Elizabeth Higgins, CCE ENYCHP, Farm Business Management
In the long run, it is only worthwhile to grow and sell a product if the price customers are willing to pay for the product exceeds all costs incurred to produce and sell it while earning a reasonable return on your invested capital (financial and human).
The purpose of each class is to give you some of the tools you need, as an orchard owner, to assess whether an investment or long-term change in your orchard business makes sense and to help you choose among potential options. Although this class will used orchard businesses as the framework, most of the concepts I will cover are applicable to any business situation.
The focus on this series is decision making and by extension risk reduction. I say risk reduction because a good decision does not necessarily mean a good outcome. Bad luck or unanticipated issues can result in bad outcomes even when good decisions were made. But the best protection you have against a bad outcome is a well-informed good decision. Our goal is to help you make good, informed decisions with the data you have available.
All webinars are free. They will each be around an hour long and cover a specific topic. They will be recorded so that if you miss a program you can view it later. You must register to attend the webinars. To register for the series, go to: Webinar Registration
WEBINAR SCHEDULE
December 5 (12:30-1:30) Webinar 1 – Looking at the Big Financial Picture for Your Farm
Your farm’s big-3 financial records (balance sheet, income statement and statement of cash flow) and how to use them to assess your overall financial situation. This information will help you assess what types of investments are likely to be viable for your farm business and whether or not you are likely to be able to use credit to finance that investment. We will specifically cover Farm Profitability, Cash Flow, and Key Financial Ratios.
December 6 (12:30-1:30) Webinar 2 – Business Strategy and the Farm Business Value Chain
How do you create value? How do you differentiate yourself from your competitors? In other words – what is your farm’s business strategy? Your investments should be in line with your strategy. Different business strategies will result in investments in different parts of the Farm Business Value Chain. Farm Business Value Chain – full range of activities needed to create a product or service.
December 7 (12:30-1:30) Webinar 3 – Using Your Farm’s Financial Data to Make Management Decisions
Identifying the Enterprises in Your Value Chain. Your Profit Centers and Cost Centers. We will cover: Direct vs Indirect Costs and Cost Allocation and Variable vs Fixed Costs and Relevant Range (when does a fixed cost become a variable cost?)
December 8 (12:30-1:30) Webinar 4 – Operating Budgets and Strategic Planning
Operating budgets are the overall financial plan for the business. You can use a budget based on your current situation as the base to model new scenarios.
December 12 (12:30-1:30) Webinar 5 – Enterprise Budgets
It is more time-consuming to develop detailed budgets for your enterprises, but it is worthwhile to do this for area where you are considering making major investments. We will demonstrate how to move from an operating budget to an enterprise budget to model specific scenarios within that enterprise.
December 13 (12:30-1:30) Webinar 6 – 5 Step Decision-making Process for Capital Projects and Long-term Investments
Introduces a structured process for a manager to go through to decide among options for long-term investments, projects or changes to the farm business.
December 14 (12:30-1:30) Webinar 7 – Cost Volume Profit Analysis and Sensitivity Analysis.
As you change your prices, volume of sales or costs of production how does your profit change? What is your break-even point and what output level do you need to achieve a target income? We will also cover sensitivity analysis that will help you see how your results will vary over a range of likely scenarios from best case to worst case. This will help you assess the riskiness of your plan.
December 15 (12:30-1:30) Webinar 8 – Capital Budgeting Tools – Net Present Value, Internal Rate of Return, and Payback Period
Capital budgeting is defined as the process used to determine whether capital assets are worth investing in. it’s the process of asking: is an asset worth the resources it requires? Capital assets are usually long-term investments like new equipment, facilities, and other infrastructure upgrades. By incorporating strategically planned capital budgeting into their financial processes, companies can more effectively determine and prioritize which projects, programs and other investment assets could be most financially beneficial in the long-term.
This winter there will be a one-day, in-person class where you can practice using these skills with other farmers. This class will be held in 5 locations around the state in the following locations. We are still finalizing the specific venues. Classes will probably run from 9-4:30 with a 1-hour break for lunch. There will be a fee for this program, mostly to cover lunch so it won’t be that high.
- January 11 (Western NY, TBD)
- January 12 (Western NY, TBD)
- January 17 (Capital District, TBD)
- February 7 (Hudson Valley, TBD)
- February 9 (Northern NY, TBD)
Elizabeth Higgins
Extension Specialist, Ag Business Management and Production Economics
Cornell Cooperative Extension | Eastern NY Commercial Horticulture
Highland Research Lab | enych.cce.cornell.edu | emh56@cornell.edu | 518-949-3722
Cornell Cooperative Extension is an equal opportunity, affirmative action educator and employer