I didn’t write a business plan as part of my undergraduate degree in Business. It wasn’t until a few years after graduation, when I decided to start a farm business, that I put pen to paper.
Writing a business plan for my farm wasn’t easy, but it was advantageous. First, I learned a lot about the agricultural industry. My focus on daily farm tasks means I miss much industry news and innovation. Writing a business plan brought me back into the big picture of agriculture. Second, my market research brought to light new marketing options to complement my existing production system, thereby increasing farm income with very little additional inputs. Last, crunching numbers for the financial portion of my plan made me more realistic. I gained reliable data to assess profitability, forecast future growth and set goals for improvement.
Why do farmers need business plans?
Sometimes farmers forget farming is our business, not just our lifestyle. Writing a business plan helps us look past daily “to do’s” and envision what we want our farms to be in the future.
A written business plan is an action plan farmers can use to make daily management decisions. It contains critical market and financial information we can use to make profitable sales and informed purchasing decisions.
Lenders often require a business plan before they decide to fund farm enterprises. Many non-profits and certifying agencies also ask for a business plan as part of their application process.
Most important, having a written plan increases your chance of achieving goals; not having a plan makes it difficult to achieve anything.
It’s never too late to write a business plan
If you already operate an established farm business without a business plan, I still encourage you to write one. A written plan is a great tool to measure progress as you grow your business.
2016 marks my fifth year farming. My business has changed tremendously in size and scope over the last 5 years. I recently sat down to revise my business plan to reflect growth and update my goals.
Research and revise
As you research and write your plan, you may find problem areas or areas for potential growth on your farm. The financial assessment portion on my plan revealed egg sales were barely paying for my laying hens. Vegetable production, a high input area, returned the least profits to my farm. I eliminated both egg and vegetable sales to focus on more profitable enterprises. In short, don’t be afraid to replot your final destination due to discoveries you make while writing your business plan.
Define your business mission and goals
The first step is to think about where you really want to go, and then figure out what you will do to get there.
Mission. A mission statement is the foundation of the business. It describes what you produce, why you produce it and who you produce it for.
Goals. Goals are what you will do to achieve your mission. Experts recommend each goal be SMART: Specific, Measurable, Attainable, Rewarding and Timed. Honest hard work is important, but goals are what drive us.
Other components of a business plan
Your farm’s mission and goals create the Executive Summary portion of your business plan. The other major components of a business plan are:
Business description. A business description tells where the farm is located and the history of your business. This section also describes your facilities and equipment.
Operations description. An operations description lists farm products/services, volume of production and production process.
Management. The management section lists the names and roles of owner(s), manager(s) and employees.
Marketing. The marketing section gives a general discretion of market conditions, expected growth and target segment(s). The National Agricultural Statistics Service (NASS) and Agricultural Marketing Service (AMS) can provide you with up-to-date market statistics and other useful data for this section.
Financial. The financial section offers your farm’s financial history, current financial position and projected position.
Free business plan writing resources
Free help is available from local business professionals and mentors. Literature, market research and other online resources are just a click away. I personally used the following services and websites to write my farm business plan:
- Small Business Development Centers of Ohio (SBDC)
- SCORE is backed by the small business administration
- ATTRA business development tools
The Land Grant Universities Extension System publishes research-based information on all aspects of agricultural production. Here are a few highlights to help you research and write your business plan:
- Ag Decision Maker is an economic and business website from Iowa State University
- Ag Plan is a business plan template tool from the University of Minnesota
- Ag Alternatives is an enterprise assessment tool from Penn State
