If you’ve never written an agriculture business plan, you might assume it will be a tedious and time-consuming procedure. It is for most business owners, but since we’re here to assist you, it won’t be.
We can help you in developing a solid business strategy since we have the expertise, tools, and resources.
This post will give you some foundation knowledge on the significance of company planning. Then, to start writing your plan right away, you will discover how to write an agriculture business plan step-by-step.
Table of contents
What Is a Business Plan?
A business plan outlines your growth strategy for the next five years and gives a current picture of your agriculture firm. It outlines your company’s objectives and your goals for achieving them. Market research is also included to help you with your goals.
Why You Need a Business Plan
It would be best if you had a business plan for farming to launch an agricultural venture or expand an existing one. A business plan will increase your chances of success by helping you plan the expansion of your farming business.
It can also be used to secure funding from investors or loans from banks and to guide the day-to-day decision-making of the business.
As your firm develops and changes, you should revise your agriculture business plan yearly.
YOU WILL ALSO LIKE: 20 Best Gift Ideas for Farmers
Sources of Funding for Agricultural Businesses
There are several sources of funding for agricultural businesses, including:
- Government grants and loans: The United States Department of Agriculture (USDA) offers a variety of loan and grant programs for farmers and ranchers, such as the Agricultural Business and Industry Loan program and the Rural Energy for America program.
- Banks and other financial institutions: Many commercial banks and other financial institutions provide loans to agricultural businesses. These can include traditional term loans, lines of credit, and specialized agrarian loan programs.
- Private equity and venture capital: Some agricultural businesses may be able to attract investment from private equity firms or venture capitalists, especially if they have strong growth potential.
- Crowdfunding and online lending: In recent years, many online platforms have allowed farmers and ranchers to raise money from many small investors.
- Agricultural Cooperative: Agricultural cooperatives often have their financing programs, such as long-term debt or equity financing, to support the members and their businesses.
- State and Local government resources: State and local government agricultural agencies also provide some funding to agricultural businesses, which can be in the form of loan or grants for specific programs.
How to Write a Business Plan for Farming Business
You need a business plan if you wish to start an agricultural enterprise or grow an existing one. The guidance below provided the information you need to write in each crucial part of your agriculture business plan.
Business Plan Template for Farming
The following sections are what make up a business plan for the farming template.
1. Executive Summary
Although it is typically the last piece you write because it summarizes each important element of your plan, your executive summary is an introduction to your business plan.
Your executive summary should draw the reader in right away. Tell them what kind of agricultural enterprise you are running and its current state. For instance, are you a start-up, do you have a mature agricultural business that you would like to sell, or do you have one that you would like to expand?
After that, briefly describe each of the following sections of your plan.
- Briefly describe the agricultural industry.
- Describe the type of agricultural enterprise you run.
- Describe your direct rivals.
- Give a general description of your target audience. Give a brief overview of your marketing plan.
- Decide who the important team players are. Summarize your financial strategy.
2. Company Overview
You will describe the type of agricultural business you are operating in your company overview.
For instance, you can focus on one of the agricultural business categories listed below:
- Manufacturing of animal feed: Manufacturing of animal feed refers to creating and distributing farm animal food formulae.
- Manufacturing of agrichemicals and seeds: Manufacturing of agrichemicals and seeds refers to the creation and distribution of agrichemicals (such as fertilizers, insecticides, and fungicides) and seeds to farmers to aid in developing their crops.
- Agricultural engineering: Agricultural engineering is designing, testing, and using innovative agricultural equipment and technologies to enhance the farming process.
- Manufacturing of biofuels: Manufacturing biofuels creates energy from biomass.
- Crop production: Crop production is cultivating and reaping a wide range of crops, including grains, fruits, and vegetables.
YOU WILL LIKE: How To Invest In Agriculture For A High ROI In 2023 | Full Guide
The firm overview n eds to give information on the business and describes the type of agricultural enterprise you will run.
Include responses to queries like:
- When and why did you launch your company?
- What achievements have you made thus far? Achieving a certain number of harvests each year, a certain number of clients served, or a certain revenue level are all milestones.
- Your legal enterprise Are you a registered S-Corp? An LLC? a single-person business? Describe your legal system here.
3. Industry Analysis
You must include a summary of the agricultural industry in your industry or market analysis in your business plan for farming.
Although it may appear unneeded, this provides several functions.
First, learning about the agricultural sector through research. t aids in your comprehension of the industry you work in.
The second benefit of market research is that it might enhance your marketing plan, especially if your analysis reveals market trends.
The final motive is to prove to readers your industry knowledge. You accomplish this by conducting the study and presenting the findings in your strategy.
Your agricultural business plan’s industry analysis section needs to provide answers to the following questions:
- How much (in USD) does the agricultural sector produce?
- Is the market declining or increasing?
- Who are the market’s significant rivals?
- Who are the leading market suppliers?
- What patterns are influencing the sector?
- What is the anticipated industry growth over the following five to ten years?
- What is the size of the r levant market?
- In other words, how big is the potential market for your agriculture business?
- By estimating the market size throughout the entire nation and then relating that number to your local population, you can extrapolate such a figure.
4. Customer Analysis
Your agricultural business plan’s customer analysis section must include information on the clients you now service and/or anticipate serving.
Examples of client segments include people, businesses, families, and institutions.
As you might expect, the type of agricultural business you run will be significantly influenced by the consumer segment(s) you select. Obviously, schools would react to marketing campaigns differently than, say, businesses.
Try to segment your target market based on their psychographic and demographic characteristics. Regarding demographics, talk about the ages, genders, localities, and income levels of the prospective clients you hope to attract.
Psychographic profiles describe the desires and requirements of your target market. The more you can identify and categorize these needs, the more successful you will be at luring and keeping clients.
YOU WILL ALSO LIKE: 15 Best Agriculture Schools in The World |2021
5. Competitive Analysis
Your competitive analysis should list your company’s direct and indirect rivals before concentrating on the latter.
Other agriculture enterprises are direct competitors.
Customers can buy from other companies that aren’t directly in competition with your product or service, known as indirect rivals. Different varieties of farmers, wholesalers, and distributors are included in this.
Give a brief description of each of these competitors’ businesses and list their advantages and disadvantages. It won’t be possible for you to know everything about your competitors’ companies unless you previously worked there. However, you should be able to learn essential details about them, such as
- What kinds of clients do they cater to?
- What kind of farming operation are they?
- How much do they charge (premium, inexpensive, etc.)?
- What do they excel at it?
- What are their shortcomings?
Consider your responses to the last two questions from the customers’ standpoint. Additionally, don’t be scared to find out what clients think is best and worst about your rivals.
Your areas of competitive advantage should be listed as the last component of your competitive analysis in your business plan for farming. For instance:
Will you provide goods or services that your rivals do not?
Will your customer service improve?
Will you provide lower prices?
Consider strategies to beat the competition and list them in this portion of your plan.
6. Marketing Plan
Product, Price, Place, and Promotion options are the four Ps that traditionally make up a marketing strategy. Your marketing plan for an agriculture firm should incorporate the following:
Product: You should restate the type of agricultural business you described in your company overview in the product area. Then, describe in detail the particular goods or services you will provide. Will you, for instance, make fruit, soy, or vegetable products?
Price: List the prices you’ll be willing to provide and how they stack up against your rivals. You are essentially l sting the goods and/or services you provide d and their prices in the product and sub-sections of your strategy.
Place: Your agricultural company’s location is referred to as “place.” Record your company’s location and explain how it will affect your success.
For instance, is your agricultural company close to your clientele on a small or large farm? And will you run a single site or several? Describe how your website might be the best place for your clients to visit.
Promotions: In the last section of your agriculture marketing strategy, you’ll describe how you’ll draw potential clients to your business (s). The following are some promotion strategies o could think about using:
- Advertise in regional publications, radio, or magazines.
- Contact online resources
- Hand out flyers
- Utilize email marketing
- Promote on social media sites
- Increasing SEO (search engine optimization)
7. Operations Plan
Your operations plan explains how you will achieve your goals, outlined in your business plan’s earlier sections. Your operations strategy should be divided into the following two areas.
Everyday short-term goals: All of the daily short-term operations required to manage your agricultural business, such as employee scheduling, inventory monitoring, receiving orders and payments, and customer interactions, are included in short-term goals.
Long-term goals: The milestones you hope to reach are your long-term objectives. These can be the dates by which you aim to have harvested X times or have earned X dollars. It could also be when you expect to expand your agricultural business to a new region.
YOU WILL ALSO LIKE : Top 10 Farm Grants For Females In 2023 | RequIrements
8. Management Team
A solid management team is necessary to show the potential for the success of your agricultural business. Draw attention to the backgrounds of your key players by highlighting the knowledge and expertise that demands their capacity to expand a business.
You and/or your team members should ideally have firsthand knowledge of running agriculture enterprises. If so, emphasize your experience and expertise. Highlight any experience you believe will assist your firm success, but do so as well.
Consider forming an advisory board if your team is inadequate. The advisory board would consist of 2 to 8 people serving as business mentors. They would assist with clarification and offer strategic direction.
If necessary, look for members of the advisory board who have experience running a farm or other agricultural enterprise.
9. Financial Plan
Your 5-year financial statement should be broken out both monthly or quarterly for the first year and then annually in your financial plan. Your income statement, balance sheet, and cash flow statements are all parts of your financial statements.
Income Statement
A profit and loss statement, sometimes known as a P&L, is another name for an income statement. It displays your revenue before deducting your expenses to determine whether you made a profit or not.
Assumptions must be created as you create your income statement. For instance, how many pounds of each crop do you expect to produce annually? Will sales increase by 2% or 10% annually?
As you might expect, the assumptions you choose to use will significantly impact your company’s financial projections. Try to ground your beliefs in reality by conducting research to the greatest extent possible.
10. Balance Sheets
You can see your assets and liabilities on the balance sheets. Even though balance sheets can contain a lot of information, attempt to distill them down to the essentials.
For instance, investing $50,000 in expanding your agricultural business won’t immediately result in earnings. Instead, think of it as an investment that should bring you income for many years.
Similarly, you are not required to promptly return a check for $50,000 that a lender issues to you. Instead, that is a debt you will eventually have to settle.
YOU WILL ALSO LIKE: 15 Best Agriculture Schools in The World |2021
11. Cash Flow Statement
To make sure you never run out of money, your cash flow statement will help you figure out how much money you need to launch or expand your business.
Most business owners and entrepreneurs are unaware of the possibility of making a profit while simultaneously running out of funds and going bankrupt.
Several of the important expenses required to launch or expand an agricultural business should be included when preparing your income statement and balance sheets:
- The price of agriculture supplies and equipment
- Payroll or wages are given to employees Business Insurance
- Taxes
- Other start-up costs, such as licenses, permits, computer software, and equipment, if you’re a new company.
12. Create an Appendix
Include all of your financial estimates in the appendix of your plan, along with any additional materials that can strengthen your case.
You may, for instance, add the lease for the land where your farm is located or a description of the farm machinery and equipment you employ.
Business Plan for farming Samples
Below are samples of business plans for farming you can take a cue from
YOU WILL ALSO LIKE: How To Buy Farmland For Investment In 2022| Expert Guide
Frequently Asked Questions
The most prevalent company structure for farms is a sole proprietorship, whereas farms more frequently use corporations or Limited Liability Companies (LLCs) with bigger sales.
Starting a small farm involves several steps, including selecting a location, obtaining financing, developing a business plan, and acquiring the necessary equipment and resources. It is important to research and consider the type of farming you want to do, such as vegetable production, animal husbandry, or agritourism. Additionally, it is also necessary to consider the local market and regulations, and to develop a marketing strategy to sell your products. Finally, building a strong support network, including mentors and other experienced farmers, can be helpful.
The most typical method farmers profit from their land is probably through their livestock. Additionally, animals typically generate a high net income despite having a few extra costs and more significant overhead.
Conclusion
It is worthwhile to create a business plan for farming. By the time you are finished, if you stick to the above template, you will have earned the title of expert.
You will better understand the agricultural sector, your rivals, and your target market. You will create a marketing plan and comprehend what it takes to start and expand a prosperous agriculture business.
References
- Agricultural Business Plan Template – www.growthink.com
- How to Write a Farm Business Plan – smallbusiness.chron.com
Recommendations
