How to Write a Farm Business Plan Proposal
Getting a loan for your agricultural business, no matter the size or scope, means asking the lender to have faith in your ability to manage a full-fledged operation and your finances in a healthy way. The best way to prove that is by coming prepared with a farm business plan proposal.
No pressure, right?
Do I have to create a farming business plan?
You can set yourself up for success - both in business and with your lender - by having a detailed business plan for your farming operation. It doesn't need to be pretty, but you do have to prove that you're willing to put the time and effort into creating a well thought out course of action for your operation.
Already operating but don't have a plan? That's okay! It's never too late to put extra thought into how your operation will continue to fulfill your livelihood.
What to Include in your Agricultural Business Plan
Whether you're a new farmer looking for a loan, or a seasoned grower that needs funding for a new agribusiness, there are a few things that you want to make sure you include in your agricultural business plan.
TITLE/ COVER PAGE
Keep it simple on the cover page. The most important information here is accurate contact information so your lender can get in touch with you easily. Include mailing address, phone, email, and fax if you have it.
- Your company’s logo
- Name of business, address, contact information
Although it will be the first page of your farm plan, this will be the last section that you write, since it acts as a summary of all your key points in your plan. Remember that this is the first section that your lender will read, so they’ll expect to see all of the highlights that make approving this loan a good financial decision for both you and the lending organization. Include points about expansion plans, market opportunities, financial trends and projections in a short and easy to read summary.
Treat this section as if you’re telling a stranger about your operation and you want to give them an overview of what you do and what sets you apart from other businesses in your industry.
- Brief description of the operation including what you do, what you produce, how you market it, and the size of the operation.
- Locations and facilities
- Mission Statement
- Plan Summary and Capital Request – if you’re starting a new operation, include a plan summary that describes how you’ll start the operation and the course of action you’ll take to build it.
In this part of your farming business plan, you'll touch on your products and services, and any measures you have in place for quality and compliance.
- Products and/or services and their corresponding systems
- Production practices, value-added practices
- Policies on quality control, inventory management and customer service
- Risk Management
- Licenses, permits and regulatory requirements
- Goals for production growth, expansion, etc.
For some people, this can be the most fun or the most challenging part of creating your small farm business plan. Before thinking about your tactics, think about the research you need to do to inform those decisions.
- Industry description, outlook, trends and projections
- Target market information
- Market share to gain
- Promotions, programs and marketing tools
Check out our blog on how to create a marketing plan for your farm and download a free template!
ORGANIZATION AND MANAGEMENT
This section talks about how you're going to structure your farm and your plan for hiring help.
- How your business is organized (corporation, partnership, sole proprietorship, etc.)
- Names, titles, positions of owners, managers, directors, etc.
- Organizational chart or Personnel plan – who facilitates which roles and potential new hires
- Benefits offered, rewards structure, etc.
- Contingency Plan
FINANCES (LEARN MORE HERE)
Arguably the most important part of your agricultural business plan is how you are going to finance your operation. In this section, make sure to include:
- Income earning potential, plans for growth, expansion, industry trends
- Historical performance
- Balance sheet, cash-basis income trend, breakeven analysis, and sensitivity analysis
- Asset management
- Capital Request
Creating your own farm business plan will take time and effort. As you complete sections, send them to partners or colleagues to review as you go along. If you have any questions on farm business plan examples or more specifically what loan officer’s are looking for, give us a call.