There are two halves to farming — production and business. They are correlated, of course. You can’t really succeed in one if you aren’t also up to scratch at the other.
That said, we’ve always known that every farmer brings their own mix of management skills and energies to the table, which means every operation across the country is running on a unique blend of producing food and navigating the business.
Is that changing?
Maybe not, but increasingly, there’s a business practice that many farmers are saying is one tool that is vital to their success. It’s their written business plan.
Janet and Kevin O’Rourke
For Janet O’Rourke and her husband Kevin, production was the focus for many years of farming hogs and growing crops. Like countless farmers across the country, they were operating without a written business plan and instead were guided by the direction in Kevin’s head.
Their farm, located near Dublin, Ont., experienced growth and change during this time and although they were achieving success, they hit a point where they knew they were lacking management skills.
O’Rourke’s analysis of their situation pushed her towards researching opportunities for higher education, especially in the areas of HR and financial management. In 2015, just before they expanded to add a broiler barn to their business, the couple enrolled in the CTEAM program.
The course kick-started the development of their business acumen and they’ve never looked back.
“Before CTEAM our bookkeeping was based on what we needed to provide the bank and we did not do anything more than have an accountant prepare an annual financial statement,” says O’Rourke, who primarily manages the office work aspect of the business. “I didn’t even know what it meant to have a good business plan… Now I know it is something we should have learned about 10 years earlier.”
Looking back at the first module of the course, she says they were introduced to strategic visioning and the concept of a mission, vision, core values and structured goals for farm business. “We had none of those things written down,” she laughs. “I had learned about setting goals in my work prior to farming but we had no experience structuring things in that way on the farm.”
Although they had their work cut out for them during the process, O’Rourke says their written business plan now is a winner for them in many ways.
The top benefit? Simply put, direction.
Says O’Rourke: “Our plan guides us and keeps us going down the path we want to be going down. It’s really easy to get off track when your goals are not written down.”
She also uses the document to organize the plans in Kevin’s head. “Before business planning I sometimes did not understand where he wanted to go or what should be next. Now that we have priorities and timelines written down, it gives us the chance to check in with each other and make sure we are staying on the same page.”
Having a financial position and projections component to the plan has also elevated the couple’s management abilities. Although they were already in the beginning stages of adding poultry to their operation when they started planning, learning how to calculate and analyze key ratios reinforced that they had increased capacity for financing and that expansion was the right decision for them.
Now when a new idea or opportunity comes up, O’Rourke pulls out the plan and assesses if it fits and where.
After the COVID-19 pandemic hit last spring, the swine industry was in crisis. When prices were crashing, having a detailed plan provided the O’Rourkes with some comfort. “Like every hog farmer, we were stressed but planning took some of the panic out of the situation,” she says. “Did we pivot and tweak the plan? Yes. But did we stray from the plan? No. Without that direction, that period of time would have been worse.”
Unexpected crises aside, O’Rourke’s practice is to revisit their plan biannually with a peer group of CTEAM graduates to track their performance against their goals. She also reassesses their financial position on an annual basis.
The O’Rourkes currently farm 1,100 acres of corn, wheat and edible beans, have a nursery barn and three finishing barns in their hog operation, and a broiler barn with 24,000 units of quota.
It has been nearly four years since they graduated from the program that taught them about business planning and they are still finding new ways to use their skills.
As their six children begin careers and continue to work on the farm, O’Rourke finds their planning practice makes it easier to have family conversations about the future. “Having formal business plan documents makes it feel like a business and takes the personal side out of it. It’s a way to differentiate your family from your farm even though it is a family farm.”
Generation Land & Grain Co.
An hour east of Calgary, Hannah Konschuh’s story is different. Unlike the O’Rourkes, she didn’t have to start farm business planning from scratch — but her parents did.
Konschuh’s farm is relatively young. Her parents, Eldon and Sheila, established Generation Land & Grain Company in the late 1990s after a succession plan with Eldon’s family failed. She studied agriculture at the University of Saskatchewan and then came home to join the business of growing wheat, canola, barley and yellow peas in 2014.
“Now that I’m fully involved in the farm I have a great appreciation for what my parents have accomplished,” says Konschuh. “They started with little support and we now run a viable mid-size grain operation after a relatively short timeline.”
Konschuh credits her dad for establishing solid business planning practices from the beginning. “He needed a strategic business plan to get off the ground, and planning has been an important part of how we work ever since.”
The first phase of the family’s transition plan was for Konschuh and her husband to rent land from her parents. “I needed to access capital, and writing a business plan for our account manager was the first thing I did,” she says. “It was my first time being directly involved with the process of planning but I soon realized that as a family business, we are intentional about every single thing we do.”
Konschuh says there is never a question of what they should be doing or when they should be doing it because it is all in the plan. Now that their generational transition has evolved and the two couples are farming together under one corporation, Konschuh says they work off of one evolved business plan, and it’s a tool she uses daily.
“It was really valuable to go through the exercise of writing an official business plan together to create a mission and values that we agree on, but I consider those sections to be static,” explains Konschuh.
It’s the financial position and projections and marketing components of the plan that she calls dynamic and that she uses to drive her daily activities.
This fall, for example, she spent time carrying out their marketing strategy. “I worked on selling the remainder of our 2020 crop but also started to sell a portion of our 2021 crop, months before it will go in the ground,” she explains. “Our marketing plan includes what percentage of our crop we are comfortable selling ahead of time so when prices get to a place where we want to sell, we know exactly what to do.”
She also regularly assesses the business’s financial position and at this point in the season, focuses on their cash flow for the remaining calendar year and into the winter.
“We make a plan and then consistently check in with it, re-evaluate it and repeat to keep moving forward,” she says.
Dedication pays off
Echoing O’Rourke’s experience, detailed planning gives Konschuh direction. She adds that it also provides stability and an improved capacity to make decisions. “Until 2020 we had gone through a period of many dry years in a row so we had to weather that storm and we did that by following our strategy and adjusting our plan,” she explains.
Since the Konschuhs have a well-developed strategy, they can react to changing conditions in a timely manner. “We have a good understanding of our financial position at any given time so we can react to things like fluctuating market prices or the opportunity to acquire assets and make fast decisions. Reacting quickly is key.”
But their dedication to business planning doesn’t just benefit the farm’s bottom line. Konschuh says her family’s management practices absolutely have an impact on their mental health — in a good way — which is consistent with findings in Farm Management Canada’s recent Healthy Minds, Healthy Farms study.
“When farming starts to feel overwhelming, it can be because there are so many things out of your control. Having a plan to work through does ease stress and that’s another motivation behind why we do things the way we do.”
Like Konschuh, Ryan Schuyler represents the younger generation in his family’s farm business. He and his brother Brett obtained post-secondary degrees in horticulture and business before joining their dad and uncle in Schuyler Farms 10 years ago.
Farming 5,500 acres near Simcoe, Ont., they grow apples, sour cherries, corn and soybeans as well as raise sheep under the name Woolleys’ Lamb.
“We are diversified now but we had even more ventures in the past,” says Schuyler, who has seen beef cattle and vegetable processing come and go from the business.
How did they decide what to focus on? You guessed it — business planning.
The general concept has guided the Schuyler business for some time but is certainly a practice the younger generation has improved and cannot fathom moving forward without.
Schuyler’s dad and uncle primarily recorded goals, production narrative and financial projections as a method of planning each year. This practice evolved over time as the need to explain their business to lenders grew, Ryan says, and then grins: “Showing a banker how you are going to buy land, buy and plant several hundred trees per acre and invest in maintaining them without seeing revenue for five years is just part of what we need to do as orchardists.”
The Schuylers focused their diversification by investing where they are most vertically integrated and by exiting other ventures. Since they own a grain elevator and are involved in a cherry processing plant and apple packing facility, those commodities came out on the top of the priority list.
Once Schuyler and his brother were active in the business, they added local market and supply chain analysis to their management practices.
Like any manufacturing facility, fruit processing plants need volume. When they noticed many of their peers were not coming home to farm orchard acreage in Norfolk County, they expanded their business plan and developed a growth strategy.
“We determined that we needed to expand if we were going to keep enough throughput going into these facilities for them to be profitable, so we invested heavily,” he explains.
But more land and more trees mean more work at the farm level in order to meet their projected volumes.
As a result, Schuyler’s focus is now expanding the HR component of their business plan and carrying out a transition to what he calls sophisticated management. “We have identified that having two people in management does not work anymore,” he says.
Part of this transition includes elevating the decision-making of existing staff but also hiring to fill new roles. The Schuylers recently added a HR manager to their team to oversee the 200 seasonal workers their operation now requires during busy seasons like apple harvest.
Does Schuyler also find that business practices ease stress? Although he hadn’t thought of it through that lens before Country Guide asked the question, Schuyler’s answer is yes.
In fact, he says creating an accountability chart — a template to chart the ownership of responsibilities throughout a business — is what helped the Schuylers identify that burnout was on the horizon if they did not delegate management responsibilities after their rapid growth.
Even so, not everything can be preplanned. The COVID-19 pandemic brought many challenges to Schuyler Farms — including the travel and housing of migrant workers that hit headlines last spring — which has made 2020 more about dealing with new disruptions than assessing their long-term goals. “We are hoping to regroup this winter and get back into a routine of analyzing our business with a strategic planning consultant.”