStrategy,thefirstofthefarmbusinessmanagementareaswithintheself
assessment.Byreferringbacktothisarea,bringforwardthehighpriorityitemsthatrequireyour
attention.
2. Identifywhatactionstatementsorgoalsaremostimportantforyoutoimproveyourfarmbusiness
managementpracticesinthisarea:
Theactionstatementsaddressareasrequiringfollowupfromyourresponsestothequestionsin
eachbusinesssection.
Youdonotneedtocreateactionstatementsorgoalsforhighpriorityfarmbusinessmanagement
practicesthatyouarealreadyimplementing.
Youarenotrequiredtocreateactionstatementsforallfarmbusinessmanagementareas.You
decidewhatareasyoufeelareimportantandrequiresomeactiontosupportimprovement.
3. Assignprioritiesforeachactionarea(i.e.whatisthelevelofurgencytocompletethataction
high,medium,orlow).
4. YouhavenowcompletedthesummaryfortheBusinessStrategyarea.Continuewithstepsone
throughthreeforalltheotherfarmbusinessmanagementareas.
5. Onceyouhavesummarizedallninefarmbusinessmanagementareas,proceedtolookingatexternal
opportunitiesandthreatsaswellasdevelopingkeybusinessandpersonalgoals.Followtheinstructions
ineachoftheseareas.
6. ThefinalstepinthisprocessistodevelopyourFarmActionPlan.
7. AcompletedFarmActionPlanisrequiredtoaccessfundingsupportforFarmBusinessAdvisoryServices
fromtheB.C.MinistryofAgriculturesFarmBusinessAdvisoryServicesprogram.

42

 SUMMARY,GOALSANDACTIONPLANS

TakingStockSummaryActionItems(Example)

Farm PriorityDescription ActionStatement Priority

ManagementArea (indicatewhetherastrength, (Goals) (High/Medium/Low)
cautionorweakness)
1) BUSINESS
STRATEGY


2) MARKETING
STRATEGY

3) PRODUCTION Limited information on cost of Gather detailed information on high

ECONOMICS production (caution) production records and input
costs for each commodity we
produce
4) HUMAN Job descriptions lacking Gather detailed information on medium
RESOURCES (weakness) production records and input
costs for each commodity we
produce
5) FINANCIAL Enhance financial record Improve my knowledge of my high
MANAGEMENT keeping and analysis financial records and monitor
(caution) business progress

43

 SUMMARY,GOALSANDACTIONPLANS
Name:

Date:

TakingStockSummaryActionItems

Farm PriorityDescription ActionStatement Priority

ManagementArea (indicatewhetherastrength, (Goals) (High/Medium/Low)
cautionorweakness)
1) BUSINESS
STRATEGY


2) MARKETING
STRATEGY

3) PRODUCTION
ECONOMICS

4) HUMAN
RESOURCES

5) FINANCIAL
MANAGEMENT

6) SOCIAL
RESPONSIBILITY

7) SUCCESSION
PLANNING

8) BUSINESS
STRUCTURE

9) RISK
MANAGEMENT

44

 SUMMARY, GOALS AND ACTION PLANS

IdentifyingExternalOpportunitiesandThreats
OpportunitiestoCapture
Whatchangesortrendsintheworldoutsideofyourfarmdoyouseeasprovidingthegreatestopportunitiesforyourfarms
futureoverthenextfivetotenyears?Listthesechangesortrendsandtellwhatopportunitiestheycreateforyourfarm.
1

Threats(Risks)toAvoidorProtectFrom
Whatchangesortrendsintheworldoutsideofyourfarmdoyouseeasprovidingthegreatestpotentialthreatsforyour
farmsfutureoverthenextfivetotenyears?Listthesechangesortrendsandtellwhatthreatstheyposeforyourfarm.
1

MyKeyGoals
INSTRUCTIONS
Step1Describewhereyouwantyourfarmtobeinafivetotenyeartimeframe.Whattypeoffarm
businesswillitbe?Howbig?Whowillbeinvolvedinthefarmandinwhatway?
Step2IdentifythreetofiveKeyGoals.Whatneedstobedonetomakethisfivetotenyearfuturepicture
orvisionofyourfarmareality?
Asyousetyourgoalsconsider:
YourHighPriorityStrengthsandWeaknessesthatyouhaveidentified.
PersonalandFamilyGoals.
TheOpportunitiesandThreatstothefarmthatyouhaveidentified.
GrowingForwardcostshareopportunities.
StateyourthreetofiveKeyGoalsandhoweachsupportswhereyouwantyourfarmtobeinafivetotenyear
timeframe.
Step3Usingthetickboxesprovided,indicateifachievingthisgoalwill(identifyallappropriate):
Buildonbusinessstrengths;
Turnweaknessesintostrengths;
Captureanopportunity;and
ReduceoravoidaThreat(risk).

CreatingActionPlanstoaccomplishgoals
OnceyouhavecompletedyourtopthreetofiveKeyGoalsthefinalstepistocompleteanActionPlanforeach.
IntheActionPlanyourKeyGoalswillbecomemorerefinedtoincludeactionstepsneededtoimplementthese
goals.

45

 SUMMARY, GOALS AND ACTION PLANS

MyKeyGoalsExample
Wheredoyouwantyourfarmtobeinfivetotenyearsfromnow?Describebelow:
Same size of operation unless great opportunity for expansion presents itself. Increase Jason and Susans involvement
in managing the farm operation. Increase profits by $25,000. Develop Succession Plan

MYKEYGOALS
WhataretheKeyGoalsneededtomakeyourfivetotenyearpictureorvisionofyour Achieving this goal will help
farmareality?Asyousetyourgoalsconsider: strengthen or address:
Yourbusinessandpersonalgoals. (markallthatapply)
TheTakingStockSummaryActionItemsyouidentifiedonpages57and58.
TheOpportunitiesandThreatstothefarmthatyouhaveidentified.
StateyourKeyGoalandhowitsupportswhereyouwantyourfarmtobeinafiveto
tenyeartimeframe.

1 Increase Profits by $25,000. This will help with family members increasing Strength Opportunity
salary needs and assist with debt payment capacity for future expansion or
Weakness Threat
possible succession planning buyout of parents.
2 Improve cost of production records for each farm enterprise. This will help control Strength Opportunity
costs and identify the areas where we make the most profits and identify ways to
Weakness Threat
improve profit margins. Good way for Jason and Susan to learn more about
running the farm business while using their computer skills.
3 Restructure debt to regain greater operating credit line. This will improve Strength Opportunity
profitability by allowing more flexibility in purchases and more flexibility in
Weakness Threat
marketing sales.

4 Strength Opportunity
Weakness Threat

5 Strength Opportunity
Weakness Threat

CapacitytoImplement:Next,asyoudevelopyourActionPlanstoaddressthesegoals,considerifthefarmhasthefollowingcapacities
tosuccessfullyimplementtheseKeyGoals.Ifnot,thenaddressingthesecapacitiesmightbeactionstepsrequiredtomeetthesegoals.
KnowledgeandSkills/Resourcesincludingfinances/FarmTeammemberscommittedtotheGoal/Motivation/Isthistheright
timetopursuethisgoal?

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 SUMMARY, GOALS AND ACTION PLANS

MyKeyGoalsExample
Wheredoyouwantyourfarmtobeinfivetotenyearsfromnow?Describebelow:

MYKEYGOALS
WhataretheKeyGoalsneededtomakeyourfivetotenyearpictureorvisionofyour Achieving this goal will help
farmareality?Asyousetyourgoalsconsider: strengthen or address:
Yourbusinessandpersonalgoals. (markallthatapply)
TheTakingStockSummaryActionItemsyouidentifiedonpages57and58.
TheOpportunitiesandThreatstothefarmthatyouhaveidentified.
StateyourKeyGoalandhowitsupportswhereyouwantyourfarmtobeinafiveto
tenyeartimeframe.

1 Strength Opportunity
Weakness Threat
2 Strength Opportunity
Weakness Threat

3 Strength Opportunity
Weakness Threat

4 Strength Opportunity
Weakness Threat

5 Strength Opportunity
Weakness Threat

CapacitytoImplement:Next,asyoudevelopyourActionPlanstoaddressthesegoals,considerifthefarmhasthefollowingcapacities
tosuccessfullyimplementtheseKeyGoals.Ifnot,thenaddressingthesecapacitiesmightbeactionstepsrequiredtomeetthesegoals.
KnowledgeandSkills/Resourcesincludingfinances/FarmTeammemberscommittedtotheGoal/Motivation/Isthistheright
timetopursuethisgoal?

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FarmActionPlan
Instructions
TheFarmActionPlanisdesignedtopromptyoutoidentifythemostimportantfarmbusinessmanagement
issuesonyourfarm(fromtheTakingStockSummaryActionItemsworksheetonpages57and58)andset
somegoalsforimprovementintheseareas.Therearethreemainstepsintransferringtheitemsfromyour
summarysheettotheFarmActionPlan:
1. Decidewhicharethemostimportantitemstoyouonyoursummaryworksheetandtransferthemto
thefarmactionplan.Thequestionsdenotedasaweaknessandhighprioritywouldlikelytake
precedenceoverthoseconsideredalowpriorityandastrengthorcaution.Howeveritisuptoyouto
prioritize.Theexamplebelowhaschosenthree.Chooseasmanyasyoufeelnecessary.
2. Forcolumnthreeactionstatementyouneedtoaddastatementexplaininghowyouaregoingto
addresstheissue.Intheexamplebelowforprioritytwotheactionstatementhasbeenexpandedfrom
improvemyknowledgeoffarmfinancialreportstoimprovemyknowledgeoffarmfinancialreportsby
takingacontinuingeducationcourse.
3. TheFarmActionPlanalsoneedsaplannedcompletiondate.Entertheplannedcompletiondatein
columnfourandwhenyoureviewyourFarmActionPlaninthefuturetheactualcompletiondatecan
befilledin.Iftherearemultipleoperatorsonyourfarmalsoindicatewhoisresponsibleforeachaction.

TakingStockFarmActionPlan(Example) Name: John Smith

Date: January 20XX

Priority Farm ActionStatement Planned Actual Responsible

Management (Goals) Completion Completion forAction
Area Date Date
1 Production Improve my record keeping March 20XX
Economics system by ... implementing a
tracking system.

2 Financial Improve my knowledge of my November

Management farm financial reports by taking 20XX
a continuing education course.

3 Human Get family members to write February
Resources their job descriptions and create 20XX
ones for hired positions.

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SUMMARY, GOALS AND ACTION PLANS

TakingStockFarmActionPlan Name:

Date:

Priority Farm ActionStatement Planned Actual Responsible

Management (Goals) Completion Completion forAction
Area Date Date

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GLOSSARY
APPENDIXAGlossaryofTerms
BUSINESSSTRATEGYTermsyouneedtoknowforBusinessStrategy
Action:Aspecificstepneededtoimplementagoal,preferablyincludingwhowilldoit,bywhen,andatwhatcost(e.g.
JohntolookatelectronicrecordkeepingsystemsavailableandmakerecommendationbyDecember31st,consideringthe
benefitsanddisadvantages,expense,trainingneeds,andthecostoftraining).
Actionplan:Acollectionofactions,whichyouhavecommittedtocomplete,inordertofulfillagoal.
Businessgoal:Akeyachievementthatwillfulfillanorganizationspurposeormission(e.g.improveprofitability;maximize
netincomebyincreasingrevenuesandcontrollingcosts).
Corecompetency:Whatyouandyourbusinessarecapableofdoingwell(e.g.,producinghighqualitybreedingstock,cost
controlinagreenhousevegetablesoperation,grainmarketing).
Mission:Astatementoftheoverallpurposeofanorganization.Itdescribeswhatyoudo,forwhomyoudoit,andthe
benefitsofdoingit(e.g.toprovideconsumerswithhighquality,pricecompetitive,servicesandproductsthatmeettheir
personal,business,andrecreationalneeds).
Priority:Awayofrankingpotentialactionsbasedonyourjudgmentofhowmuchofaneffecttheywillhaveinfulfilling
yourgoals.Inthisprogram,rankinganactionwithahighpriorityincreasesthelikelihoodthatitwillbeincludedinyour
prioritylists.
Strategy:Ahighlevelplanorapproachtoachievingadesiredresult(s).
Vision:Adescriptionoftheidealofwhatyouwantyourbusinesstolooklikeinthefuture.AMissionStatementwill
describehowyouwillmakeyourvisionbecomereality.

PRODUCTIONECONOMICSTermsyouneedtoknowforProduction
Benchmarking:Theprocessofcomparingresultsonyourfarmwithyourownfarmspastresultsorwithresultsfrom
otherfarmsproducingthesameproductsorservices.
Costofproduction:Thecostofproducingoneunitofproductoroneunitofservice.Thecostofproductionisdividedby
theamountofproductsmadeexpressedindollarsperunitofproduction(e.g.$4.50perbushelofcorn,$68.00perHLof
milk).
Productionadvisor:Apersonwhoprovidestechnicaladviceontheproductionofcropsandlivestock.
Productionsystem:Theinputs,equipment,people,orderofsteps,standards,andevaluationproceduresrequiredtoturn
thepurchasedinputsintotheproductsdeliveredtoyourcustomers.
Productionstandards:Thesecanincludeyieldstandardssuchasyieldperacreorperanimal,regulatorylicensesor
certificatessuchasGrowerPesticideSafetyCourse,industryormarkettraceability,andbiosecurityrequirements.
Productiontechnology:Thisincludesanymachinery,knowledgeskillset,andsystemofstepsormethodsusedtoturn
inputsintotheproductsdeliveredtoyourcustomers.
Quality:Thisdescribesthedesiredcharacteristicsofaproductorservice.
Service:Thisreferstoworkprovidedforacustomerforpay.
Servicesystem:Thissystemistheinputs,equipment,people,orderofsteps,standards,andevaluationprocedures
requiredtoturnthepurchasedinputsintotheservicesdeliveredtoyourcustomers.
Suppliers:Thesepeoplesellinputstoyourfarmbusiness.

MARKETINGTermsyouneedtoknowforMarketing
Agritourism:Agritourismiswhenconsumersvisitafarmersfairormarketwhiletraveling;visitingapickyourownfarm
orparticipatinginaharvest;stayingataworkingfarmorguestranch.
Basis:Thedifferencebetweenthelocalcommoditycashpriceandthespecifiednearbyfuturespriceofthesame
commodity.Basis=LocalcashpriceNearbyfuturesprice.
Commoditymarketing:Agriculturalcommoditiesaregeneric,undifferentiatedproductsthat,sincetheyhavenoother
distinguishingandmarketablecharacteristics,competewithoneanotherbasedonprice.Acommoditymarketingsystem
encompassesalltheparticipantswhoareinvolvedintheflowofthecommodityfromtheinitialinputtothefinalconsumer.
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Directfarmmarketing:Directfarmmarketingallowstheproducertoassumetheaccountabilityandrewardsof
deliveringqualityagrifoodproductsdirectlytotheconsumerthroughavarietyofmarketingchannels(suchasfarmers
markets,farmgatesales,oronfarmstores).
Farmersmarket:Farmersmarketsarecommonfacilitiesorareaswhereseveralproducersgatheronaregularbasisto
sellvariousfoodproductssuchasmeat,fruit,vegetables,andotherfooddirectlytoconsumers.Thesearealsoforthe
benefitoftheurbanconsumerwhovaluesquality,variety,andfreshnessintheirfood.
Forwardcontracting:Aforwardcontractisanagreementbetweentwoparties(suchasawheatfarmerandacereal
manufacturer)inwhichtheseller(thefarmer)agreestodelivertothebuyer(cerealmanufacturer)aspecifiedquantityand
qualityofproduct(wheat)ataspecifiedfuturedateatanagreeduponprice.
Futurescontract:Anagreementthroughafuturesexchange,tobuyorsellacommoditysometimeinthefuture.The
quality,quantity,deliverytime,anddeliverylocationarespecifiedandthepriceisdiscoveredonanexchangetradingfloor.
Hedging:Infuturestrading,ahedgeisafuturepositionthatisequalandoppositetoapositionheldinthecashmarket.
Theobjectiveistominimizetheriskofanadversemoveforthecashposition.
Marketingboards:Marketingboardsplayanimportantcoordinatingroleinthemarketingorsellingofcommodities.
Marketingboardsmayprovidemarketinformationandsupportresearchandpromotiontotheirproducermembers,while
othersalsonegotiatewithprocessorstodeterminethepricepaidtogrowers.Someothermarketingboardsmanagesupply
fordomesticandexportmarkets.Thesemarketingfunctionsalllendstabilityandpredictabilitytothemarketforproducers
andthebuyersoftheircommodities.
Marketingplan:Yourmarketingplanoutlinesthestepsyouwilltaketomatchyourcustomersneedswiththebest
productsandservicesyoucanprovide.Yourmarketingplanwillhelpyoudecidehowtospendyourmarketingbudgetand
isapartofyouroverallbusinessplan.
Marketresearch:Marketresearchlinkstheconsumertothemarketerthroughinformalandformalanalysisofaproduct,
service,ormarketsegment.Marketresearchgivesyoutheknowledgetomaximizecustomerresponseanduptakeofthe
productorserviceyouaresellingorpromoting.
Options:Anoptioncontainsaright,butnotanobligationtoeitherbuy(calloption)orsell(putoption)anunderlying
futurescontractataspecificprice(strikeprice)foracost(premium).

FINANCIALMANAGEMENTTermsyouneedtoknowforFinancialManagement
Accrualstatement:Afinancialstatementthatmatchestherevenueearnedandexpensesincurredforaspecifictime
period,regardlessofwhenthecashtransactiontookplace.
Arrears:Alegaltermforatypeofdebtthatisoverdueaftermissinganexpectedpayment.
Assets:Referstopropertythatthebusinesseitherownsorcontrols.Assetsincludeitemssuchascash,equipment,
buildings,andland.Theycanbevaluedonafairmarketvalueoronthebasisofcostlessdepreciation.
Balancesheet:Astatementoffinancialpositionshowingtheassets,liabilities,andequityofabusinessonaspecificdate.
Benchmark:Ameasurementofaparticularfinancialorproductionindicatorthatservesasastandardbywhichabusiness
canbemeasuredorcompared.
Breakevenprice:Thepriceaproducermustreceiveforaproductinordertorecoverallofthecostsassociatedwith
producingtheproduct.
Capital:Financialcapitalreferstothefundsprovidedbylenders(andinvestors)tobusinessestopurchaserealcapitallike
equipmentforproducinggoodsandservices.Realcapitalmayincludeland,equipment,buildings,orotherassets.
Capitalbudget:Thisprovidesanestimateofthefeasibilityofmakinginvestmentsinlongtermassets.
Capitalinvestmentstrategy:Astrategyaimedatmaximizingthereturnandefficiencyofthecapitalinvestedinthe
businessbasedontheanalysisofcashflowsanddesiredreturnoninvestment.
Cashflow:Anaccountingtermthatreferstotheamountsofcashbeingreceivedandspentbyabusinessduringadefined
period,sometimestiedtoaspecificproject.
Cashstatement:Astatementthatrecordstherevenueandexpenseswhenthecashisactuallyreceivedorpaid,
regardlessofwhentheagreementtosellorpurchasemayhavetakenplace.
Debtservicingcapacity:Theabilityofthebusinesstomakepaymentsofmoneyowedafterconsideringthecash
revenuesandexpensesofthebusiness,personallivingcosts,andtaxes.
Debtstructure:Theproportionofshorttermdebtwhencomparedtolongtermdebt.
Depreciation:Anannualnoncashexpensetorecognizetheamountbywhichanassetlosesvalueduetouse,age,and
obsolescence.

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Enterprisebudget:Providesalistingofthedirectincomeandexpensesassociatedwithaparticularenterprise.Itisused
toestimatetheprofitabilityofanenterprise,tocomparetheprofitabilityofvariousenterprisesonafarm,andasanaidin
preparingwholefarmorcashflowbudgets.
Equity:Aninterestinpropertyorthemonetaryvalueofthepropertylessanyoutstandingliabilities.
Netincome:Equaltotheincomethatabusinesshasaftersubtractingallcostsandexpensesfromthetotalrevenue.Net
incomeforasoleproprietorshipmustcoverfamilylivingexpenses,taxes,andprincipalpaymentsondebt.Itissometimes
referredtoasprofitorjustincome.
Profitability:Theabilityofabusinesstogenerateincome(orprofit)inabusinessundertaking,afterallexpensesandcosts
havebeenmet.

HUMANRESOURCESTermsyouneedtoknowforHumanResources
ConflictManagementStyles:ThefollowingarefivestylesofconflictmanagementasoutlinedbyKennethThomasand
RalphKilmann.
Avoidance:Theindividualdoesnotpursuehisorherownortheothersconcerns.Thisusuallyresultsinaloselose
solution.
Accommodation:Theindividualhasahighconcernforothersconcernsandneglectshisorherown,inordertosatisfy
othersneeds.Heretheindividuallosesandtheotherpeoplewin,resultinginalosewinsolution.
Competition:Theindividualisonlyconcernedwithhisorherowninterestsandpursuethemattheexpenseofothers.Here
theindividualwinsbuttheotherpeoplelose,resultinginawinlosesolution.
Compromise:Theindividualisequallyconcernedwithhisorherneedsandothersneeds.Compromiseneverfullytakes
careofanyonesneedsandresultsinanowin,nolosesolution.
Collaboration:Theindividualhashighconcernforbothhisorherneedsandothersneeds.Usingthisstyle,theindividual
workswiththeotherpeopletofindasolutionthatisacceptabletoall,resultinginawinwinsolution.
Humanresourcemanagementplan:Thisisaplanwhereyouassessyourpresentandfutureneedsintheareaof
humanresources.Itisalsoanopportunitytoexamineyourstrengthsandweaknessesasamanager,andtodesignand
implementaplantoaddressyouruniquecharacteristics.
Managementstyle:Everyfarmerhasamanagementstylethatisuniquetohisorherownbusiness.Stylescanrangefrom
ahandsonsituation(wherethefarmerworksalongsidehisemployees)towherethefarmerreliesonverbalandwritten
instructionstoconveywhattheyexpectfromtheiremployees.Itisimportanttorecognizethatyourmanagementstyleis
shapedbyyourownexperiencesandpersonality
Regulations:(thefollowingActsaremandatoryifyouhavepaidworkers).
CanadaPensionPlan:Thisisunderthejurisdictionofthefederalgovernment.EveryonewhoworksinCanadamustpay
intothispensionfundasitprovidesdisabilitypaymentsaswellasapensionwhenyouretire.
EmploymentInsurance:Federallegislationtoprovideinsurancepaymentsshouldaworkerbecomedisabledorlosetheir
employment.TherearealsoallowancesformaternityandpaternitybenefitsintheAct.Employersmustmakedeductions
andremittancesunderthisAct.
EmploymentStandardsAct:AprovincialActthatdealswithwagelegislation,vacations,publicholidays,hoursofwork,
andovertime.
OccupationalHealthandSafetyAct:AprovincialActthatexplainsanddefinesemployersandemployeesrightsand
obligationsforsafetyintheworkplace.Itcontainsasetofguidelinesforbothemployerswithpaidworkers,andemployees
tofollow.
WorkersCompensationAct:ProvinciallegislationthatcoversallworkersinBritishColumbia.Employersmustpayinto
thisfundiftheyemployworkers.TheWorkersCompensationActprovidespaymentandbenefitstoworkersshouldthey
becomeinjuredonthejoborareinvolvedinafatality

SOCIALRESPONSIBILITYTermsyouneedtoknowforSocialResponsibility
Communityinvolvement:Communityinvolvementcanincludeactivitiesinyourlocalmunicipality,school,faith,sports
andrecreation,business,orothersharedinterestgroup.
Industrylevelinvolvement:Industrylevelinvolvementcanincludeattendingfarmorganizationorindustrymeetings,
servingonfarmorganizationorindustryboards,andtakingpartinfarmorganizationorindustryledprojectstofind
solutionstoissuesorpromotesuccessstoriestoconsumersortothepublic.
Industrynetworks:Industrynetworksareorganizationsorassociationsthatprovidecontactsforpeopleinthesameor
relatedindustries.

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EnvironmentalFarmPlan:AvoluntaryeducationandawarenessprogramdesignedtohelpBritishColumbiafarmers
prepareconfidentialandselfadministeredenvironmentalriskassessmentsfortheirfarms.Actionplansaredevelopedto
dealwiththeidentifiedconcerns.
Environmentalstewardship:Environmentalstewardshipistheresponsibilitytotakecareofournaturalresourcesto
ensurethattheyaremanagedinasustainablewayforcurrentandfuturegenerations.
NutrientManagementPlan(NMP):ANMPisadocumentpreparedforafarmthatgivesanevaluationofwhich
applicationrateisappropriateforthelandbaseandwhatotherstandardsforapplicationmustbemet.
NutrientManagementStrategy(NMS):ANMSisadocumentpreparedforafarmthatshowshowmuchmanureor
prescribedmaterialsisbeingproducedyearly,howitisstored,andwhereitisused.
Valueaddedmarketopportunities:Valueaddedmarketopportunitiesrefertotheadditionalvalueaddedtoaproduct
orservicethroughimageandmarketing(e.g.organicproduce).

SUCCESSIONPLANNINGTermsyouneedtoknowforSuccessionPlanning
Familybusinessdynamics:Thisdealswiththeimpacts,influences,androlesthatfamiliesandfamilymembersin
businesstogetherhaveoneachotherandontheoverallperformanceofthebusiness.Itmostlyrelatestothelinksbetween
family,ownership,andmanagement(theTaguiriDavis3circlemodelbelowhelpstodescribethis).Familybusiness
dynamicsiscriticalinsuccessionplanningasitinfluencesthingslikemanagementstyles,conflictresolution,
communication,andothersuchissues.
Readinessfactors:Theseissuesneedtobeaddressedandresolvedsothatthefamilyandbusinessarereadytoproceed
withsuccession.Thesefactorsincludestageoffamilybusinesslifecycle,familydynamics,communication,sizeandfinancial
viability,identificationanddevelopmentofasuccessor,andvisionmissiongoals.
Stagesoffamilybusinesslifecycle:Manyfamiliesandbusinesseshavethreeparallelstagestheypassthrough:(1)
entry;(2)growth;and(3)exit.
(1)Entryhastwomainsteps:(i)testingwhetherfamilymember(s)wanttobeinthebusiness;and(ii)establishment.(2)
Growthalsohastwomainsteps:
(i)expansion;and(ii)astimeprogresses,possibleconsolidation.(3)Exitaddresses:(i)retirement;and(ii)transfer.
Successionplanning:Acontinuousprocessinvolvingtheadvancedplanningforandimplementationofstrategiesto
transferthelabour,knowledge,skills,managementcontrol,decisionmaking,andownershipofthefarmbusinesstothe
nextgeneration(withinfamilyornot)Successionplanningisbasedonpersonal,family,andbusinessgoalsandobjectives.
Successor:Thepersonplanningtogaingreatermanagementand/orownershipcontrolofthefarmbusiness.

BUSINESSSTRUCTURETermsyouneedtoknowforBusinessStructure
Businessagreements:Documentsthatdescribethedetailssurroundingtheformationofabusiness.Examplesare
partnershipagreementsandshareholderagreements.Businessagreementsdescribeitemssuchastheformationofthe
business,assetcontribution,howitwilloperate,andhowitwilldissolve.
Corporation:Alegalentitythatisseparatefromitsowners,theshareholders.Noshareholderofacorporationis
personallyliableforthedebts,obligationsoractsofthecorporation.
Fairmarketvalue:Atermtodescribeanappraisalbasedonanestimateofwhatabuyerwouldpayasellerforanypiece
ofproperty.
Fairmarketvaluebalancesheet:Astatementoffinancialpositionshowingtheassets,liabilities,andequityofa
businessonaspecificdatevaluedattheirfairmarketvalue(seedefinitionoffairmarketvalue).
JointVenture:Abusinessstructurethatcloselyresemblesapartnershipbutlacksoneormoreoftheessentialelements
ofapartnership.
Legalbusinessstructure:Referstothetypeofbusinessstructurethatabusinessusestooperate.Themostcommon
structuresaresoleproprietorships,partnerships,andcorporations.
Ownershipstructure:Describeshowthebusinessisownedbytheindividualsinvolved.Ownershipofassetsmaybe
structureddifferentlythantheprevailingbusinessstructure.Forexample,ashareholderinacorporationwillownshares
thatrepresentownershipofalltheassetsofthecorporation.However,theymayalsoownlandpersonally(suchasasole
proprietorwould)andrentthatlandtothecorporation.
Partnership:Anagreementwheretwoormorepersonscarryonabusinesswithaviewtomakeaprofit.Allmembers
sharethemanagementofthebusinessandeachispersonallyliableforallthedebtsandobligationsofthebusiness.This
meansthateachpartnerisresponsibleforandmustassumetheconsequencesoftheactionsoftheotherpartner(s).
Apartnershiphasthefollowingcharacteristics:
Anagreementtosharetheprofitsandlossesofabusinessexists;
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Theabilityofeachpartnertocontractuallybindtheotherpartners;
jointownershipofproperty(althoughitiscommontoholdsomepropertyoutsideofthepartnership);
Theuseofthewordspartnerandpartnershipinanywrittendocumentation(i.e.howtherelationshipisperceivedby
thirdparties);
Theuseofapartnershipname,jointbankaccount,jointaccounting,singlefinancing,etc.;and
Formalregistrationasapartnership.
Soleproprietorship:Thisisgenerallythesimplestwaytosetupabusiness.Asoleproprietorisfullyresponsibleforall
debtsandobligationsrelatedtohisorherbusiness.Acreditorwithaclaimagainstasoleproprietorwouldnormallyhavea
rightagainstallofhisorherassets,whetherbusinessorpersonal.Thisisknownasunlimitedliability.
Succession:Theprocessofplanningandexecutingthetransferofthebusinesstoasuccessor.

RISKMANAGEMENTTermsyouneedtoknowforFinancialManagement
Privateriskmanagement:Includestheuseofprivateinsurance,commoditymarketingstrategiessuchashedging,and
otherstrategiessuchasdiversifyingproductionandcustomerbase.
Publicriskmanagement:Includesgovernmentrunprogramssuchasproductioninsuranceandincomestabilization
programs.
Riskmanagement:Aprocessofidentifyingrisk,assessingitsimpact,anddevelopingmanagementstrategies.Strategies
includetransferringtherisktoanotherparty,avoidingtherisk,reducingthenegativeeffectoftherisk,andacceptingsome
oralloftheconsequencesofaparticularrisk.Financialriskmanagementfocusesonwhenandhowtohedgeusingfinancial
instrumentstomanagecostlyexposurestorisk.

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