Small Farm Business Plan
If you are running a farm business, you need a small farm business plan. Statistics tell us that when any business does not have a business plan, it has an 80% chance of failure. I don’t know about you, but because of that statistic, the risk for my business would be extremely uncomfortable for me. It is totally avoidable!
Your business plan does not have to be a formal document unless you plan to present it to the bank or investors. Then, you need to go into great detail, all based on your research and skills.
At this point, you can also determine if you need to have some type of legal structure for your small farm business. You can operate as a sole proprietor, an LLC, or a corporation, but this business planning will help you decide the direction you wish to take.
Good people to consult at this early stage are a CPA or good accountant, a lawyer, your insurance agent, and if possible, an agricultural marketing resource center.
Table of Contents
Why is a Small Farm Business Plan Important?
A micro farm business plan is the road map for your farm business. It basically tells what the business is, who you are, and what your vision for your business is. There are other details that are important to include in a business plan, but those three things provide a simple structure for everything else.
If you need to attract investors, get a bank loan, or a state grant, you will need to have a detailed farm business plan. The more information you can give them, the better your chances are.
How to Create a Simple Farm Business Plan
Your business plan can be as simple as a one or two-page discourse or you can make it as complicated and as long as you like if you include the important things within it. Here is a basic list with descriptions of what you need to consider including in your business plan. The more detail you go into when business planning, the greater your chances of success.
If you feel stymied, there are sample business plans online that you can read. They might give you some direction.
What is your farm business?
Tell your name, address (or URL), and what your company is intending to do. Will you incorporate, be a limited liability company (LLC), or a sole proprietorship? How big is your farm? How much acreage do you intend to devote to the business? What assets will you use? Do you have a product? If so, describe it in detail. Basically, describe your farm project in the business plan.
What is your vision for your company?
This is your mission statement. What do you want to accomplish? A good way to define this is to research your industry and figure out what problem you will solve for customers. The solution to that problem is probably your mission statement for your farm business.
What is your Unique Selling Point (USP)?
A unique selling point (USP) is what makes your product unique in the marketplace. If your product is not unique or doesn’t meet consumer needs, it will not sell well.
Why is your product different from all of the others in the marketplace? During the business planning phase, you want to explore all of the other similar products and see what problem they are NOT solving for the public. You need to aim at solving that problem. The problem that you are solving will also come into play here: this is why your business is different from everyone else.
Who are your competitors?
This is your market analysis or in other words, know your enemies. In the business plan, it is important to list the companies which are doing similar things and determine their market share, if possible. The more detailed you are here in describing your competitors, the more you will see their weaknesses as well as their strengths. Play to their weaknesses and you will garner market share.
Who are the principal people involved in the company?
For many companies, it is just the owner. Write a brief bio, concentrating on your experience and education. Why are you uniquely qualified to lead/start/develop this company? Write it down. If you have other key team members, write a similar short bio on each of them. Include why they are able to do their jobs in a professional manner.
What are your cash flow and revenue expectations?
Another good section to include in your business plan is a projection of your cash flow and revenue. Being proficient in Excel can help you here for you can enter information into the program and create projections for the future. Try different scenarios to see what will and won’t work for you.
Write an outline of your marketing plan and its costs.
You have a product, so now, how will you sell it? Be realistic as to what you or your team can accomplish. How much money are you going to spend in promoting your product? Will you sell online? If so, how? Will you sell locally? If so, where. How much is all of this going to cost?
What additional items should you add?
Add anything else you think might enrich this view of your business. Some people add a conclusion, others analyze their business strengths and weaknesses, while still others include milestones. Just remember that the more analysis you do, the stronger your good business plan will be.
To make this business plan work for you, you must be brutally honest with yourself in creating it. Pie-in-the-sky is good for dreamers, but you are doing business in a ruthless environment. Honesty, even when it hurts sometimes, will keep you grounded and realistic. You can make decisions based on reality rather than what you want the world to be. These decisions will keep your business growing. Unrealistic decisions can only hurt your business and perhaps eventually destroy it.
Business planning will set your course for the future. You can set up milestones and then cheer your mini-wins when you reach them. That planning helps you to understand your market and your customers. It also helps you to reduce risk–always a problem.
Know the Reasons Why Businesses Fail
Experts study why businesses fail all of the time, and I will tell you that as farmers, some of these reasons won’t apply to you. BUT there are some reasons you need to be aware of and plan to make sure they don’t submarine your efforts. Here are some reasons that you must consider.
Lack of Money
The number one reason any business can fail is lack of money. If you start without adequate business planning and have not estimated costs properly, you could be in trouble within a year.
No Market for Your Product or Services
Another reason for failure is incorrectly estimating the demand for your product. Regrettably, this takes a lot of market research to find out if people really will buy your product or service. Your marketing strategy should take your everything you have learned into consideration.
No Time to Work the Business
If you have an outside job, leave the farm at 7 am and get back around 6 pm, you don’t have a lot of time left to work on your small farm business. This can be a real hindrance for the growth of your business.
Spouse or Family are Not Supportive
If your spouse or family needs to be involved in your business plans, you must make sure that they are willing to work in the business. If you don’t check this out, you could end up being the only one working after a month. Build your team for success.
Other Reasons for Failure
There are probably 10 additional reasons why businesses fail. Some business plans deal with too much paperwork or not enough passion for what you are doing. Fear is a big one: fear of failure haunts some people. By planning your small farm business carefully, you can avoid the obvious pitfalls.
How to Succeed
The answer to this is simple: a good business plan. Granted there are events outside of your universe that can cause business failures, but by business planning, you can avoid the common reasons for failure.
One Final Thought
A business plan is a living document. You must revisit it on a regular basis–say, every 6 months or so–and rewrite it when the need arises. This is your business roadmap, so use it to reach your goals.
About the Author
Tony Savickas is a businessman and entrepreneur who enjoys life with his family on his small farm in Michigan.