Farm Progress

Hello Lender; Meet my Business Plan

David Kohl, Contributing Writer, Corn+Soybean Digest

September 1, 2010

2 Min Read

You may have heard me discuss the importance of business planning and submitting a business plan to your lender. Recently, the president of our homestead creamery and I had the pleasure of submitting our business plan to our main lender. This year’s plan was nearly 90 pages long, but don’t let that intimidate you. The actual plan is about 20 pages, but the additional pages include supporting budgets, historical financial statements, photos, newspaper articles, etc.

The main focus of attention was our seven-page executive summary, which highlighted five years of net income and five years of key financial ratios with benchmark comparisons. Our discussion included a review of 2009 including variables behind our financial performance and a breakdown of the various enterprises’ economic performance and major accomplishments.

The lender was interested in our accomplishment of 2009 strategic initiatives set in our planning session, as well as capital expenditures and public relations accomplishments. Of course, 2010 financial projections were discussed as part of our loan structuring of term debt, both new and existing, and renewal of operating lines.

The business plan’s financial projections were so helpful in the discussion concerning locking interest rates given how sensitive our business is to changes in interest rates, fuel cost and market dynamics.

The capital expenditure section was invaluable in discussions concerning priority of financing, loan structuring, describing items to be internally financed and financed by our lender and implications on the debt servicing request and cash flow.

The business plan allowed our two-hour meeting to be focused, very organized and productive. Our lender also commented that the business plan was valuable for internal and external review and regulator teams.

I must admit, and I am sure my business partners would concur, that a business plan is one tool brought from my academic classrooms at Virginia Tech and Cornell that has moved our business ahead by light years.

Build Your Own Business Plan
Farm Credit University’s Ag Biz Planner training is a 10-module online series on developing a business plan. Access it at If you want to see proof in action, see some of our first graduates, Sharon and Johnny Rogers, discuss their experience, along with my business associate Alicia Morris. Go online to This gets all of us at Farm Credit University more excited for the highly motivated people wanting to plan their business’ and families’ futures.

September 2010

About the Author(s)

David Kohl

Contributing Writer, Corn+Soybean Digest

Dr. Dave Kohl is an academic Hall of Famer in the College of Agriculture at Virginia Tech, Blacksburg, Va. Dr. Kohl has keen insight into the agriculture industry gained through extensive travel, research, and involvement in ag businesses. He has traveled over 10 million miles; conducted more than 7,000 presentations; and published more than 2,500 articles in his career. Dr. Kohl’s wisdom and engagement with all levels of the industry provide a unique perspective into future trends.

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