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Questions on Discussing Goals
(Appendix to Step 4 of Business Planning)
A purpose of business planning is to assure that farmers fulfill their desires. All adult members of the business may want to consider the following questions as they review their goals. Likewise, married couples often discuss their ideas with each other to focus on their similarities and reconcile differences. Finally, farmers recognize the interrelationships among their personal and business goals.
The following questions are intended to stimulate the thought process, but each question does not require a written answer or detailed thought. Many questions are followed with a second question of "why" because the reason for the thought is often as important as the thought.
Personal Career Interests
These questions ask you to think about the types of work/business activities that provide you the greatest personal satisfaction.
1. Do you consider yourself primarily involved in farming?
____ Yes
____ No (What do you consider to be your primary activity? ______________)
2. Why are you farming? (Check as many as apply.)
____ Farming was the best opportunity available when I started my career.
____ The farm was transferred to me by a relative or neighbor.
____ I trained to be a farm operator.
____ I like farming.
____ I feel pressured to continue the farm business.
____ Farming generates an adequate income for me.
____ The personal satisfaction from producing agricultural commodities and being involved in the ownership of a business is important to me.
____ My spouse is involved in farming.
____ At this time, I am not trained for any other career.
____ Farming still offers the best opportunities for me.
____ Other_______________________________________________________
3. What do you want to accomplish by farming?
4. How long do you want to farm? Why?
5. What would cause you to discontinue your involvement in the farm business (such as employment opportunity, disability, death of spouse, divorce, higher production costs, lower commodity prices, increased land prices, others)?
6. Do you have any off-farm employment? If yes, what type? Do you want to continue this employment? For how long? Why? Do you want to quit your current off-farm employment? When? Why?
7. How much time do you want to invest in the farm business (e.g., full-time or part-time)? Why?
8. Do you want to further your education? What additional training are you interested in? When? Why?
9. Are you married?
___ No --> Do you plan to marry? Yes No
___ Yes --> Do you plan to add to your family? Yes No
10. In what type of leisure/recreational activities do you like to participate? Why?
11. Would you like to take a vacation in the next few years? What type of a vacation?
12. How much time off do you want during the next few years? How much time-off do you want 6 to 10 years from now?
13. Would you like to change your housing situation? What type of change would you like? When? Why?
14. Are you planning for retirement?
____ No
a. Why are you not planning?
b. When do you expect to start planning?
____ Yes
a. At what age would you like to retire or begin reducing your work responsibilities? Why?
b. Between now and retirement, do you want to change your role in the business? If yes, what changes would you envision (e.g., reduce your labor obligation; reduce your managerial role; reduce your financial risk; increase your successor's involvement in terms of financial commitment, labor, and/or management)?
c. How much time off do you want as you approach retirement?
d. What role in the farm business do you want after retirement (e.g., provide labor, provide management, lease assets to the business, receive an income share, no involvement)?
e. What would you like to do with the additional time you would have available after retirement or in what type of activities will you participate after retirement (e.g., travel, work on the farm, move to another region of the country)?
f. Where do you want to live when you retire (e.g., on the farmstead in the house where you now live, on the farmstead but in a different house, in the local community, in another community)?
g. What will happen to the farm assets when you have retired?
h. Do you expect someone to continue the farm operation after your career?
____ Yes
____ No
____ Do not know at this time
i. How much money will you need to retire?
j. What will be the most likely source(s) and amount of retirement income from nonfarm sources?
k. Do you expect income from the farm business after retirement? If yes,
- Would you want annual payments or one lump sum?
- How much would you expect to receive and, if annual payments, for how many years?
- What would be the reason for the payment (rent of assets, sale of assets)?
15. Have you developed an estate plan for yourself (such as prepared or updated your will)?
Business Objectives
16. Do you intend that the farm business participate in government farm programs during the next 5 years? Why?
17. Do you want the business to be eligible to receive all government payments possible? Do you envision that all persons involved in the farm business will assume some financial risk?
18. Do you want to expand the business? If yes,
a. What do you want to change?
b. By when do you want these changes accomplished?
c. How will the changes be accomplished (e.g., purchasing additional acres, renting additional acres, increasing the cow herd, increasing the number of feeders, other means)?
19. What additional enterprises you would like to add to the farm operation?
a. What do you want to change?
b. By when do you want these changes accomplished?
c. How will the changes be accomplished?
20. Why do you want to expand the business or add an enterprise (a financial need for a larger business, improve efficiency of assets, for personal satisfaction, other reasons)?
21. How will the expansion be financed (borrowed capital, sale of other farm assets, sale of nonfarm assets, farm earnings, nonfarm earnings, investors)?
22. Who will pay for the expansion?
23. How soon do you expect and want this expansion activity to pay for itself (one year, five years, 8 years)?
24. Do you want to reduce the business size or eliminate an enterprise? If yes,
a. How would you reduce the size (sell assets, lease out assets, discontinue leasing assets, give assets away)?
b. Which enterprise would be discontinued, and why would you make this change?
c. When would you want to accomplish this change?
d. What would you want to do with any revenue generated from this change?
e. Why do you want to make this change? What do you hope to achieve by making this change?
25. Are there any property improvements you want to make (construct or remodel buildings, drainage, dams, replace some machinery)? What are they and why do you want to do them (to increase production, improve efficiency, for personal satisfaction)?
26. What type of production goals do you have for the business (increase yields, raise certified or registered seed, improve livestock production, other goals)?
Note: Detailed production goals, such as gross and net dollars per acre, gross and net dollars per head, and deadlines for completing tasks (such as calving, planting, spraying, haying, harvesting, fall work, weaning, backgrounding, feed out) are addressed in step 9.
27. What is the incentive or motivation for these production goals (financial need, personal satisfaction, other reasons)?
28. What type of return do you expect for replacing machinery (fewer breakdowns, less time to complete task, provide capacity so business can be expanded, do some custom work), storing grain (manage taxes, wait for better market, assure storage during harvest), backgrounding calves (increase value of produced feed, market a more desired product)?
29. The business is a success because_______________________________________________________.
30. What are your primary concerns for the business (too many equipment breakdowns, tasks take too long, not enough labor to satisfactorily complete tasks, cannot keep me fully employed year-round, no longer enjoy the work)?
31. The biggest problem facing the business is__________________________________________________.
32. What can be done about these concerns (and we cannot change the weather)?
33. The business would prosper if_________________________________________________________.
34. Is someone else involved in this business?
If yes,
a. Have they identified their goals?
b. Have you collectively discussed and prioritized your goals?
c. For which functions in the business do you make the decisions? Why? (Functions may include production, marketing, labor allocation financing, accounting, leasing, crop rotation, purchases.)
d. For which functions in the business does your spouse make the decisions? Why?
e. For which functions in the business do other family members make the decisions? Why?
f. For which functions in the business do partner(s) make the decisions? Why?
g. For which functions in the business do you, your spouse, family members, and partner(s) make collective decisions? Why?
h. Which management functions are you
____ Unwilling to share?
____ Willing to share?
____ Want to no longer be involved with?
i. For which enterprises are you willing to relinquish management?
j. Do you want to alter your management responsibility? When and how?
35. Do you want to help someone become involved in your farming business? If yes,
a. How would you like to help?
____ Hire them
____ Sell property to them (which assets, when, at what price)
____ Lease property to them (which assets, when, at what price)
____ Give property to them (which assets, when)
____ Bequeath property to them (which assets)
____ Expand the business to include them
b. Do you envision this person becoming involved in your farm business and becoming your successor? If yes, in what role (provide labor, provide management, lease assets to the business, receive an income share)?
c. If a successor joins the business and wants to become involved in management and control, when would you be willing to relinquish some control or management of the business?
36. Do you want someone to help you become more involved in a farming business? If yes, what type of help do you expect?
____ Hire you
____ Sell property to you (which assets, when, at what price)
____ Lease property to you (which assets, when, at what price)
____ Give property to you (which assets, when)
____ Bequeath property to you (which assets)
____ Expand the business to include you
____ Other
37. Are you be willing to be part of a co-owned business?
38. For your farm property that is used in a co-owned business, do you envision paying for repairs or improvements to buildings, machinery, land (fences), or housing? Or would you expect the business to pay for such repairs?
39. If you pay for the repairs or improvements, do you expect additional compensation for those expenditures? If yes, in what form would you want to be compensated (increased rental payments)?
40. If the business pays for the improvements or repairs, will it be compensated? If yes, how would it be compensated (reduced rent, increased ownership interest in the improved or repaired property, compensation upon sale of asset)?
41. Do you want to increase your business ownership interest? If yes, when and how [contributing more labor, contributing more management, assuming more risk (borrowing capital or initiating another enterprise), contributing more assets (capital, machinery, buildings, land)]?
42. Do you want to increase the amount of assets you own? If yes, when and how (buying from co-owner, buying from unrelated sellers, receiving gifts)? If you want to buy property from your co-owner, which assets would you want to purchase, when would you want to buy the property, and how much would you be willing to pay?
43. Do you want to be sole owner of some farm assets? If yes, which assets (all of the property, land, machinery, livestock, farmstead, home)?
44. Are you willing to co-own some farm assets with your partners? If yes, which assets and for how long?
45. How much business debt are you willing to take on? Do you have the financial capacity to obtain that amount of capital?
46. What would happen to the business if you or a key person in the business became disabled?
a. What would be the impact on the business and individual incomes?
b. What would be the disabled person's sources of income?
c. What would be the impact upon the disabled person's spouse and dependents?
d. How would related medical costs be paid?
e. How would the costs impact the operation of the farm business?
f. How would current business and personal debts be paid?
Personal Financial
47. How much do you annually spend on each of the following categories at this time (and in total)?
a. Family living (food, clothing, health insurance, housing, utilities),
b. Debt service and income tax (business and personal obligations and income tax), and
c. Other expenditures (travel, and luxury items).
48. What is the minimum amount of cash you annually need for each category (and in total)?
a. Family living (food, clothing, health insurance, housing, utilities),
b. Debt service and income tax (business and personal obligations and income tax), and
c. Other expenditures (travel, and luxury items).
49. How much do you annually want to spend for each category (and in total)?
a. Family living (food, clothing, health insurance, housing, utilities),
b. Debt service and income tax (business and personal obligations and income tax -- DO NOT ENTER $0), and
c. Other expenditures (travel, and luxury items).
50. How much cash income do you earn each year from the following sources (and in total) that can be used to pay the expenses listed in the preceding questions?
a. Farm income (return over operating expenses from livestock, crops, and other enterprises) and
b. Nonfarm sources (financial assets, off-farm employment, nonfarm investments).
51. How will your family living costs change over the next 5 years? Why will they change? Do family members want to further their education? Who? How?
52. How are your nonfarm sources of income likely to change in the next 5 years? Why will they change?
53. How are your family living costs likely to change 6 to 10 years from now? Why would they change? Do family members want to further their education? Who? How?
54. How are your nonfarm sources of income likely to change 6 to 10 years from now? Why would they change?
55. Based on the previous answers, what is the minimum amount of annual cash farm income (return over operating expenses from livestock, crops, and other enterprises) you can tolerate?
56. What is the 3-year minimum average annual cash and noncash farm income (return over operating expenses from livestock, crops, and other enterprises) you would accept from this business and still continue farming?
a. What rate of return on your farm assets do you need to earn the amount of income specified in the first part of this question? Refer to total asset values on the balance sheet you prepared in step 1.
b. What rate of return on your farm equity do you need to earn the amount of income specified in the first part of this question? Refer to total asset values on the balance sheet you prepared in step 1.
57. What rate of return on your farm assets and farm equity do you want? Why do you want that rate?
58. What percent of your gross income do you want as net returns? Why?
59. What debt-to-asset ratio do you want for your business by the end of this year? By the end of 5 years? By the end of 10 years? Why?
60. What change do you want in your total liabilities by the end of this year? By the end of 5 years? By the end of 10 years? Why?
61. What change do you want in your net worth by the end of this year? By the end of 5 years? By the end of 10 years? Why?
62. How much income do you annually want from the farm operation for farm and non-farm investments?
63. Based on the previous questions, what amount of cash do you want or need to annually withdraw from the farm business to meet your family needs and your expectations for the business?
64. Bottom line: Does the farm business appear to have the capacity to generate the level of income necessary to satisfy the previous answer for all owners of the business? You may not want or be able to answer this question at this time, but keep it in mind as you continue the planning process.
Last Updated April 1, 2005
Email: David.Saxowsky@ndsu.edu
This material is intended for educational purposes only. It is not a substitute for competent professional advice. Seek appropriate advice for answers to your specific questions.
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