Dairy Processing 101: Pre-Business Planning

Pre-Business Planning

Pre-business planning is where the person(s) interested in a business enterprise goes through a thought process to decide if that particular enterprise is right for them, their family, and their farm. It is like doing a feasibility study. It’s important to do pre-business planning before doing the more time consuming process of writing a business plan. After going through the pre-business planning or self-exploration process, many people find that this enterprise is not right for them, their family, or the farm.  Coming to this realization is ok!

The pre-business planning process is essential for anyone interested in this enterprise; however, it is even more important for those that determine this business is right for them, as many parts of this exploration process will be used in writing the actual business plan. This will be the next step in the overall process of starting a dairy processing business.

In general, there are four main parts of the pre-business planning process. 

*Self-Assessment
This is where you evaluate the skills that you have now and compare them with skills that you need to add this enterprise to your farm. You will also look at your financial needs as they are today. How much money do you need per month and per year? What are your financial goals for this enterprise? You will then look at the amount of time that you have to spend on this enterprise to determine if it’s a good fit for your lifestyle.

*Research the Proposed Enterprise
This is where you ask people who are in this business some basic questions about the proposed enterprise. You will also look at the market opportunities for the particular enterprise you are interested in.  For example, if you are planning to sell fluid milk, you want to see if your area is already saturated with local labels, determine how close are you to populations of people, and assess how accessible your farm is. This section is basically the start of your market research.  

*Resource Evaluation
This is where you start to identify all of the resources that you have today.  You''ll explore your physical assets like a barn, pastures, animals, etc.You will also look at financial assets, like retirement, savings, home equity, or other access to capital.

*Establishing a Strategic Plan
For those that plan to go through with the enterprise, the strategic plan is a glorified “to do” list with a time-line associated with it. It is normal for people to decide not to continue with the proposed enterprise directly. You may determine you need to learn a specific skill or need access to capital that is not available at this time. If you are not sure if this is right for you or your family, but still want to gain more skills or take more time, it is often a good idea to write down what you need to learn and when you plan to do it. For those that decide that this is not a good thing for them, their family, or their farm, often writing down your assessment and reasons for not proceeding is a great way to have closure.