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Step 2: Owners' Interests and Skills

Business Planning -- Owners' Interests and Skills

 

The purpose of this step in the business planning process is for the owners and their family to assess themselves relative to their business operation. The previous step focused on the physical resources in the business; this step emphasizes getting to know the human resources. Although the discussion focuses on the owners and their family, they may decide to involve some or all of their employees in this step.

 

The likes, interests, skills and willingness of the business owners influence how they operate their business.  Matching abilities and interests to tasks that must be performed in the business can increase productivity.  Identifying areas of weaknesses and dislikes allows managers to seek outside help from consultants, hired labor, or custom hire so the business can pursue previously unattainable enterprises.  This step involves self-evaluation of the business owners, potential owners and their families.

Objectives of step 2

Assess the owners' skills, interests, and willingness to assume risk

Assess alternative opportunities for management and labor

Needed to complete step 2

Self-assessment, job analysis, and apitude tests

Results of step 2

Description of preferred activities and responsibilities

Documentation of possible training needs

Description of attitude toward risk exposure

 

All resources (including human resources) should be put to their most productive use. Individuals who are underemployed or whose responsibilities do not align with their skills and interests may not realize their potential nor enjoy maximum personal satisfaction. In those cases, "farming as a way of life" may become more an excuse than a pleasant declaration. In comparison, happy people generally are more productive and successful.

An important question for each person to answer is "from among all the activities I am qualified to do, what do I most like to do?" One way to develop a response may be answer the following questions:

  • What am I currently doing?
  • What am I qualified to do?
  • What am I interested in doing?
  • What activities do I value?

These questions invite individuals to consider their likes, dislikes, values, strengths, weaknesses, interests, abilities, training, and experiences. The responses should help identify each person's unique skills or characteristics that can be used to operate the farm more competitively. Opportunities to modify or add enterprises also could emerge as a result of completing this step. Furthermore, this may be a good point in the planning process to evaluate non-farm opportunities.

Who to Involve in this Step?

Completing this step should not be limited to the business owners ; family members whose interests and desires impact the business also may want to consider these questions for themselves. Likewise, potential owners/investors, such as an adult child who is interested in being involved in the business, could be included in this step. Their interests and skills will be critical to the future success of the business. Family members who will not be involved in the business probably do not need to complete this step.

Some owners may consider involving key employees ; for example, an employee who intends to be part of the operation for a long-time or whose skills are critical to successful operation of the farm. An owner may not be as interested in involving employees who are likely to leave soon to pursue other career opportunities. Although this step could be completed as part of a regular employee performance evaluation, it should not be considered a substitute for such a review (developing a labor management plan is addressed in an appendix to step 5).

Business owners who employ little or no hired labor and work primarily by themselves may think these questions are irrelevant because they feel "I have to do what needs to be done; I cannot refuse to do what I do not like to do, there is no one else to complete the job." However, selecting enterprises and designing a transitional plan that minimizes activities that they do not enjoy and maximizes activities they most enjoy could lead to increased productivity and profitability for the farm business. In addition, the owners might identify opportunities to employ outside help (e.g., consultant, custom hire, or part-time help) that would then allow them to concentrate on activities they enjoy the most and perform the best.

What to do with the information

One benefit of this step is matching the interests and skills of the owners, family members, potential owners, and key employees with available on-farm employment, off-farm employment, or value-added initiatives. Likewise, enterprises can be selected and tasks re-assigned based on the results of this step. Again, this process could reveal tasks that may be best performed by hiring another employee, custom operator, or consultant.

The information compiled by completing this self-assessment exercise provides input and background information for several other steps in the business planning process. For example, the owners' interests and skills are important in developing personal and business goals (step 4). Opportunities to hire needed skills also is important in designing alternative enterprises (step 6) and a transitional plan (step 7). The information learned in this section should also help refine the business' labor management plan (step 5).

A short table (table 1) is offered to help start the self-assessment; each question requests a short written response.  An alternative is to use aptitude tests available from other sources, such as the Myers-Briggs Type Indicator.  These standardized tests usually provide an indication of management style, personality types, and related information. Such results can contribute further insights in identifying each person's characteristics and strengths.

What am I currently doing?

The first question requests a short written statement or list that describes the functions and tasks each person currently performs. This information provides a basis for comparing the answers to the next two questions.

What do I want to do?

The answer to this question provides the framework for setting personal and business goals and identifying the potential enterprise combination that the owners would like to include in the long-term business plan. A related question is "What do I not want to do?" Answering this question helps eliminate certain enterprises the owners do not want included in their plan. The owners may want to prioritize all potential enterprises recognizing that some enterprises may need to be included (for crop rotation purposes or government program requirements) even though the owners would prefer not to operate them.

Table 2 is designed to assist each person determine what they enjoy doing and what they do not enjoy.

What am I qualified to do?

The next space on the worksheet is a chance to document each person's skills. In answering these questions, individuals are urged to think broadly about their skills and qualifications. The answer to this question may not be as obvious as the previous answer, but should be straightforward. Experience, education, skills, strengths, and limitations in farming or agribusiness should guide the thought process. Non-farm skills and experience are equally important.

What activities do I value?

 

What Skills should I Improve?

A related question is "which of my skills should I improve." Farmers have generally worked hard to maintain their understanding of emerging production practices. More recently, they have focused on enhancing their understanding of commodity marketing. Today, general management issues involving financial decision-making, labor management, and processing of agricultural commodities are emerging as areas where farmers often want additional information and skills. This question asks each person to identify which skills they want to enhance. Another aspect of this issue is to identify alternatives for improving those skills, such as attending workshops, courses, self-study, or various other forms of education.

Opportunity Cost of my Labor

This question asks each person to consider how much they could be earning if they were to do something else, such as working off the farm or operating different enterprises. An alternative question is to ask "how many dollars of income do I require that I receive for my labor in order to retain my interest in my activities." Of course, the answer to this question depends on how well the individual likes the activity and how much they need to earn to maintain their desired standard of living.

The amount owners charge themselves for their time and labor (that is, their opportunity costs) does not have to be the same for every activity. The difference will reflect, in part, how well they enjoy doing the activity; for example, individuals often require no cash income for the labor they spend on an activity they consider to be a hobby.

Willingness to Assume Risk

Risk is an issue that arises throughout the planning process. In the preceding step, the owners considered their farm's capacity to assume risk. This question asks them to look at themselves and determine how much and what type of risk they are willing to assume. The answer may not be quantifiable, that is, it may not be possible to express in numbers; but it is a factor that must be considered. Some individuals shy away from risk; others are more willing to accept risk exposure.

An individual's attitude toward risk has some similarities with opportunity cost; that is, the level of enjoyment that they receive from the activity will influence how willing they are to accept the accompanying risks. Therefore, an individual's willingness to accept risk exposure may vary among activities.

It is important that each owner perform their own assessment of their willingness to assume risk. The willingness of individuals to accept risk changes over time; attitude toward risk often changes as business owners and their families grow older. Monitoring attitude towards risk is part of the business planning puzzle.

The Ideal Job Description

The last part of the worksheet asks the owners to write the ideal job description for themselves. Writing this short description will help clarify thinking about what each owner wants to do and what each is qualified to do. They could specify tasks and duties they want to perform and the compensation they desire (not necessarily how much they presently earn or spend on family living expenses).

Doing this will help identify which direction the owners would like to go and what limitations and challenges could potentially prevent them from getting there. This also will help identify additional training or expertise that they may want to obtain before advancing to the next level of management. The ideal job description may not be what the owners end up doing immediately, but provides direction for the long-run.

Conclusion

Individuals' skills and interests are as important to a farm business as are other resources such as land, capital, equipment, or livestock. This step is an opportunity for each person involved in the business to assess and document their interests and skills. This information about oneself will serve as a point of reference in the thought process as other steps in the planning process are completed.

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