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Corn+Soybean Digest

Business Planning in Action: Meeting with your Lender

Many of you have heard me discuss the importance of business planning and submitting a business plan to your lender. The other day, the president of our Homestead Creamery, Donnie, and I had the pleasure of submitting our business plan to our main lender. This year’s plan was nearly 90 pages long. Do not let that intimidate you because 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 and 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, or CAPEX, 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 Donnie and the other stockholders 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. 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. The segment will air on the American Agri-Women Show on Tuesday, July 6 at 6 and 9 pm (Eastern) on In Country TV, Channel 230 on Dish Network and Channel 344 on DirecTV. It can also be viewed at This gets all of us at Farm Credit University more excited all the time for the highly motivated people wanting to plan their business’ and families’ futures.

Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at

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