Determining Where You Want to Go and How You Might Get There

1. Determining Where You Want to Go and How You Might Get There Jeffrey E. Tranel Agricultural & Business Management Economist Colorado State University Extension Farm Financial Management Training Workshop Omaha, NE 2009 June 2 - 4

2. Who is Jeff Tranel? • Raised on commercial & purebred cattle and hay ranch in Wyoming & Colorado • University of Wyoming • University of Nebraska: 1984 – 1987 • “Managing For Tomorrow” • Colorado State University: 1987 - Present • Extension and Dept of Ag & Resource Economics • Fieldman for Farm Business Association • Leader of Extension’s Ag Core Competency Area

3. Agricultural Economics Production Any process which satisfies or helps to satisfy a human want or as the creation of utility The art and science dealing with the allocation of scarce resources among various competing uses, with the object of maximizing utility or maximizing satisfaction of human wants

4. Economic Rationality(Kearl) The farm or ranch as an economic firm and the entrepreneur’s family as a household of consumers are generally so interrelated that the behavior and goals of the family very often have important effects upon production decisions made in the context of the firm

5. Economic Rationality(Kearl) The farm or ranch as an economic firm and the entrepreneur’s family as a household of consumers are generally so interrelated that the behavior and goals of the family very often have important effects upon production decisions made in the context of the firm Profits are not the ultimate end or the quantity which a farm household attempts to maximize Profit maximization may be competitive with utility and satisfaction

6. Working with Farmers/Ranchers Help People Be Honest With Their Circumstances (Where am I) Decide What Is Best For Themselves (Where do I want to go) Select Strategies for Getting From Here to There (How can I best get where I want to be) • Working with people possibly feeling • Distressed • Stressed • Depressed • “Lost in the Today” • Apathetic • ?????????

7. Working with Farmers/Ranchers • People need “safe” environment (time) to talk • Trust • Rested • Reduced stress • People under stress may not know what they want nor want to do

9. Strategic Planning Where you want to go How you get there Where you are

10. Where Are You? • Inventory of Human Element • Likes/Dislikes • Aptitudes • Risk Tolerances • Willingness (to do things) • Skills • Heirlooms • Land • Genetics (animals, seeds, etc.) • Community Involvement • Beliefs and Values

11. Inventory of the Human Element You Spouse Other Team Member(s) Personal Personal Personal Family Family Family Farm Farm Farm Team Inventory

12. SWOT - Strengths

13. SWOT - Weaknesses

14. SWOT - Opportunities

15. SWOT - Threats

16. Where Are You? • Exercise • Have 2-3 people work together as a management team. • Each person completes questions 8-13. • Then team develops a “team” inventory. • List 4 enterprises that would be a good fit for the team. • List 1-2 enterprises which the team should not (or would need outside resources) to undertake.

17. Where Do You Want To Go? • A projected state of affairs that a person or system plans to achieve • Goals • Short term, intermediate term, long term • Ask ‘Why’ • Sheds light on the true reason for the goal • Enhances reflection and discussion • Aids in determining “how to best get there”

18. Goal Setting Specific • What are you going to do? • Why is this important? • How/when are you going to do it?

19. Goal Setting Specific Measurable • Establish concrete criteria for measuring progress • Use objectives

20. Goal Setting Specific Measurable Achievable • Remember to stretch

21. Goal Setting Specific Measurable Achievable Realistic • Do-able

22. Goal Setting Specific Measurable Achievable Realistic Time Sensitive • Timeframe for achievement of goals and objectives along the way

23. Goal Setting Specific Measurable Achievable Realistic Time Sensitive

24. Goal Setting • Activity • Teams (2-3) people. • Develop one goal for your farm/ranch business. • Doesn’t matter if short, intermediate, or long term. • Complete the Goal Setting Form.

25. How to Get There? I want to go here First two questions • Where are you? • Where do you want to go? I need to change Where I Want To Go! Third question • What is the best way to get there? I am here

26. How to Get There? • Help is everywhere when it comes to deciding which enterprises, investments, input purchases, etc. • Family, friends, neighbors,… • Extension • Input suppliers (e.g. seed companies) • Web sites • Accountants, attorneys, consultants, …….. • Tools • Partial budgeting • Records • Financial analysis • Courses: e.g. “Feasibility of Alternative Enterprises” • Etc.

27. Goal Setting / Strategic Planning • Provides insights to you and the management team • Helps a person or firm to move towards a ‘desired state’ • Enhances relationship building and maintenance • Understand one’s self • Understand others • Tools provide opportunities for individuals to reflect and talk within a “safe” environment with an objective in mind

28. Thank You Good Luck! Jeff Tranel jtranel@colostate.edu www.coopext.colostate.edu/tranel/