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Operational planning – 5 key things you need to consider to do it well

  • 6.5 min read

Let’s discuss tactical plans for your business. What’s your ground game? You have a mission and vision, but what are the daily pieces needed to achieve them? Farm owners must keep track of many variables, both in and out of their control. So, we’ll focus on areas where we can exercise the most control and influence.

In Article 3, we determined what tools we need to execute our plans. Here, we’ll detail those tools and find the best way to “operationalize” them to become more efficient. You understand the high-level details of your farm – now we’ll dive into the nitty-gritty and walk away with an airtight plan.

If a strategic plan is an ariel drone photo, then an operational plan is a ground-level smartphone photo. Ensure your initial plan mirrors both measurable objectives and the mission and vision established in Article 1.

Building a solid operational plan

Regardless of business type, operational plans are non-negotiable. These should occur at least once per year, although some operations may repeat this exercise frequently over the farm season.

Whatever operation needs a solid plan, there are five major components to focus on: Preparation, marketing, logistics, human resources (HR) and financial limits.

1. Preparation

After a well-earned break from your busy season, it’s time to look at the year ahead. As always, purposeful preparations will position you and your farm to be in a better spot to capitalize on potential success. Failure to plan and adequately prepare may leave you short-handed or in a situation where you have limited options due to a lack of preparation.

For many operations, this might mean checking on equipment and making necessary preparations. You may be doing this yourself or leveraging the capabilities of your employees or an external resource. Or if an operator is inexperienced using a piece of machinery, this could also become part of your preparation. Especially true with hired labour and the cost of time if they aren’t properly prepared. How long will it take to train this person, and what kind of support do they need before they take the controls?

2. Grain and livestock marketing

While opinions vary on the authoritative information source for commodity markets, there are many valuable resources available. Consider how the following can help you capitalize on opportunities to keep your business financially healthy.

  • Canfax has offered cattle information in the North American marketplace for more than 50 years. It offers data on fed and non-fed cattle and Canadian slaughter statistics, feed grains and more.
  • Farmbucks, Combyne both connect farmers to grain merchandisers and examples of Canadian grain marketing programs available to producers for free or a nominal fee.
  • FarmLink and FBN also provide marketing services to farmers. Certain companies offer convenient ways to receive daily grain-related marketing information. Farmers receive notifications on pre-set price triggers without wasting time scrolling for the perfect price.

3. Logistics

Logistics is where the work is accomplished and carried out daily. Planning is essential to have strong logistical outcomes and closely connects with the implementation of your production plans.  These can be as simple as maintaining a clean yard site or ensuring delivery is on time to keep everything in each day or week running smooth.

Farm example: Li and Katie are preparing for deliveries from chemical, seed and fertilizer companies and scheduled them for the same day. With the small window between each delivery and a limited physical yard site, it’s important they’re on time, and trucks have enough time to enter, deliver and exit the yard. Failure to execute this smoothly will cause delays and headaches for all involved.

4. Human Resources (HR)

Employees will have a greater sense of purpose and ownership for tasks when their roles are clearly defined and correspond to responsibilities at the farm. Equally important is being clear about procedures and protocols around performance reviews, standard check-ins, health and safety and disciplinary measures.  Having a thorough HR strategy also covers any farm owner’s blind spots.

Consider enlisting an external HR advisor to review your plan and identify any gaps. This is especially valuable if your business has shifted focus from one area to another or expanded its operational scope.

New to this world? No problem. Here are a few online resources and templates to help:

5. Financial limits

Whatever you plan, it must be carefully pencilled out to make financial sense. FCC mortgage, equipment loan and lease calculators give you a quick and accurate understanding of future purchases and how they may look over a set amount of time through a qualified budget. You can also discuss your plans with your external partners or your lender.

Farm example:  Li and Katie need a new baler because the current one is quickly deteriorating. How does that plan look? What do they need to do today to set aside $150,000 for a new piece of equipment they plan to buy next year?

Just because buying a piece of equipment may still show in the black on a spreadsheet, it doesn’t mean it’s the right call. Ideally, an equipment purchase should connect to its potential output and what the new, more efficient piece of machinery will provide.

Agility is key

These 5 planning components have one thing in common - they must link to measurable objectives and tie in with your mission and vision. If you can’t correlate these together, you may risk losing urgency and purpose and financial viability. Operational planning only works if a connection between your initial plan and goals can be observed.

To an extent, this is where we trust the process. Every day things go haywire at a farm and cost you more time, effort and energy than anticipated. This is the test: Do you stick with the carefully drawn-up plans (allowing wiggle room for the unexpected), or do you scrap the plan and draw up something new on the fly?

Good business owners think about the “what ifs” even when everything is going well, so’s there is already a pre-formed answer when the unexpected pops up. You can trust that to keep things from going too far into the ditch. Knee-jerk reactions often leave behind evidence of poor forethought.

Have a backup plan

No matter what operational plan you’re executing, the multiple adjustments will always remain. Producers must continue to rethink the boundaries of their plans, especially considering timelines, farm location, market vagaries and unseen opportunities or threats that may arise.

In a world that shifts rapidly, having a backup plan is a prerequisite. Having a backup to your backup is a good idea, too. Many farm owners can attest to planning and setting it back an entire year or more due to adverse events.

In the early- and mid-2000s, BSE brought Canadian producers to their knees almost overnight when the world reacted to the crisis by temporarily rejecting Canadian beef. It’s a reminder that best-laid plans are that and nothing more. They’re written down as a reference point, but you must be nimble enough to pivot when adversity strikes.

Keeping your plan alive and kicking

If an operational plan exists but has been static for more than one marketing year, it’s a good practice to spend half a day or a full day reviewing it. Has the farm been successful in living up to its plan after X amount of time? Are there areas where it fell short, or the operational plan did not account for an unknown variable?

Consider operational plan software to assist and visualize the status of your farm. Similarly, external trusted farm advisors are often a go-to resource because they bring fresh eyes to a situation. Their recommendations and points of view can provide new things to consider as you move forward with operational plans for the next year or growth phase at your farm.