When farmers call themselves “producers” is it any wonder our kids struggle with their business skills?
There is a whole lot of doubting going on at Assiniboine Community College when Chad Bodnarchuk first addresses the students. Bodnarchuk volunteers as a mentor for the business plan project, a compulsory part of the college’s agribusiness diploma program. “I tell them it’s going to take hundreds of hours to complete their business plans,” he says. “They just laugh.”
“But when I am sitting there at 10 p.m. with one of my groups, they start to gain a whole new respect for the business planning process.”
Students at the Brandon, Man. college get six months to complete a detailed business plan for an agri-related venture of their choice. They often balk at first. “Whose idea was it to make this a compulsory course?” they can be heard muttering. “It doesn’t teach anyone how to grow anything.”
“It completely changes their perception of things,” says Terry Powell, agribusiness instructor at the college. “Often there hasn’t been much discussion at the farm kitchen table about business management. This business planning process opens their minds to see a much bigger picture.”
With at least half of the college’s students coming direct from the farm — and probably as many wanting to return, at least part time — it isn’t surprising many choose to base their plans on a farm enterprise. Some students work on business plans for their home farms, often encouraged by parents who don’t always feel confident in their own business planning abilities, but who actively encourage their kids to develop the skills they know are becoming vital to a successful farm operation.
“Farmers in general may call themselves producers, not financial managers, but they are all entrepreneurs,” says Bill Brown, ag economist at the University of Saskatchewan. As family farms become more complex, and as they expand to accommodate more family members, their business management approach depends largely on what they are producing, says Brown.
“When you deal with commodities like wheat or canola you need to look at economies of size and keep your cost per unit as low as possible,” Brown continues. “When you’re dealing with something like organics or purebred livestock that is no longer a commodity, it becomes a product and then it’s quality and reputation that sells that product.”
It all comes down in the end to what you are selling. Understanding this helps students identify new possibilities, not just for off-farm agribusiness careers, but also for opportunities that complement their farming aspirations.
“If you want to excel quickly you have to think outside of the box,” says Nick Boundy, a young farmer from Boissevain, Man., who graduated from the Assiniboine ag program in 2010. “If you’re doing what everyone else is doing you’re not going to have an advantage.”
During his second year, Nick worked on a business plan with co-students Brittni Nykoliation and Jason Wenzel. Their business plan project was for a mobile seed-cleaning business, which became a side venture for Boundy when he returned to farm with his dad.
Nick’s mentor Laurie Clarke was ready to retire from the seed-cleaning business that Boundy had used as the basis for his business plan. Boundy purchased the well-established business from Clarke, and thanks to his business plan projects, had advance knowledge of how the business works.
After a year of operational experience he is planning for expansion and has already added new clients, also thanks to some of the connections he made during his time at ACC.
As each group works on business plans for their diversity of enterprises, the students begin to get more insight into other players in today’s ag industry too, like a farm supply business or a machinery dealership.
“It makes them realize why it’s necessary to pay a mechanic $120 an hour to work on their equipment. They can figure out where the numbers come from,” says Powell.
Like their peers in the business programs next door, the college’s ag students learn classical business planning techniques and they start to understand that agriculture works on the same principles as any other business. “First they get an understanding that the agricultural industry is much more complex than just the agronomy side,” says Bodnarchuk. “The business plan process forces them to look at every aspect of a business — the strengths, the weaknesses, the opportunities and the threats — and it makes them take a serious look at whether their project can be viable or not.”
Students get a lot of leeway to choose their business plan enterprises, but the No. 1 piece of advice from Powell is to keep it realistic. “I advise them to target something at the lower entry level, and something they might realistically be able to do,” he says.
Kory Van Damme went out of his way to be realistic when he prepared his business plan at the college in 2004. “It would have been far easier to base my plan on an existing business with years of historical data to base projections on,” Van Damme says. “But it made me think more outside the box by doing everything from scratch.”
Van Damme’s business plan was for a small, localized consulting business offering agricultural services. Van Damme also had Bodnarchuk as his mentor and got lots of real-world advice too from Wade Barnes, who had graduated from the college’s ag diploma program a few years earlier, and who was just establishing a similar consulting company of his own.
Thanks to the business skills he learned, partly through the business plan process, Van Damme joined Barnes and his partner Curtis MacKinnon as the third employee of Farmers Edge, which the team has built up to be a leader in variable-rate technology, with locations across the Prairies.
A healthy dose of realism is always important in business, but it’s the creative and innovative projects that get the most attention, says Bodnarchuk, something that’s important for a couple of reasons. All of the groups present their business plans to peers and first-year classmates in January and the top four business plan groups then present a second time in mid-February to peers, parents and guests.
Each of these four groups are judged and will receive a Farm Credit Canada (FCC) Business Planning Award, with a monetary award of $2,500 for first place, $1,500 for second and $1,000 each for third and fourth places. This national program is offered in a number of post-secondary institutions across Canada and challenges students in agriculture diploma or degree programs to partner with parents, industry specialists and experienced farm operators to develop real-life business plans.
Being able to sell the business plan is as important as the plan itself. The presentations, which are never advertised, are attracting growing crowds, including professional recruiters looking for talent.
“What we are looking for in the agricultural industry is passionate people who are able to grow businesses,” says Bodnarchuk, who is a recruiter and business development specialist with Ag Call Human Resources. “The students have to stand up in front of their peers and guests and present an idea and they have to come across as passionate and really wanting to do this project. Students who can do that have very marketable skills.”
Bodnarchuk completed his own business plan before graduating from ACC in 1998, the first of probably over 500 that he has written throughout his career. “I have used my business planning tool set a lot. It has allowed me to work in several industries and own several companies and has been a great asset to me,” he says.
Both instructors and students agree the mentors, many of whom are former Assiniboine students like Bodnarchuk, are vitally important to the project. “Without the mentors it would be like a light bulb that never turns on,” says Powell. “Having a mentor really makes it real.”
Similar programs are taking root in ag programs across the country, at both the college and university level. For instance, the University of Saskatchewan’s (U of S) College of Agriculture and Bioresources offers a similar program in association with the Agriculture Council of Saskatchewan (ACS). The Saskatchewan Agri-Food Concept Evaluation Program receives applications from local clients who want to have an agriculturally related business and/or marketing plan prepared. Half of the $600 cost to prepare the program is covered by ACS with funding provided through the federal Agricultural Adaptation Program.
Students in the agribusiness diploma or degree programs at U of S then choose which application they want to work on, and then meet with the client and work in groups of three or four to prepare a complete business plan as a compulsory part of their program.
Dealing with group dynamics and clients who often have no definite direction in mind for their intended business venture makes the process a valuable experience in co-operation and the application of skills already learned. “In terms of the business theory it’s nothing new to them, they have already covered these things. But when the students work with the clients they get all types,” says Brown. “A lot of these entrepreneurs have an idea, but no concept of how to do it, or the market or the finances and the students have to deal with all that. As well, some of them have a new idea every 10 minutes, so they have to keep them focused. It’s really good experience for the students in a real-life setting.”
Just a decade ago, a typical on-farm conversation between the farm generations revolved around setting up an exit strategy that would help see the parents through retirement, while urging the sons and daughters to get as far from the farm as they could.
Today, as things look more positive in agriculture, the older generation is trying much harder to keep the next generation on the farm and is supporting them both financially and by urging them to get the business skills they will need.
“Everyone is aware of the bottom line,” says Bodnarchuk. “You need to have that business planning process going on in your head all the time. Agriculture is full of innovation and people are getting paid well for doing a great job. There are all sorts of opportunities in agriculture. You just have to step through the door.” CG