Updated January 1, 1 . AmFam Team
When you’re in the business of farming, you’re not only thinking about your daily responsibilities, but you’re keeping the bigger picture top of mind, too. From planning the future of your farm to mapping out how to make a profit, a farm business plan is an essential tool.
Creating a farm business plan gives you a detailed account of your vision, mission, goals, strategies, operation and finances, among other things — which ultimately will help you reach your bottom line.
Take a look at some of the main components of a business plan and start creating your own roadmap to success.
A farm business plan is a strategy for how your farming operation is going to work and what you’re going to do to make it succeed. Typically, a farm business plan covers your goals for the first three to five years. Consider it your compass — it’ll help direct all of your business decisions.
While most business plans have common guiding principles with similar outlines, your plan length and details can be as complex or simple as you choose. The purpose of creating a plan is actually using it when you’re done, so the easier it is for you to understand, the more useful it’ll be. Below, we’ve outlined important details you’ll want to include in your plan so it serves its purpose and provides a roadmap to help you accomplish your goals and objectives.
Vision. Your vision is your first priority since it’ll be used to guide your business long term. It should reveal, at a high level, what you hope to achieve and where you hope your farm will be in the future. Consider it your “north star” — it should articulate a concise statement of the meaning and purpose of your business that guides the direction your business goes.
Mission statement. On the other hand, your mission statement is all about the now. While your vision statement is your aspiration for your farm’s future, your mission statement is actionable — what are you doing right now to drive your farm’s business forward? Your mission statement should get more specific and embody your broader vision. Focus your mission statement on the guiding values of your farm business. A good place to start for your mission statement is answering these three questions:
Essentially, your mission statement should distinguish you from your competitors.
Objectives and Goals. Your objectives and goals provide a framework to help you achieve the vision and mission of your farm. While goals are broader defined and help direct your business, the objectives translate your goals into detailed, measurable targets, and typically have a specific timeline to work around. Clearly defined objectives are necessary for an effective farming business strategy. Your objectives should be specific enough so they provide guidelines for all decision making, but they should also be flexible as priorities and interests often change.
To begin setting your farm’s business goals and objectives, think about what you’re trying to achieve. Dig into your vision and mission statement to build on those values and aspirations. Goals and objectives are meant to point your farm in the right direction and keep you on track. Keep “SMART goals” in mind when sitting down to craft this section of your farm business plan. SMART goals stand for:
Now that you’ve determined a foundation for your plan, you’ll need to focus on three key logistical components to include: marketing, operations and finances.
Marketing. The marketing component focuses on your product and customer. Key questions you’ll want to answer include:
Answering these questions will help you develop a marketing strategy which then can further dive into other areas, like price, placement and promotion ideas. The success of your product will be in conveying its value to your customers — and it all starts with your marketing strategy.
Operations. This part of your plan centers on how you produce your product. Consider the following:
Anything that goes into the actual production of your product goes into the operations section.
Finances. Detailing the financial aspect of your farming operation is another critical component of your farm business plan. Start with your initial financial requirements, like income and operating expenses. Consider your daily, weekly and monthly expenses and where your money will come from. For instance, think about the cost of land, equipment, seeds, breeding animals, barns or outbuildings, fences, etc. How much will your initial finances cost? Then go back to your goals and objectives and project what’s needed for future growth and how you’ll meet any objectives in terms of capital.
A farm succession plan is the process of passing on the ownership of your farm to another person — quite often the next generation of your family. A succession plan makes that transfer smoother and it’ll help determine the future of your farm. While you don’t need to vet out an entire succession plan in your original farm business plan, it is important to keep it in mind as your farm continues to thrive. Here’s some key info about a farm succession plan, including more about what it is and how you can create one.
Starting with these key components will help you create your farm business roadmap that details how you’ll get from Point A, which is where you are today, to Point B, which is where you want to be years down the road. Creating a farm business plan shouldn’t be considered a daunting task — it’ll take some time to develop, but it’s a resource for you that helps you achieve goals, stay on track and help your farm grow into a successful endeavor.