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Business Planning: Section 4, Organizational Matters

In this section, you will look at the organizational structure for your potential business.

A. Business Structure

This is where you identify what the business structure will be like. To learn more about the pluses and minuses for each business structure, refer to a good textbook on business management. To decide which one is right for you, it is advised that you speak to an accountant and an attorney. The different types of business structures have different levels of liability and taxes, which is important to understand. (LLC, INC, etc)


 B.
 Government Regulations

You will have to follow local, state and federal laws. It is always easier to follow the laws than lose everything by breaking the laws. In general, they are made to protect the consumer from getting sick. These laws are also in place to limit liability (to lenders, to insurance companies, to you). For the most part, the regulatory agencies will try to work with you and are not “out to get you”.

  • Always start with state inspectors. To learn who to go to visit, http://adga.org/StartDairy.htm .
  • Next, consider federal regulations:

    PMO
    IMS
    Federal Orders
    Food where plan is
    Bar Code

  • Finally, research any local regulations.


C. Management Issues

If you completed the skills assessment worksheets and summarized the results, you should be able to identify who has strengths and weaknesses in the various areas of the proposed business. List all of the people who will be involved in the enterprise. Give their job titles and list their specific roles in the proposed enterprise. If they are especially qualified in a particular area, highlight this! (for example, a CPA in the family may be the best one to do financial part of things).

It is recommended that one person act as the farmer and one person act as the dairy processor.  The most successful dairy processing businesses are those that are able to make clear definitions between farming and dairy processing. After a long day of making cheddar, the last thing a cheesemaker needs to do is unload hay or milk cows, just as the person milking the goats is not clean enough to be in the cave cleaning rinds.

If you are weak in a particular area or after completing the time worksheets you note that you need to hire one or two people, this will be the section where you identify the job(s) and completely describe their roles and expected skills.


D. Advisory Team

An advisory team is the group of people that you will go to for things like financing for the filler the inspector expects you to have installed in 30 days or less, or the guy that will actually install that filler. Depending on your skill set or experience running your own business, this list may just be your attorney, loan officer, and insurance broker or it may be a summary of all of those people you need to get this business going.

Some possibilities include:

  • Loan Officer
  • Attorney
  • CPA
  • Food or cheese consultant(s)
  • Stainless steel welder
  • Equipment/Supply House (like Glengarry Cheese or Dairy Connection) who also offers advise
  • Electrician
  • Plumber
  • Contractor(s)
  • Veterinarian
  • Geneticist (for critical populations of animals)
  • Graphic designer/Label guy
  • Marketing/Sales Agency (especially regional favorites if asking for a grant)
  • Extension or other NGO staff

 

E. Managing Human Resources

You may be solo, or you may have employees. Who will work there (yes, redundant), their job titles (yes, redundant), salary, and if you are planning to do payroll yourself or through some agency.


F. Risk Management

Debt

List all debt, personal and business related. Identify basic details and expected pay off. Banks like to see that if you sell equipment and animals, you are without debt. This used to be how things were in agriculture. The more debt you have vs. assets, the less likely you are to get a loan or a grant.

 Insurance

You should have Product Liability Insurance. It can be cheap or crazy expensive. I include the word crazy, because it is crazy if you do not shop around and actually pay that price. Be honest about the products that you are making. Do not be surprised if raw milk products are not insurable by some agencies.

A HACCP plan and a recall plan may be mandatory. If it is not, do it anyways. It may lower insurance costs. It will also help you when (if) you do have a problem. If you do not have things sorted by batches and labeled/inventories, you may have your ENTIRE inventory seized. Having a plan and implementing the plan will help you from going out of business.

Next>

Business Planning


>Section 1: Executive Summary

>Section 2: Business, Concept, Mission, and Goals

>Section 3: Background Information

>Section 4: Organizational Matters

>Section 5: The Marketing Plan

>Section 6: The Financial Plan

Additional Resources

 

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