EVALUATING YOUR GOALS AND LIFESTYLES
“For Farm entrepreneurs, the opportunities for a farm family business have never been greater.” (Joel Salatin, YOU CAN FARM, Polyface, Inc 1998)
Are
you thinking of starting a farm based enterprise? Maybe a pastured
poultry operation, a market garden, or a home bakery? The
times are changing and many
are saying it’s time to make a
change. Whatever the enterprise,
there are questions to be asked,
and pitfalls to be navigated to develop a vision and see it succeed. These are questions best asked and answered by the whole family
and everyone involved.
This fact sheet will provide you with a brief overview of the business and production aspects to consider, and the types of questions to ask before you begin the venture. More detailed information may be found in the resources listed at the end, and in the Small Farms Resource Center at WSU Cooperative Extension in Spokane at 222 N. Havana.
So you have a dream of farming. What does
it look like? Where
do you want to be? Does your family share your enthusiasm? Does it mean moving? Making lifestyle changes? Do you have the training, skills, and
the experience necessary to be successful? After
your new enterprise is established, what amount of family living
income would you like the new enterprise to contribute annually? What special features does the family
want the enterprise to possess? (level of risk, labor requirements,
seasons, use of special skills or resources, etc.) Evaluating these
questions ahead of time will go a long way towards maintaining your
quality of life.
Identifying
Alternatives
What opportunities show promise for your
situation? The first
step in the process of identifying alternatives is doing a resource inventory. The
purpose of a resource inventory is to show the limitations and opportunities
presented by your current situation. A
complete inventory includes five areas, and a set of questions to
consider for each area:
1. Physical
Resources: (their quantity, quality, limitations, are
they underutilized?)
2. Marketing
Resources: (their capacity, distance, limitations,
potential)
3. Management
and Labor Resources: (seasons available, hrs/wk, skills, underutilized)
4. By-Product
Resources: (their
quantity, quality, limitations, potential uses?)
5. Financial
Resources: (source, amount, details?)
· Cash
· Savings
· Family
credit
· Commercial credit
As
a general rule, successful
enterprises avoid resources that you don’t
have and take advantage of
un-used or under-used resources. Evaluating
these areas beforehand will save a lot of time in missteps and will
point out opportunities that were unnoticed before. This concept is
part of a whole system perspective of enterprise farming from the Small
Farms Resource Center at WSU Extension in Spokane County. Phone: (509)
477-2048
Production (Can it be done?)
By evaluating an enterprise you see what
the production aspects are and where they overlap with your resources. Production requirements to evaluate include:
Climate
Some decisions that need to be made regarding
production are: quality, production
rate and business size and last but not least, regulations and liability factors. What are they? And how will you deal with them?
Sources
of production information include: Cooperative Extension
production budgets and publications, trade organizations and producers,
and government offices.
You should now have a clear idea whether
your requirements match your resources. If
your available resources cannot adequately support the enterprise,
development may not be feasible. However,
many production problems can be overcome by hard work, capital inputs,
or ingenuity.
Profitability (Will
it make money?)
To project whether the new enterprise will
be profitable, the farm manager should complete an income statement. An
income statement lists projected receipts and expenses, and then yields
a value for net farm income. After the income statement is completed,
a sensitivity analysis can measure the effects of changes in key factors,
such as yields, prices, and profitability. For
instance if you raise or lower the price of carrots 5 cents/lb., how
will that affect the quantity you would have to grow to make the same
profit?
Financial
Feasibility
If you establish the new enterprise, will
you have enough cash to cover operating expenses, family living needs,
and debt payments? To answer this question you will need to complete
a cash flow statement. Completion of a cash flow statement will
enable you to determine the amount of capital needed to finance the
business, as well as the repayment ability of the business if money
is borrowed. If necessary, sources of financing should
be identified. Once potential
lending sources are identified, develop a loan
proposal, which includes a
business description, marketing plan, production methods, service
summary, income statement , cash flow analysis, net worth statement,
resume, and other supporting documents.
Making
a Decision (Will you start the new enterprise?)
If you have found an enterprise that seems feasible, it is time to gather all family members, or others who will be affected by the final decision, to fully review and discuss the results of the evaluation. Ideally everyone will have been involved in the process, but the person responsible for the research should present the findings to the rest of the group. This presentation is good training for applying for a loan. However you make the decision, consensus or majority, everyone’s concerns need to be heard so that they can continue to express needs and opinions in the future.
If you decide to go ahead with the enterprise,
you can look forward to a very exciting and challenging endeavor. You should now develop an implementation
plan, including a development timetable, production schedules, marketing
plan, management structure, and a financial plan. Also
think about how you will evaluate the progress of the new enterprise.
Compiled by Don Dysart
Credits
Farming Alternatives,
Northeast Regional Agricultural Engineering Service. Phone: (607) 255-7654
Resources
Farming Alternatives Northeast
Regional Agricultural Engineering Service
You Can Farm An
entrepreneur’s
guide to start and succeed
in a farm enterprise.1998. Joel Salatin,. Polyface, Inc. Virginia. Acres USA Phone: (800)499-3201
Center for Holistic Management
Farmers
Markets
The New Farmers Market located
at Division and 2nd
Spokane
Farmers’ Market Association
The Spokane Market Place
Useful
Publications
Growing for Market,
Small Farm Today
Incubator Kitchen
The Kitchen Center
Business
Assistance
Business Information Center
801 W Riverside
SCORE Spokane Regional Business Center
Washington State Department
of Agriculture
Small Business Administration
W. 601
First Ave.
Spokane WA
Small Business Development Center
Spokane Neighborhood Action Programs
Lancaster@snapwa.org
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