PEOPLE 

The success of the change will be based on how well the people impacted by the change accept and support the change. Who is impacted and what is the impact to their routines are key questions to answer. Identifying who is affected will help to develop further sections of the proposal. 

AREA OF BUSINESS 

Does the proposed change impact one small area or activity, or does it impact additional areas on the farm? If the change impacts multiple areas of the business, identify those areas and the potential challenges that might arise from positive or negative impacts of the change to further help the plan's development. 

HOW WILL THE CHANGE WORK? 

What is going to improve if the change is implemented? When proposing a change, there are benefits that are trying to be achieved. What are those benefits, what research data or farm experiences are there to support the benefits, and what may be limiting factors to achieving the benefits? These are key questions to answer in the proposal.  

BUDGETING 

While some benefits associated with a change may not have any dollar value, most changes all have costs associated with them in some manner. Working through a budgeting process helps determine what is expected to happen financially with the change and how the overall farm business is impacted. When considering operational changes, partial budgets are the key budgeting tool. 

Partial budgets are utilized when the operational change impacts only a few areas of the business. Only those financial numbers impacted by the change are included in the budget, with a key assumption being that all other numbers not impacted by the change remain the same. These budgets are generally prepared for a future year after the change is implemented, but can also be prepared for shorter time frames if appropriate. 

When preparing partial budgets, several key concepts should be incorporated. 

1. A profit budget should be the first focus, and then, if capital investment is part of the change, a cash-based budget can be prepared. 

2. A comparison is needed. To improve decision-making, more than one option is needed. In many cases, the change can be compared to the status quo, or what is currently being done, but it can also be compared to other options. 

3. Performing sensitivity analysis. By estimating the benefits and costs associated with the change, the actual result will most likely be different than what was budgeted for. Sensitivity analysis involves changing key assumptions in the budget up and down and to determine the impact on the projected net results.  

TIMELINE 

How long will it take for the change to be implemented, and for the benefits to be realized after the decision is made? Some decisions can be implemented the next day and results can be seen the following day. An example of this is implementing a change to turn the feed mixer and loader off instead of leaving it idling during dairy feeding activities. This can be done in one day, and the fuel usage change can be determined the next time the equipment is fueled. Other changes may take months to implement and might take months to see any results. Recognizing the time needed to both implement the change and then see results can assist in the decision-making process. 

WHAT IS NEEDED? 

If the decision is made to adopt the change, what is needed to be successfully implemented? Some key questions to answer: Who needs to be involved, what new trainings need to be conducted, what changes need to take place to allow implementation, what disruptions need to be planned during implementation, and who needs to know about the change?    

CONTROL 

Not all decisions work on farms, for various reasons. It is important to review and recognize how a decision is performing to decide if the decision should be revisited, how it was implemented, and what benefits and costs are occurring. To evaluate the decision, under the control function, key measures of costs and benefits are identified that can be tracked to document how the change is working. What measures to calculate, how to capture date, who is going to calculate the measures, how frequently the measures are calculated, and how the measures are shared are key questions when monitoring the impact of a change. 

EXIT STRATEGY 

Recognizing that not all decisions work out and the decision is to move on, the last part of the proposal is the exit strategy. Some important questions to answer regarding the exit strategy are: How easy is to it stop doing, can the capital investment be sold, how long will it take to end the activity or process, and what would the expected loss be if necessary to walk away? 

SUMMARY 

When the managers of a farm need to evaluate what to work on next or what investment to make, many questions arise. The purpose of preparing a proposal for a change or investment is to answer all the questions that might be asked by the leadership team before they are asked. By preparing a proposal, the additional effort leads to a better understanding of the benefits and costs associated with a change or investment and can make the decision-making process quicker and easier.  

ADDITIONAL RESOURCES 

Using partial budgets to propose change: https://ecommons.cornell.edu/items/91d9edf7-b6f1-4b31-83e848a8397ac850