Does my farm need a business plan?

A business plan is a decision-making tool that takes the form of a formal document. It states your business goals, why you think you can achieve them, and lays out your plan for doing so. Farm business planning is not just for when the chips are down. It can also be a great tool to set out your vision for your farm, how you plan to reach your goals and drive farm profitability and sustainability.

Farmers face several challenges such as seasonal conditions and market volatility and it’s important that a farm business plan supports you to make decisions through these challenging times. A business plan should include worst case scenarios with the hope that they never happen.

Your business plan should also include a timeline for your retirement, family succession or eventual sale of the farm. For long-term planning to result in successful and achievable outcomes, discussions should involve all members of the family who are part of the farm business. Afterall, there is no point planning for a member of the next generation to take over the farming business if they are not interested in doing so.

How to prepare a business plan

Evaluate your position

The success of a business often comes down to whether it does something better than the competition. Evaluate your land for the types of crops it can support, focusing on those crops that are most lucrative or have the highest demand. Consider your own special horticultural talents and resources. Other things to consider include whether there are products you can produce as a side revenue stream in addition to deliveries to produce buyers.

Financial Projections

Projecting your finances can be a study that changes your entire plan. After evaluating your strengths and weak points, make a list of your fixed expenses such as seed, water, power, fertiliser and equipment costs. Estimate variable costs like employment, trucking, maintenance, and marketing. The cost portion of your plan forms the basis for figuring out how much revenue you need and how to go about attaining and exceeding that number. Always over-estimate costs so you can avoid running out of money at a critical moment.

Selling the products or crops

List the produce brokers, trucking companies, and other service providers you will use. If you are going to be producing and selling food products, herbs, or landscape plants, describe how you will market them, the target consumer, how your product will fit into the consumer's buying habits, and various avenues for sales like farmers markets, online stores, or a store on your property. Add a contingency plan for times when the crop is poor, the customers don't buy, or the events get rained out. The farming business has many variables, so try to prepare for as many as you can foresee.

Regardless of whether you are a beginning entrepreneur who has recently inherited a business, an experienced farmer who is considering on-farm processing, or a retiring business owner who is looking to pass on the farm, business planning is important.

For more information on business planning and how to implement it please visit A Guide to Developing a Business Plan for Farms and Rural Businesses.

Don’t forget that The Money Edge can assist you with your business planning needs. Contact our office today to find out more.

The Money Edge | Bundaberg

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