Business plans can serve as a foundational document as you begin to envision your future farm business, or to capture details of your current operation to determine areas of weakness and opportunities for growth.
In developing a business plan for internal use, it can be helpful to focus both on the narrative components (What is the value of this business? Who are you selling to? What are your objectives?) as well as the financial components (budget, sales/revenue projections, expense projections, etc.). If you are not yet actively operating your farm business, or are just starting out, these projections may be hypothetical but can still help you map out what is realistic for your farm.
Below, we’ll walk through the fundamental components of a basic business plan.
Give a brief overall summary of your business. What do you do? Why are you doing it?
Why are you building your farm business? What are you hoping to do?
What is the unique value of your farm business? What can you offer your customers that others can’t?
What objectives do you have for your farm?
Give a brief summary of the farming sector in your area.
Product and Service Offering
What do you plan to sell? What services do you plan to provide?
Who do you plan to sell to? Individuals? Organizations?
Sales Channels and Categorization
How do you intend to sell those products? Identify retail, wholesale, or a combination.
Direct to consumer (retail): Farm stand? Farmers market? CSA? Online?
Wholesale: Restaurants? Groceries? Schools? Other?
Competition and Barriers to Entry
Who else is out there? Include market research and other details you’ve learned about your competition in your area. What could keep you from being competitive?
Partners and Vendors
Who will you work with to sell your products? Will you send your products to be processed or packaged elsewhere? If you are creating value-added products, where will you purchase packaging and other components?
Branding and Marketing
How are you branding your company? What methods will you use to market your products or services (newspaper, social media, newsletters, etc).
How will you price your products? What research have you done to help you set your prices?
What are your farm’s business operations? Sales, administration, operations, etc?
Who else are you working with? Do you plan to take on all the functions listed above? Will you hire staff? Will you contract a third party for any of these functions? Explain who will do what. Include experience that qualifies each individual to take on these functions.
What does the day-to-day management of your farm business look like? How does this shift throughout the year? When will you be available to your customers?
Facilities and Equipment
How will you find and maintain the equipment you need to successfully run your business? What facilities are needed for processing or otherwise preparing your products?
What equipment and other items do you currently own for operating your farm business? How will you purchase/rent/otherwise obtain any additional equipment or items needed to run your farm?
Compliance: Labor, Insurance, Workers Compensation, Other
If you are hiring additional labor, how are you preparing to be in compliance with local, state, and federal laws?
Timeline: Plan of Action and Milestones (POAM)
What is your plan of action? Describe how you will design, launch, and grow your farm from its Start Phase (year 1) through its Emerging Phase (years 2-3) to its Sustainable Phase (years 3-5).
What happens when you reach your final business objectives? What happens if things change and you are unable to reach your final business objectives?
What is your budgeting process? Do you plan on making an annual budget? How will you review and update your budget?
What is your financial year? Most choose the calendar year (Jan 1- Dec 31) but you could also structure this to reflect your growing season or the launch of your business.
Accounting and Reporting
What is your accounting method?
Cash (accounting that reflects when money actually flows in or out of your business). This can be an easier approach to accounting.
Accrual (accounting that reflects when money is earned or expenses are incurred, whether or not cash changes hands). This can be more complicated, but provides for a more accurate picture of your accounting over time.
Who will handle accounting for your farm? Will you use a tool like QuickBooks? What financial reports will you produce, and how often will you review and update them (monthly, quarterly, yearly)?
Balance Sheet: reports the farm’s assets (what you own) and liabilities (what you owe)
Income Statement: reports the farm’s profits and losses.
Statement of Cash Flow: reports all cash flowing in and out of your business
How will you finance your farm? Loans, self-financing, crowd sourcing? Include all your options.
Cost Accounting Methodology
How will you keep an account of your costs? Most businesses use the following:
Sales/revenue – expenses = profit
Expenses can be divided up into the following:
Fringe (costs associated with labor, like benefits)
Overhead (costs associated with farming and/or production)
General/administrative (costs associated with marketing, sales, etc)
Sales / Revenue Projections, Years 1 – 5
Estimate what you project your sales and revenue will be for the first five years your farm is in business. How did you come up with these projections? Include charts that show monthly projections for individual products and total sales.
Expense Projections, Years 1 – 5
Estimate what you project your expenses will be for the first five years your farm is in business. How did you come up with these projections? Include charts that show monthly expense projections for individual products and total sales.
Gross Profit, Years 1 – 5
Estimate your gross profit for the first five years your farm is in business. How did you come up with these projections? Include charts that show monthly gross profit projections for individual products and total sales.