How to create a farm business plan

[music] Tori Jackson: Hi, my name is Tori Jackson.
I work for the University of Maine Cooperative Extension in Androscoggin and Sagadahoc Counties. Today we’re going to talk about why it’s important
for a farm to have a business plan. Typically, when people think about a business plan, it’s
usually when they’re thinking about going for financing at a bank or another lending
institution, but it’s really important for any business to have a plan of where they’re
going, regardless of whether or not they’re looking for money. It can be important for you to help decide
if you want to hire help, if you want to grow your enterprise in some way, if you can afford
to do that, and really just to help you figure out where you’re going, before you get there. The process of going through and making these
decisions with your family and other business partners is really more valuable than even
the document that you end up with. Many business plans are very lengthy and elaborate,
especially for a larger company. For a farm, you can have a long and elaborate business
plan, but it’s really not necessary. It can be very simple. The goal is for you to go
through the process of creating one, and then to actually use it. The easier it is for you
to understand, the more useful it will be. The three major components of a business plan
are marketing, operations and finance. The marketing portion of your business plan focuses
on what you have to sell and who you’re going to sell it to. You can talk about what’s unique about your
product, who you sell it to, whether it’s stores or direct to consumers, through a farmer’s
market or some wholesale outlet, and whether or not you are going to do any processing
or selling to restaurants. It’s really all about your product and where it’s going to
end up. The operations portion of your business plan
focuses on how you produce and deliver your product. Is it a one-person show? Is it just
you running the farm, or do you have a whole team of people working on your farm? Do you
use a lot of land, or are you really intensively managing one acre? Do you have a lot of equipment, or are you
trying to do things by hand or with horses? Are there a lot of power and other sorts of
inputs? This would also include whether you’re an organic farmer or a conventional farmer.
Everything that goes into the actual production of your product comes under the operations
section. The most important part of your business plan,
especially if someone is going to be looking at it in terms of financing, whether that
is through a bank and more conventional financing or any grant program you might apply for,
is the finance section. One way of putting it all together is saying,
you can sell this product, but can you make it selling this product? Is it going to make
you any money? How much cash do you need on a daily, weekly, monthly basis for your regular
expenses? Are you showing some negatives at certain times of the year? If so, where is
that extra money going to come from? Will you need a loan? Lots of farmers come to me looking for grant
opportunities. In general there are very few grants that are available to farmers, so we
need to look at other types of financing as well. The finance section is where you have all
your charts and spreadsheets, or even just a simple statement of “I grow apples. I sell
them at this time of year. I make this much money, and this is how I know that I’m profitable.” If you think you’d like to write a business
plan for your farm, whether you’re new and beginning or you’ve been in it for a number
of years and you’d just like to have a plan, contact your local University of Maine Cooperative
Extension Office, and they can help you put together your plan. We’d be happy to go through the drafting process
with you and help you put together a product that helps you either attain financing or
just plan the roadmap to success for your farm. [music]

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7 thoughts on “How to create a farm business plan

  1. when quality of food in the US is so important,,,, why isnt there more opportunities for farmers to get grants, or poeple who would love to become a farmer ,,,,, like me
    im a beekeeper and id love to market beekeepers honey as a commercial business.

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