Start Farming Business – Writing a Profitable Farm Business Plan
A farming business plan provides the foundation for future success. It outlines your plan for accomplishing objectives and identifies your company goals, purpose and outlines your approach for proceeding. It is used to manage resources, identify new directions for expansion, and to make business decisions in an orderly and organized fashion. A farming business plan establishes a course of action for meeting the future needs of your company while considering all variables. A well-organized plan facilitates resourcefulness and flexible forward thinking by focusing on what is important to accomplish the company’s future objectives.
Many people mistakenly think that a farming business plan must focus on a single objective, such as “producing a high volume of cash crops.” In reality, such a plan would consider every aspect of the farming industry and consider the needs of the marketplace, including the markets, consumer demand and other factors. An agribusiness plan focuses on meeting the specific needs of the marketplace and is an organized description of the company’s activities in the agricultural sector. A plan for raising and selling agricultural products is an excellent way to define your objectives and create a roadmap for successfully completing a profit producing operation.
A goal setting is a key element of any good farm business plan. The purpose of this is to identify, where possible, financial goals and a realistic time frame to reach those goals. Financial goals should be financially achievable with a history of profits and should be clearly defined in a way that small farmers can understand. Financial goals are usually based on revenue and are the type of goals that farmers are most concerned about.
Setting up a legal structure for operating the business is an important component of any farming business plan. The types of legal documents required vary with the nature of the industry and the individuals involved. Some documents include Articles of Organization, Operating Agreement, & Income and Other Finances. Operating agreement establishes the relationship between the farmer, stockholders or other parties and the business. Operating Agreement also sets out the policies and procedures that will be used to maintain a successful business.
Marketing strategy is the process of bringing together information from pastures and production to determine what works best for the animal and market needs. Marketing strategies are essential for long term profitability. A marketing strategy should be flexible enough to allow for future expansion of the farm. Many businesses have been able to achieve sustained growth by developing a marketing strategy through the addition of new products, location, breeds, or combination of any of these elements. A marketing strategy is therefore not only a tool for sustaining a profitable business but is also a tool for developing a profitable future for the business.
The last two sections of any farming business plan, the Financial Overview and the Marketing Strategy, are extremely important and should not be ignored. This section should be written with the objective of achieving financial goals for the business, either with the help of external funding (through investors or loans) or self-financing. A financial overview should identify the current market position and any current or future problems in the supply, demand or pricing of the commodity(s) being produced. It should also outline the financial objectives, including sales and profits as well as long term goals for expansion and diversification of the business’s resources.