Junior and Senior level Ag Bus.

Colorado Agriscience Curriculum

Section: / Advanced Agribusiness
Unit: / Entrepreneurship
Lesson Title: / The Business Plan
Colorado Ag Education Standards and Competencies / AGB11/12.03 - The student will be able to formulate and analyze financial records and use the information for evaluation and planning.
Develop a farm business plan.
Colorado Model Content Standard(s): / English Standard 1: Students read and understand a variety of materials.
English Standard 4: Students apply thinking skills to their reading, writing, speaking, listening, and viewing
English Standard 5: Students read to locate, select, and make use of relevant information from a variety of media, reference, and technological sources.
Student Learning Objectives: / Upon completion of this lesson the student will be able to:
1.  Explain what a business plan is.
2.  Explain what a business plan is used for.
3.  Define the parts of a business plan and the information contained in them.
Time: / 50 minutes - 1 class period
Resource(s): / Business Plan Template. Stephen R. Lawrence (attached below)
Business Plan Outline (attached below)
Instructions, Tools, Equipment, and Supplies: / Italicized words are instructions to the teacher; normal style text is suggested script.
Print outs of power point notes
Projector to run power point
Whiteboard
Colored paper – Green, Red, Light Blue, Yellow, Pink, Orange, Purple, Dark Blue, Gray, White.
Interest Approach: / Slide 1
Snow ball fight. The information is color-coed within the curriculum. The instructor should cut and paste each set of color-coded information onto a separate sheet of colored paper. Make a master sheet of what each color sheet has on it, or make a duplicate copy on the same color of paper. If you do not have enough colors, scribble on the back with a colored marker and denote it as “pink with black marks” etc. Then, wad up one copy of the papers into colored snowballs. At the beginning of class, divide the students into two teams and give half the snowballs to each team and let them go at it. Instruct them not to tear or squish the ball any further. Stop the snowball fight after 5 minutes. Tell the students to pick up one snowball. You may not have enough for everyone to have one, but only one snowball to a student. Tell the students to take their seats and let the lecture begin. As the power point gets to the part of the lecture that is contained on the, lets say “green” snowball, ask the student who has the snowball to read the information to the class. The instructor should follow along with the duplicate snowball and help the student out in case parts of the information becomes unreadable from snowball fighting. Printing the text in bold and in a large font makes it easy to read after it has been crumpled. Also, the instructor will want to add to the information printed from the master copy as well as give examples and more of their own information if needed.
Objective 1: / In today’s competitive and volatile agriculture industry, a smart manager understands the need to plan for the future and utilize all the business tools available. Today we are going to discover how necessary a business plan is to successful company. Who has the green snowball? Please read to the class what is on the snowball. As we begin this next section be sure to have your notebooks out. You need to capture all the information on the slides and that we discuss into your notes. The instructor should run the power point or have the students do it as they read the snowballs. Slide 2
What is a business plan?
1. A report that sets, in writing, your business goals.
2. Describes you business and market.
3. Helps determine if a new business is feasible.
4. Explores the possibilities of expanding your business.
5. Describes your customers and competitors.
6. Highlight strengths and weaknesses of the business and also your management skills.
7. It details the future and usually is a long-range plan.
Objective 2: / Would the student with the red snowball please read.
Slide 3
What is a business plan used for?
1. Long-range planning.
2. Help organize your thoughts and analyses your business.
3. To obtain financing.
From your banker.
From investors.
5. Attract customers.
6. Attract employees.
Once developed, you should refer to it often and update it yearly. The plan is not carved in stone. It is a road map to help you make decisions and doesn’t have to be followed to the letter. It is best that all persons involved with the business be involved in producing the plan.
Your plan should be concise, factual, and easy to read.
Now let’s step through the parts a good business plan should include.
Objective 3: / Ask the student with the LIGHT blue snowball to read.
There are many different styles of business plans, but they all contain basic information. Some can be hundreds of pages long. Most are 10-30 pages.
Slide 4
Business Plan Outline
Cover Page
Summary
Marketing and Sale
Market Analysis.
Market Strategy.
Sales Strategy
Management Plan
Financial Data
Appendices
Now we will briefly take a look at each part.
Will the student with the yellow snowball please read.
Slide 5
The cover page should contain the following:
1. Name of business.
2. Name(s) of owner(s).
3. Address.
4. Phone number(s).
5. Date the plan was produced.
Will the student with the pink snowball please read.
Slide 6
Summary
This is a one or two paragraph summary of your business used to explain your business to a busy executive who does not have time to read your life history. You want to capture his/her attention so he/she will want to continue to learn about your ideas.
>The summary should briefly describe the business and include:
The name and location of the business. Describe the product and or services rendered and the current market and competition.
>It should include your business goals, a summary of financial needs and expected income. These will all be dealt with in more detail later on in the plan.
Instructor should give examples related to After reviewing this information, there is no way stop liabilities issues from arising, however, there are options that can help producers avoid liability issues.
–  Proper training
–  Contracts/lease agreements
–  Liability Insurance Ag.
The Marketing and Sales section of your plan includes Market Analysis, Market Strategy and Sales Strategy. The last two may be combined. In this section of the plan you must convince your reader that you have a good idea and a solid business foundation.
In the Marketing Analysis section you briefly describe the market conditions and your competition. This will require researching your business. Try the library, Internet, other producers or farmers, extension agents. Can anyone name any other sources of information? This is also the place to identify voids in the market and how you plan to fill the voids with your product/service.
Would the student with the orange snowball please read.
Slide 8
The market analysis should answer these questions about your market:
How large is it?
Who currently services this market?
Where is the market headed? Increasing? Steady? On the way out?
Who are your target customers?
How is the market divided up?
What makes your customers spend their money in this market?
Instructor should give ag-related examples to the class
Would the student with the purple snowball please read.
Slide 9
The overall marketing strategy answers the following questions: How are you going to fill the unmet needs of the market? How will your products/services differ from your competition? What are your unique product/services features? Who are your customers?
Your research is very important and will center on customers and potential customers. It is very important to do a complete job because you need to convince yourself and banker/investors/partners that you have an “in demand” product or service.
Customer research should included talking with potential customers, conducting focus groups, walk-up or mailed surveys, putting up a mock demonstration of your concept and soliciting customer feedback, and so on. Be creative. And finally, be neutral and factual about your product or you may skew the information if you are overly enthusiastic about your idea when taking your survey.
The instructor may want to take over as there is much to say here.
Your pricing policy explains what the price of your product should be and why? Your policy should compare your pricing strategy with your competition and include evidence that your customers will accept the price. Enterprise price breakevens will help you determine your minimal price.
You need to consider how you will distribute the product or service. Agriculture has numerous challenges in this area including packaging, shelf life; perish ability, hauling and animal stress issues. Discuss how you will solve these problems. Have a rapid fire moment and ask the students to quickly give you some discussion on distributing the product or service.
Promotion. Give me some ideas on how you could advertise and promote your product or service?
Other things to remember are if you are starting a business, list the steps needed to get the business up and running? If you are expanding a business, what do you need to do to make it grow?
Keep these things in mind when developing your marketing strategy:
Where the business/product/service is right now?
Where are you headed?
Include steps and a timeline.
What are the risks? Technical, cost, and competitive risks.
Also, the deal is not a deal until its sealed. Tell your readers how you will close the sales deal?
Who has the DARK blue snowball?
Slide 10
There are three attributes important for a successful start-up business: management, management, and management.
The purpose of the Management section, therefore, is to convince the reader that you have a great team to complement a great business concept. Be honest, but highlight your accomplishments and your capabilities and de-emphasis your weaknesses. Class, what are some positive attribute you could list here?
You also need to include more detail in the following areas:
>Form of business organization
How will the business be organized?
Sole Proprietor, LLC, Inc.
>Board of Directors
Will we have a board of directors?
Who will be on it?
What will be their role?
>A list of officers, an organization chart and responsibilities of each officer.
Who are the key managers? (Include resumes in the Appendix.) List their duties and responsibilities and their unique skills. Include future additions to the management team and when you plan them.
Also note how will the management team be compensated? Pay? Stock options?
What will be compensation for the board of directors?
The student with the gray snowball please read.
Slide 11
By this time your readers should be hungry to invest or be part of your company. Now you need to “set the hook” with a positive financial summary.
The financials section should be a discussion and description of your financial projections. Put the actual financial spreadsheets in the Appendices. These should include:
Three to five year financial projections.
+Income statement (profit/loss statement).
+Balance sheets (Net Worth Statement)
+Cash flow.
+Capital expenditures.
Instructor should take over.
>This section includes your cash-flow projections, income statements, and pro forma balance sheets for at least three years, and sometimes five years. It is recommended that your financial projections extend to the point where your business has stabilized. The first year should be monthly since cash flows are critical in the early stages. Second and third years should be quarterly, and fourth and fifth years should be annual. If possible, include best case, expected and worse case scenarios and how you will respond. Be sure to be consistent with the rest of your plan when predicting the financial future.
Include all your assumptions you have made (market price, gain, weights etc) Hopefully the profits, assets, and ROI are all favorable for the business as the years pass. Another good financial report to include is a break-even analysis.
>Explanation of use and effect of new funds (loans, etc.)
Explanation of projections. Estimate the new capital you will need and when you will need it by explaining your cash flow.
Key business ratios
Note the financial risks and how you plan to minimize them. Figure your financial ratios so you know your position and can analysis your risk.
Do you have an exit strategy? Some suggestions are to go public, sell out, buy more land and grow.
Calculate the Net Worth from the balance sheet.
If we are pitching to investors, how much of the company are we willing to give away? In addition, how much liability can we handle and how much interest are we willing to pay? What is our collateral? What is the anticipated return on investment? Figure your financial ratios. All food for thought and should be digested now, before you take the business plunge.
The last snow ball can be white. Text to put on snowball is bolded.
Slide 12
The appendices should include items that support your business plan. Be complete and concise.
Include required (e.g., financial projections),
those which are helpful (e.g, results of marketing studies), and
Those which assist in selling your idea (e.g., letters of interest from potential customers).
It is a good idea to summarize lengthy reports and note in the plan that the complete documents are available upon request.
Instructor should finish up
You have the makings of success if your business plan is :
Outlined a great business concept, and
Demonstrated a real need for your venture.
If you have shown how you can execute your ideas, and
prove that you have a quality team in place.
And finally, if you can show that the bottom line is in the black.
Review/Summary: / Get out the colors and have the students draw a map of their business plan, highlighting the main parts and subparts. If they have a business of their own, have them incorporate their business as part of the map
Application--Extended Classroom Activity: / Now have each student present their map of the business plan to their parents.
Application--FFA Activity: / This can help your students in Marketing for the business plan as well as in the POA.
Application--SAE Activity: / Have each student with an entrepreneurship make a business plan for their SAE. If they do not have an entrepreneurship then have them buddy with someone who does to get the information that they need to make a business plan.
Evaluation: / Have each student make a business plan for their SAE or a plan that would work for a business that they are interested in.
Evaluation Answer Key: / See rubric below.

BUSINESS PLAN OUTLINE