Use Pre-Mortem Analysis to Prevent Project Failure

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When you are planning a bold farm diversification or expansion who do you want on your planning team?  An ultra-advocate….”we can do this!” or the devils-advocate… “here is something that  could really go wrong!”.  Consider the premortem analysis process. Don’t wait to complete the  postmortem debrief after the project fails. At that point it is too late. The team can learn from the mistakes but it will be too late to recoup sunk capital, time and possibly relationships that suffer from the failure.The premortem analysis takes an important look at all the factors that can wreck your project. It is a key process to anticipating these risks, fine tuning the plan and building in sufficient contingencies.. Business advisers can facilitate this process or business owners/project leaders can do it within their groups.

Feasibility planning regularly suffers from over-optimism or key leaders that are over-invested in success (at all costs!). The project premortem is an essential step in the planning process. Here is a list of key steps to complete the project premortem

  • Gather key projects members and stakeholders that have already been briefed on the anticipated project goals.
  • Make the announcement “the project has failed”.
  • Team members must  start with the brainstorm first (don’t try to problem solve). Ask participants to list 2-3 the things that caused the failure. Ideally, get people to develop their list independently without group conversation. Create space for all team members to get their perspective into the process.
  • Team leaders and/or the group reviews the premortem symptoms and ranks the highest priority items.
  • Look for ways to strengthen the project plan.

Farming is a risky business and certain farms are challenged to retain profits. At any point in the business planning process it is OK to ask, “is there more evidence pointing to project failure compared to success? Can this be a viable project?”

The premortem perspective will bring your farm planning to a higher level. Forcing projects to fail on paper will improve a manager’s ability to make them work in real life.

 

Farm Business and Budget Clinics

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UVM Extension farm business educators are available to meet one-on-one with farm business owners over the next 3 weeks. Business and budget clinics offer a 1.5 hour private meeting to prepare a budget/financial statement or review a business plan strategy.

For more information and registration information go to the Budget Clinic Schedule:Winter 2017

The program is offered at the following locations: Bennington, Berlin, Brattleboro, Middlebury, Morrisville, Newport, Randolph, Rutland, St. Albans and St. Johnsbury

Farm Viability Network Resources

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On February 17, 2017 the VT statewide farm viability business planning network members met to share current research and resources to advance farm business plans.The session included farm business benchmarks, feasibility studies and conservation easements.

The Farm to Plate Viability Indicators Task Force is collecting key benchmarks and indicators for produce, livestock, maple and other ag sectors in VT. Picture the scene, 17 business planners adding notes to a group spreadsheet and punching calculators to document business metrics used to evaluate performance and management: labor expense ratio for produce farms, gain per day for grass-fed beef finishing, debt repayment margins for robotic dairies. The task force will be publishing key benchmarks later in 2017.

Rose Wilson shared recent feasibility projects she has been working on. Right now, enterprise analysis projects for organic enterprises including grass only milk, laying hens and pork is underway. Spoiler…. these enterprise are challenged to break even at the current cost and market price levels. More studies include….

Feasibility Study for a Leased Vegetable Storage Facility, Rose Wilson This reports explores the demand and business  feasibility for a shared-use leased vegetable storage facility.

Northeast Kingdom Agricultural Transportation Feasibility Study, Rose Wilson
 This report presents different freight service delivery solutions and includes cost analysis, route mapping and other business considerations.

The meeting concluded with an extended panel featuring the VT Land Trust Farmland Access Program.  A key discussion centered on  on farm labor housing and appraisal considerations relating to collateral values and credit decisions. Conservation easements continue to be an important way to meet conservation goals, facilitate farmer exit planning and provide affordable farmland access for new farm businesses.

Maple Business and Industry Update

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What do Fortune 500 investors, folklorists, family farmers and Harvard Business School all have in common?

vacuum-on-3-16ths

All these people were at winter maple conferences and investigating ways to get in on the maple industry expansion. UVM Ag Business was able to attend maple conferences in NY and VT to witness the blend of old-school sugaring and new industry innovations. Here is a quick recap.

  • Industry Overview

Representatives from Butternut Mountain Farm, Bascom Maple Farms and Leader Evaporator Co. provided data and insights on maple supply, demand and pricing in the US and overseas. Consumers are making a shift towards “healthy” sweeteners. Maple syrup is a pure product with a very short processing chain that appeals to customers seeking pure and natural products. That being said, the industry is aware they are selling sugar and they don’t want to overstate health claims to promote maple. The panel estimated that global maple sales are split like this: 25% farm gate sales , 50% mass markets wholesale and grocery and 25% to manufacturing (sugar, cream, food product flavoring). Now with bulk maple prices hovering at $2.10-$2.20 per pound (down from almost $3.00 6 years ago) they predict an increase in the manufacturing portion of demand as maple becomes a more affordable ingredient for mass produced foods.  We are seeing that, new maple products and more products with added maple for flavoring. There is tremendous product innovation at all levels, big and small: maple sap beverages, infused syrups and sports recovery products

Is there still a place for table syrup? Everyone think’s so. Even with increasing global sales they cite the room for growth in domestic consumption in the US. Canadians consume ~ 1 quart of pure maple each year while Americans only consume 4 ounces. Promotional goals will work to increase consumption for those that already love pure maple.

  • Storytelling

Michael Lange, Associate Professor at Champlain College, delivered a keynote address blending folklore, storytelling and graphic design themes for maple producing regions in Vermont and beyond. After completing hundreds of interviews with maple producers he explained that the “Vermont” maple experience is something truly unique to our state. It blends a combination of nostalgia, cuisine, hobby and commercial economic impact in our state. He continued with the practical aspects of maple marketing and explained how storytelling through product promotion and branding is perceived differently outside maple producing regions.  People in urban areas and other countries are attracted to different element of the maple story.  Take the time to know your audience and don’t assume they care about the same things we do in VT.

  • Finances and Business Management

Mary Peabody, UVM Extension, explained current direct market trends and how to target the right customer. Increased demand for ethnic foods highlight expansion of spicy flavors in USA food products, and spicy flavors are often best complimented with sweet flavors (hint….Maple).

Yankee Farm Credit discussed how sugar bush real estate is appraised.

Business investors from other industries are attending sessions as they explore investing in new maple ventures. Even academics from other business schools are taking notice of maple. All the topics are there to entice a business student: a strategic reserve and quota system, free expansion in the US, technology innovations, risk and profit potential.

Producers are watching their finances! Declining bulk markets have producers nervous about short term cash flow. Many producers continue to get organic certification and enjoy the $0.15 – $0.20 premium, it helps! Find more on maple finances at our Maple Benchmark webpage.

 

Legal Education and Water Quality Regs: Workshops this Month

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lisaborre-et-al-lakechamplain

Photo: Lisa Borre

UVM Extension is holding legal education workshops for farmers on December 15th (Vergennes), 16th (Randolph) and 20th (Enosburg). This workshop will focus on farmer rights and responsibilities as a new regulatory framework is established.

Workshop Features:

  • Legal Education Presentations
  • Break-out Groups: Compliance, Liability, Leases
  • Farmer to Farmer Networking
  • Participants will develop short term legal risk management plan

Presenters include: Tony Kitsos & Mark Cannella, (UVM Extension), Annette Higby, (Attorney at Law)

Register Now at:   https://www.eventbrite.com/e/water-quality-regulations-and-legal-education-for-farmers-tickets-29757524557

 

 

 

 

 

 

Dairy Grant Workshops for December 15th Deadline

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Vermont dairy farms can apply for Dairy Improvement Grants up to $40,000 from the VHCB Farm and Forest Viability program in partnership with Commonwealth Dairy. Farmer grant submissions are due December 15th.

UVM Extension Farm Business Educators will hold free sessions to discuss eligibility, requirements and preparation for submitting a Dairy Improvement Grant application.  Register to join a group session and begin to prepare your application during the workshop. Sessions are being offered statewide from November 29th – December 9th.  Click this sheet for locations, times and registration information: Dairy Improvement Grant Workshops

Follow these links for more information on the grants program.

Dairy Grant Instructions (includes eligible projects and selection criteria)

VHCB Dairy Grants webpage

To register for a workshop contact Christi Sherlock at 1-866-860-1382 or christi.sherlock@uvm.edu

 

 

Farm Business and Budget Clinics in October

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UVM Extension farm business educators (Mark Cannella, Tony Kitsos and Betsy Miller) are available to work one-on-one with farmers on their finances and business planning.Fall 2016 Business and Budget Clinics are scheduled for October 11- October 28 at our statewide offices. Reserve an appointment now at www.regonline.com/fallclinics2016

Bring your financial statements, business plans, recent records and questions for this 1 ½ hour scheduled private meeting. This might include internal accounting statements, the IRS Schedule F and files on a portable farm computer. Use the time to prepare the statements that will help manage the business.The session can also be used to review a written business plan or feasibility plan.

In this session you can expect to develop an accurate balance sheet or a budget for the farm. Alternatively, the time can be used to assess or revise business planning goals including: capital access, marketing,strategic planning, and business plan preparation.

Business Planning Wallpaper? The Business Model Canvas

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The Business Model Canvas is going up on barn walls and office doors throughout CaptureVermont. UVM Extension Forest Business Educator Chris Lindgren began using this business planning tool with loggers and mill owners over the past year. This is the perfect resource for farmers and forest professionals that want a better visualization of key business areas as they work on their business strategies.

A manager can make notes on the canvas, draw arrows or use post-it sticky notes that can be reshuffled in real time as the business changes. The Business Model Canvas is a nice alternative to other business planning templates that are based on preparing a multi-page narrative document.

The Business Model Canvas and more resources can be found at Strategyzer

 

 

New Maple Benchmark Report Highlights Top Profit Strategies

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UVM Extension has published the 2014 Maple Benchmark report. This report displays detailed financial measures for maple producers from 2,500 taps to over 50,000 taps. Go to our Maple Benchmark page to download reports and learn more about the program.

Analysis of the 2014 season shows that top profit producers have a variety of ways to reach financial success with a maple business. Key findings reveal:

  • Average Cost of Production for Operating Expenses average $2.09 per pound or $9.15 per tap across 18 participating businesses
  • Full Economic Cost of Production (with depreciation and a valuation of owner management) averages $3.75 per pound or $15.71 per tap.
  • Top profit producers achieved high production income in relation to their investments. This comes from a combination of high yields and/or higher-paying market prices. In many cases the top profit producers are NOT low cost producers but they are able to generate optimum income based on their expenses.

Download the 2014 Maple Benchmark for all the details.

UVM Extension is Hiring a Farm Business Educator

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Job Posting: Extension Farm Business Educator

The University of Vermont Extension seeks a Farm Business Educator to deliver business management education to owners and managers of commercial farms. The position will focus on business analysis, financial planning and outreach education programs.  A Bachelor’s Degree in agriculture, economics or a closely related field and at least 3 years of experience in agricultural development is required.  The University is especially interested in candidates who can contribute to the diversity of the institution and deliver high quality outreach programs to a broad audience. Applicants are encouraged to include in their cover letter information about how they will further this goal. The position is located in Berlin Vermont. This is a grant funded position that starts at 0.80 FTE with the option to increase over time.  For further information or to apply, search for posting # S796PO at our website: www.uvmjobs.com .