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A Comprehensive Guide To Starting A Farm Business

Key points to keep in mind when writing your farm start-up plan

So, you’ve gone beyond the initial stages of maturing your smallholding idea.

The natural follow-on is to begin scoping your plan for starting your farm business.

How is this done?

The following are the steps which we advise for drafting a successful roadmap to small farm business success.

Is Your Start-Up Idea Feasible? Step-By-Step Farm Feasibility Planning

We all know how costly false starts can be – especially in business.

Feasibility planning for your farm is one way of avoid such commercial disappointment.

Prudence prior to commencement always pays off.

Guide to writing a farm feasibility plan

The aim of a feasibility plan is to assess on paper if your idea has commercial viability & holds water.

  • Step 1 – write an executive summary
    • …this involves summarising in brief the main drivers and motivators informing your decision to start-up the business and your expectation from running it.
    • …you’ll want to outline the essential ‘value proposition’ of the business – in other words, what will your business do? and what real benefit will it grant stakeholders?
  • Step 2 – decide on products and services
    • …define what your full range of products and services will be.
  • Step 3 – market analysis
    • …alongside each product and service set measures for quality and declare benchmarks of attainment for each one.
  • Step 4 – write a list of the necessary technological assets required
    • …categorise the various aspects of operations and set a list of technological solutions required to achieve your expected results.
  • Step 5 – staff and organisational resources
    • …budget the staff levels which your research indicates will be necessary to fulfil your commercial target.
  • Step 6 – schedule your start-up implementation
    • …plot a simple timeline or Gantt chart to visualise your schedule for start-up.
  • Step 7 – calculate 6 year projection for your farm business
    • …determine cashflow figures for 6 years of recurring agricultural trade.
    • …simply estimate your sales revenue from predetermined products and services sales & offset against cost of sales.
    • …plot your figures against a chart axis to visualise your like cashflow results for the first 6 years of agricultural trade.

Get Detailed About Your Products & Services: Start Profiling

Profiling products and services is a solid building block to producing sales projections

The products and services of your farming business need some definition (meat on the bone) in order for you to get firm figures when projecting.

Detail the purpose, components, variations, target audiences, cost of sale, price and profit margins involved.

Writing your product and service profiles

  • Step 1 – make an itemised list of all products and services
    • …write out your exhaustive range of market offerings.
  • Step 2 – produce a produce/service profile template
    • …design a template to hold commercial profile information on each product/service.
  • Step 3 – write product/service names & descriptions
    • …spell out exactly you intend to call each product or service.
  • Step 5 – mock product/service photos
    • …give illustration to what your products/services should look like.
  • Step 6 – present product/service benefits
    • …outline the benefits offered to customers by each product/service.
  • Step 7 – ideal customers
    • …customer personas and profiling will help you envisage who is likely to get maximum value from your products and services.
  • Step 8 – cost items
    • …any items which comprise products and services that are purchased are accounted for here.
  • Step 9 – suppliers of costs items
    • …identify suppliers of cost items and shortlist your favoured partners.
  • Step 10 – likely staff to deliver
    • …how is your product/service to be delivered? declare who is likely to perform this task.
  • Step 11 – prices
    • …determine your product/service prices.
  • Step 12 – profit margin
    • …estimate your profit margin on each sale of each product/service.

Analyse Your Margins: Perform A Profit Analysis

Estimate profit margins and get a handle on what your efforts are worth in the selling of each product or service

Each profit and service in itself will offer a certain measure of profitable return.

The margin earned on every sale will differ between offerings.

Therefore the commercial importance will also vary.

Resource allocation and internal business support will be swayed toward supporting a product/service with greater profit potential.

That said, this is not always the case, some strategic objectives aside from profit may warrant priority.

Profit, however, is the leading edge on product and campaign funding considerations.

Compare profits between planned products and services 

  • Step 1 – products/services list
    • …line up your products and services
  • Step 2 – cost of sale
    • …list the associated costs of sale for each product/service
  • Step 3 – price
    • …declare the prices of each product/service
  • Step 4 – profit
    • …calculate the potential profit on each sale
  • Step 5 – margin
    • …calculate the margin of profit available on each product/service sale

Trading Seasons Offer Varying Yield: Plan Ahead For Cash Flow Seasonality

Planning for the undulating trends of trade in your agricultural business cycle

Riding the tidal ebb and flow of cash flow successfully requires establishing some foresight and having a nimble approach.

Take your time to understand how your business’ cash availability might affect your financial decision making.

Seasons have a character of their own.

Some carry yield, some are typically void.

Plan your business expectations according to trend to make use of the financial harvests when they come.

Write a projected plan for the tradings seasons ahead

  • Step 1 – declare an average deal value
    • …estimate the average revenue generate from a single product/service sale
  • Step 2 – estimate enquiries, sales and revenue figures (last year actual vs. next year projected)
    • …estimate the overall output of your farm enterprise with yea-on-year figures, accounting for expected growth
  • Step 3 – produce a change matrix to determine seasonal trade variation
    • …plot determinants of change against months of the year, estimating percentage variation from the average and variable revenue figure against each month
  • Step 4 – produce graph to visualise change in expected revenue month-on-month
    • …plot month to month revenue changes in a graph illustrating expected fluctuation in trading income across a typical year
  • Step 5 – put together a preparedness plan for tackling lean periods
    • …simply take each month as it comes stating what you intend to do to tackle the expected challenges

Wrapping Up Your Farm Business Start-Up Plan

Now you have the critical facts and figures to support the start your farm enterprise.

This is about all you will need on paper to justify an investment decision.

On to the next chapter…


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