6 steps to put together a strategic dairy business plan

Re-evaluating the long-term strategy of a business and feeding the results into every day decisions is important, particularly during tough market conditions.

Although farmers are well versed in producing costings, what is sometimes missing is strategic planning, says Sarah Bolt, knowledge exchange manager at AHDB Dairy.

Taking a step back from a business can often be a revealing process, providing an opportunity to take control and set goals for the future.

See also: Five-point guide to successful farm business plan

What is strategic planning?

Strategic planning addresses the wishes of the individual alongside those of the business, while focusing resources and prioritising and setting goals for the future.

“It is about discussing what each person wants from the business and from their lives; and what makes them happy,” says Ms Bolt.

“Sometimes it can be hard for them to think of life outside of farming.”

Setting out this process can provide direction to the whole team by giving them something to work towards, rather than just living the day-to-day. With many dairy farms struggling to keep their heads above water, this is more relevant than ever.

How to put together a strategic plan

1. Discussion

Sitting down and having a discussion is the first hurdle for those involved with running the farm. Ms Bolt advises doing so in a neutral setting and possibly with a third-party present to mediate the discussion.

“This could be an accountant or a consultant; they do not have to be a trained facilitator, just someone who makes sure everyone gets a chance to speak.”

Though the kitchen table is where a lot of business discussions are likely conducted, strategic planning is best done in a neutral setting to make sure no one has a psychological advantage.

2. Assessment

Everyone then needs to think about what makes them happy and what the purpose of the business is, explains Ms Bolt.

“Question, why dairy? Some will like the lifestyle; some will like achieving yields and others showing cows. Everyone might be different, so it is a case of linking these interests to the purpose of the business and establishing what type of business they want to have.”

Getting a clear picture on where the business is at present will help to bring perspective to the discussion.

“The team or family will need to address where they are now and where they want to be, as well as how to get there – and question whether they want the business to grow or not,” says Ms Bolt.

“Use sticky notes and flip charts to do this, but keep the group values and vision at the centre of everything.”

3. Setting goals and Smart objectives

The next step is to establish achievable goals and work out what needs to be done to make these happen.

Setting up a mission statement for the farm and putting this in writing makes it official, says Ms Bolt.

One way of defining the goals clearly is to develop Smart objectives: Specific; Measurable; Achievable; Relevant and Timebound.

“These need to be in agreement with everyone as this is all about working together. Embracing change can often be the hardest thing,” she adds.

Once goals have been set, it is important to share them with the rest of the team so everybody knows the targets for the business.

4. Collect information and measure

Progress needs to be measurable, which could include monitoring through benchmarking or comparing production figures, depending on the goals that have been set.

This means everyone in the team is able to see what progress is being made and the difference the planning has had.

5. Review your progress

Reviewing progress against the goals should be done regularly.

“It can help to refocus and retarget some of the goals and also fit in with changes along the way,” says Ms Bolt.

6. Take corrective action

If there are any issues or difficulties, they need addressing as they happen. This could be particularly relevant with changes that may result from Brexit.

It is worth looking at the plan, considering the impact of changes, and whether the plan will still work.

“The exercise gives an opportunity to take a step back and see the wood for the trees, and to act rather than just react,” she adds.

“This kind of planning is only a dream until it is put into writing, and then it becomes a goal.”

Case study: Andy McKay, Broughton Mains Farm

Andy McKay has been using strategic planning at Broughton Mains Farm, Newton Stewart, Dumfries and Galloway, for the past six years.

On the first occasion, with his parents Jean and Colin McKay, the aim was to improve budgeting, when they purchased a second farm.

Initially, the family had a meeting with a Kite consultant to set out targets and organise budgets as finances would be much tighter after the purchase.

“It was good to have a third party involved to bounce ideas off, as well as for the financial and practical advice,” says Mr McKay.

Farm facts

Broughton Mains Farm, Newton Stewart, Dumfries and Galloway

  • 340ha in total: 279ha owned, 61ha rented
  • 81ha of barley and wheat for feed and 259ha of grassland
  • 400 pedigree Holstein cows
  • 300 ewes
  • 150 cattle, some finishers, others Angus crosses for stores

They discussed whether to sell up and stop milking, but both Mr McKay and his father wanted to continue so they planned for that.

“Half the trouble when running a business is being able to think about what you actually want, but a third party really helps you to realise and consider everyone’s input,” he adds.

As a result of the discussions, the family took on the second farm to give room for growth, and have now amalgamated it with the original farm as well as changing milk buyers to improve returns.

The business targets also changed when Mr McKay got married and had children.

Following structured family discussions, Mr McKay’s parents decided to take a step back from the business, making him the main decision maker, alongside his wife Susie, who he now sits down with to discuss future plans.  

He now has quarterly meetings with John Allen from Kite Consulting, to look at the targets set on the last occasion, analyse the success or short-comings on meeting them and how that can be improved, while also setting more goals.

If any changes need to be made, Mr McKay then involves the rest of his team.

“Three years ago we decided to start milking three times a day, which had a big impact on the staff.

“I made the decision and then talked to everyone about how they wanted to do it,” he explains.

The biggest difference Mr McKay has noticed is improved confidence in himself and his decision making.

“Over the past 12 months the milk job has been so awful, but sitting down with Mr Allen and looking at the farm, it is noticeable that it has been a bad year, but we are doing OK.”

Even so, Mr McKay admits he did not like the process to start with, as it was quite a challenge and made him feel as if he were failing.

“It takes some getting used to, but now I have more confidence to make the right decisions, have a good business structure in place and a plan for the future.”

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