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Financial Planning for Small Businesses. Paul Ellinger [email protected] University of Illinois April 1, 2008. Outline. Background: Illinois Farm Beginnings Overview of FAST Tools Business Plan: Economics of the business FAST Tool: New Company Simulator. Illinois Farm Beginnings .

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financial planning for small businesses

Financial Planning for Small Businesses

Paul Ellinger

[email protected]

University of IllinoisApril 1, 2008

outline
Outline
  • Background: Illinois Farm Beginnings
  • Overview of FAST Tools
  • Business Plan: Economics of the business
  • FAST Tool: New Company Simulator
illinois farm beginnings
Illinois Farm Beginnings
  • Farmer Training Program initiated in Minnesota
  • Illinois Farm Beginnings is facilitated by
    • University of Illinois (Leslie Cooperband),
    • University of Illinois Extension (Deborah Cavanaugh-Grant)

Two non-profit organizations

    • The Land Connection—Congerville, IL,
    • Angelic Organics CSA Learning Center—Caledonia, IL
  • http://illinoisfarmbeginnings.org/
illinois farm beginnings4
Illinois Farm Beginnings
  • 10 sessions in the winter focusing on planning for profit
  • Hands-on Field Days: April to October
  • Mentoring from existing farmers
sessions
Sessions

Session 1 Clarifying values; Setting personal and Strategic Business Goals

Session 2 Building Your Business Plan

Session 3 Whole Farm Business Strategy: Tools and Techniques

Session 4 Financial Planning 101: The Fundamentals

Session 5 Financial Planning 201: Planning for Profit

Session 6 Marketing 101: The Fundamentals

Session 7 Marketing 201: Realities from the Field

Session 8 Connecting with Financial Resources and Farm Business Plan Presentations

Session 9 Connecting with Conservation Resources and Farm Business Plan Presentations

Session 10 Mentor/Mentee Meeting

session outline
Session Outline
  • Understanding the economics of your business
    • Identify the major revenue sources of the business
    • Develop a method to determine the costs of producing/preparing for sale each item
    • Variable costs vs fixed costs
    • Distinguish your one-time costs from ongoing costs
    • Identify vulnerabilities
    • Oops and double oops assumptions
    • Develop a break even price and/or production level
  • Financial statement primer
  • What does your lender want?
  • Tools and information
fast tools
FAST Tools
  • farmdoc companion project initiated in 1999
  • Development of spreadsheet-based tools to aid decisions for producers, lenders, consultants and investors
  • Facilitate use, access, distribution of tools and resources through CD and internet distribution
    • Quarterly subscription
    • farmdoc download
    • via workshops
  • Approximately 30,000 CDs produced and another 35,000 downloads
  • Increased demand for education and training
fast tools overview
FAST Tools - Overview

Computerized

Decision Aids

Financial Analysis

Investment

Analysis

Loan Analysis

FarmManagement

Grain Marketing & Management

Risk Management

Yield Database Utilities

new company simulator
New Company Simulator
  • Key components
    • Five year financial plan
      • Cash Flow: Monthly cash flow to account for seasonality
      • Balance Sheet
      • Income Statement
      • Financial ratios
    • Ability to evaluate 6 alternative crops/enterprises
    • Simultaneously evaluate 3 economic scenarios
    • Break even analysis
    • Solver for initial capital needed under alternative conditions
fast spreadsheets
FAST Spreadsheets

Demo of program

www.farmdoc.uiuc.edu/fasttools/

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