An effective farm business plan is a valuable tool for ensuring your operation survives uncertain times. Unfortunately, for the vast majority of British farmers, it’s given scant attention unless a visit to the bank manager is in the offing.
If your business plan has sat ignored for years, now is the time to update it. And if you’ve never even written a business plan, now is definitely the time to get started. A business plan helps you set goals, track your progress towards them, and identify potential roadblocks. And it is not as daunting as it sounds.
It’s wise to review and update your farm business plan annually and whenever there are significant changes to your operation. At an internal level, it means you can be confident you have given your business the best chance of succeeding. Externally, it builds credibility and convinces others (including banks or investors) that you know where you’re going.
A current business plan is essential if you want to develop your farm through expansion or significant investments, if you decide to change enterprise mix, or if you’re in the process of succession planning. Or when there is uncertainty on the horizon.
The exact format of your farm business plan will depend on the size and nature of your enterprise; however, the following sections are worth considering:
This is the most critical section of your business plan: an easily digested summary of all the sections that are to follow. This should be written last, after you have developed your business plan, and needn’t run over a page.
Outline the history of your business in your plan and how you have developed it, with an overview of the current situation. You can use this section to describe the industry and the opportunities you are looking to exploit. You should also include contact details, legal status, and details of relevant advisers.
This section delves into the market’s needs and how you will meet the needs of your target customers. This section may include a SWOT analysis, which explores strengths, weaknesses, opportunities and threats in relation to your business. Show that you understand consumer and therefore processor or retailer trends. And that you can adapt if necessary. It is essential if you want to attract outside capital.
This gets into the nitty-gritty of your operation as you explain how you produce a quality product for your customer. In this section of the business plan, you can talk about changes you plan to make to improve your profitability, whether it’s by reducing costs or improving output. Explain the investments – technology and infrastructure or livestock and land – that will underpin these improvements.
This section will face close scrutiny from a bank manager, and it’s worth talking to yours to find out precisely what they would like to see. Typical requirements include a current balance sheet showing assets and liabilities, a profit and loss statement with revenues and expenses for a particular period, and a cash flow statement demonstrating your ability to pay operating expenses and fund potential investments.
List key team members, their role and their expected progression with the business. This is an opportunity to outline recruitment plans for particular skills or, conversely, show how technological advancements will lead to a more streamlined operation. Or, if you are seeking investment, perhaps you wish to show that additional worker on the farmer will enable a greater operation to function.
Consider including health and safety, people or environmental policies; correspondence with current or future people that you sell to (even if it is the local mart or one of the processors); legal documents such as property deeds; and a farm map.
Involve your employees, family and advisers in the process for your business plan. Their insights will make the plan more valuable, and asking their input will ensure they feel invested in making it a success.
It’s essential that current stakeholders or potential investors clearly understand your operation and where it’s going with a quick read of your plan. Use precise language and short sentences. Don’t be afraid to use subheadings and bullet points. This breaks up the text and makes it easier to read.
You are doing yourself a disservice if you tweak figures in your favour, whether it’s exaggerating cash flow forecasts or downplaying debts. Potential lenders are likely to see through your overly optimistic numbers; if they aren’t, reality will bring you undone.
A business plan isn’t a collection of notes on your laptop. It should be printed out, with a contents page and a cover. Include charts for easier comprehension and have the plan proofread for clarity. It should be a document you are proud to show friends and investors.
AgriWebb livestock management software is invaluable when preparing your farm business plan. It streamlines reporting and provides powerful insights.
Organising livestock into separate business units means you can identify the most profitable and replicate your successes. Similarly, you can see exactly which fields are performing, so you know where investment in pasture improvement will lead to better returns.
Your financial figures will be more reliable than ever, as AgriWebb tracks the exact input costs connected to every livestock record. You will know the cost of production for every animal in every paddock and gain insights into where you can reduce spend and maximise output.
AgriWebb also gives you a live farm map that reflects precisely where your operation is. You can look at your mobile phone or tablet and see where cattle are grazing, and how much feed is in front of them. This real-time reporting makes updating your farm business plan a breeze, and will win you the trust of potential investors.
Get in touch to find out how AgriWebb’s livestock business management solution can work for you, or read more in our 2022 State of the Farmer Report. Not sure where to start with your business planning? Start with understanding your goals.