How to pressure test your strategic plan for farm success
Once you have explored what you want your business to be and developed vision, mission, and guiding principles, it’s time to move into the second planning stage. This is when you make a concerted effort to understand what surrounds your farm business in terms of a business climate and logistics to bring your farm goals into reality.
Most farms have many goals and ideas, as you likely found out while working on your vision and mission but they must be pressure tested and rooted to come to fruition.
Use SWOT to assess your business and operating environment
Farmers may take many routes to better understand their goals and how to achieve them. A first step to gain a holistic picture of your business is often done through a SWOT Analysis – Strengths, Weaknesses, Opportunities and Threats.
This well-known exercise gives people, regardless of business or industry, the ability to recognize all the relevant details that may affect their organization.
Strength
The first and, arguably, most important letter to focus on is the ‘S”. When you understand your strengths, you can better leverage them, manage existing relationships and create new opportunities. Often, a business is built around the S through ongoing generations of practitioners and, by extension, institutional knowledge or a very studied and determined individual with clear goals in mind. We also often see an organization’s strengths tie into its mission statements.
Farm example: Morgan Smallman is a sixth-generation potato farmer at Knutsford, Prince Edward Island. Being part of a continuous potato growing operation that started in the early 1800s brings about a depth of knowledge of his farm fields that simply cannot be rivalled. Growing potatoes is his business.
His and his family’s key strength is a keen understanding of the land, local agronomy and weather to have a profitable farm for years to come.
Weakness
The ‘W’ is also a helpful tool to address and manage areas long overdue for attention or perhaps an outright overhaul. By knowing where your farm is weak, you can begin to identify steps to strengthen it. However, just because you identify a weakness does not necessarily mean it needs to be fixed. Sometimes it is just as important to acknowledge and accept a weakness to drive other opportunities or areas of focus for your business. Even this awareness is valuable when so many other things are beyond your control.
Farm example: A farmer with limited on-farm storage capacity may not have the ability to store grains as long as they’d like to for crop marketing. With limited options, they may be forced to sell at a less-than-desirable price. Their weakness is a lack of storage options.
Opportunities
These are beyond our control. Perhaps a farmer has an ideal location due to its proximity to a substantial population base for direct selling, a rail line for shipping or water for production. Whatever it may be, it is worth conducting an on-farm assessment to determine where you may already have an advantage. You’ll aim to leverage any strategic advantages as you create your strategy in the coming articles.
Agri-food example:
Your Farm Market in Woodstock, Ont. is a seasonal farmers’ market that has grown a massive following over the years. The market retails fresh eggs, fruits, vegetables and other locally grown products and sells them at its market. It has two opportunities or strategic advantages:
Location. Its flagship centre is nearly perfectly wedged between Brantford and London, serving hundreds of thousands of consumers. The second storefront in downtown Toronto benefits from a relative flow of non-stop foot traffic.
Many Canadians now prefer sustainably produced local food. With most of its farmer suppliers within 45 minutes of the Woodstock market, it’s as local as it gets.
Threats
It doesn’t matter what area of farm production a person works in. Threats often referred to as “risk” are always present. Threats are not always as clear-cut as a case of mildew in an apple orchard. They may be more subtle, such as an importing country changing its phytosanitary standards or major shipping routes being cut off, as the world recently witnessed.
Resources like AgriResponse, AgriShield and Roots to Success are examples of national risk management programs available to farmers with resources related to business, production, people, finances, markets, management and biosecurity protocols and more. Understanding, defining and taking steps to mitigate risk is what all good farms have in common. Risk exposure never goes away. Instead, it just re-appears in different formats.
Regional farmland example: Prairie farmers over the winter of 2020/21 had a relatively light snowfall followed by an uncharacteristically warm spring, which increased dryland farmers’ risk due to extremely arid conditions. This threat will be different based on geography and crop type, but it must be dealt with.
Note about risk mitigation: While farmers can control certain variables, they cannot control everything. Because of this, they must be prepared for common scenarios that may arise and, to an extent, uncommon ones, as well.
Try a SWOT analysis. Get your team in a room, write the four sections on a board, and work together to fill them in. A variety of perspectives can be helpful here. You also may want to pull in some of your advisors.
Enlist the help of a third-party advisor
Issues may become clearer, and problems could be solved efficiently by enlisting the professional help of a third-party advisor or facilitator. No different than an accountant, veterinarian or agrologist, third-party advisors serve a vital purpose to provide unbiased assessments and opinions about your farm and its future.
Advisors are an important resource because they offer a few things that we, as farm managers, simply cannot.
They’re separate from your farm and its business. For them, being solicited bears relatively little emotional connection and, thus, gives them the benefit of looking at a situation without a preconceived bias. The detachment often helps bring clarity to a situation.
Advisors have more specific experience in each area than we do. It’s why we call on them in the first place. Whether it is a farmer who has simply been at the same game you have, but for a longer period, or a venture capital maven, advisors are often subject matter experts with a supreme knowledge in a singular field. Because of this, it allows us to call upon that person with a definite goal in mind.
Agriculture carries tremendous risk, and most successful farms will have at least one, if not more, external advisor. Having those people outside of our farm helps make sense of all the moving pieces beyond the farm gate and put the information into a workable context. These people help give us green, yellow and red lights for possible decisions we consider.
As farmers progress with the help of outside voices, there are scenarios where those same people shift into a more formalized role, often in the structure of a board. Having an official group of outsiders you report to, or are in constant contact with, brings higher degrees of accountability and professionalism to your farm and its overall strategy.
Try a “Known Knowns” Matrix
If your farm business involves direct-to-consumer selling, what does COVID-19 mean for you? If you are a canola grower, what do trade disputes mean for your seed purchasing decisions? As a farm manager, if an employee goes on maternity leave, sick leave or long-term disability, what is your process to find that suitable stand-in while they’re away from the farm?
One way we can better prepare ourselves for these questions and more is through a Known Knowns Matrix. It simply emphasizes how some things we can know and some we cannot. It also underscores the principle that farm managers are as much in issues management as an HR professional.
By reviewing a Known Knowns matrix, you may better prepare yourself for common scenarios, and even uncommon ones, that may arise. You can take what you find in this exercise and incorporate it into your SWOT analysis.
Try your own Known Knowns Matrix
Next steps
The goal at this stage is to reality test. That means developing a strong understanding of your current circumstances, your business and your environment. Completing a SWOT analysis and a Known Knowns Matrix informs you and helps to identify your strategic advantages. In the next article, we will leverage those strategic advantages as you create your strategic approach.
Learn how to assess your strategic advantages, hierarchy of priorities and unique enterprise considerations to set you up for success.
From cash flow planning to net worth statements, get the basics you need to prepare for a loan application.
We have a business plan bundle to set you up for success.