Establish business goals and objectives
Planning is an ongoing process that should consider all aspects of your business.
The first step in developing a business plan is to develop a mission statement together with a selection of goals that will cover all important aspects of the business.
Meaningful mission statements
A mission statement is a statement of purpose. It outlines what you are in business for and helps you make decisions that align with your values and goals.
It is a concise paragraph (or a sentence) describing what your business does and for whom. There are three key things a mission statement should cover:
- who you supply (feedlots, consumers, other producers etc)
- what you supply (cattle, beef etc)
- what distinguishes your product (grass-fed, MSA graded, organic, etc).
The best mission statements are usually a result of a combined effort, with input from all stakeholders involved in the business.
A meaningful mission statement should be easily understood and should be able to withstand the challenges and changes that occur over time.
Guidelines for setting goals and objectives
Goals imply a purpose or a direction, whereas objectives must be measurable. Often achieving a goal will require several specific objectives to be met. If you have multiple goals in your business (almost everyone does), then you will need to prioritise them.
Business goals and objectives define the purpose of your business and, once identified, should be revisited on a regular basis to ensure you remain focussed.
Goals and objectives must be balanced between personal, social, environmental and financial components of the business and should be unique to that business.
Tool 1.07 provides further information about setting goals and objectives, including ensuring the objectives are ‘SMART’, that is:
- Specific – detail what is to be achieved
- Measurable – so they can be compared with actual results
- Achievable – avoid overly optimistic goals
- Realistic – make sure objectives are ‘do-able’
- Time bound – put a timeframe on achieving the objective
Goals must be prioritised and it is important to distinguish between levels of planning to ensure your plan and goals address:
- strategic decisions – these provide direction and purpose and focus on the ‘big picture’ for your business. They concern the long-term (5-20 year timeframe) future of the business and are the basis of annual planning to set directions.
- tactical decisions – these involve choice and decisions. They are often made each season and become the steps the business takes in the medium-term to achieve future goals.
- operational decisions – these relate to the day-to-day operation of a station property and are often made in ‘real time’. They include decisions that need to be made quickly to allow the property to adjust to change (for example, in seasonal conditions or commodity prices).
Pastoral business managers are usually very good at tactical and operational decision making, but often steer clear of the more difficult but important long-term strategic decision making and goal setting.
Guidelines to planning the business goals and objectives
The goals and objectives must incorporate all aspects of the business including:
- business structure
- financial management
- production management and enterprise mix
- natural resource management
- marketing management
- family and staff management
- risk management.
Tool 1.07 sets out a straightforward process for setting goals and objectives. To assist, there is a ‘starter’ tool included on how to prepare a business plan in Tool 1.08. This is relatively simple and fits well with the SWOT analysis (Tool 1.09). Tool 1.10 outlines an example of a planning process.
These tools provide a relatively simple approach to analysing your enterprise, setting goals and objectives and preparing a business plan. Many businesses, inside and outside of agriculture, find that engaging professional assistance to facilitate the process and provide unbiased independent advice is the best way to get started with the development of formal business plans.
What to measure and when
A key requirement to preparing goals and objectives is to ensure they are measureable. It is important to establish concrete criteria for measuring progress toward the attainment of each goal you set. Without the ability to measure your progress you will not be able to determine whether you are on the right track.
To measure your progress towards or the achievement of your goals and objectives, you must assess all aspects of the business plan that has measurable targets or key performance indicators (KPIs).
The frequency of measuring will depend on the particular target. For example, operational short term measures may require twice weekly measuring, such as water levels/quality. Financial performance may require monthly assessment, such as cash flow budgets – how actual cash flow compares with budgeted performance. Overall business analysis requires annual review and an assessment of performance against KPI’s and specific targets (see Tool 1.13).
A review is critical, but remember to consider variations in both climate and commodity prices to assist the development of measurable performance targets for future years, include impact of continuous dry seasons/drought (Tool 1.06).
- Financing your Farm: A practical guide to financial growth, 2006 by A Blackburn and A Ashby (Australian Bankers’ Association and Grain Growers Association)