A business plan is a road map of your business, says Chris Zoller, Ohio State Extension educator in Tuscarawas County. It is a place to outline your business’ mission, goals and objectives and it gives you a direction to achieve those goals. A business plan should be realistic, simple, specific and complete.
1 Mission, goals and objectives
When you read a mission statement, you should be able to identify what the business does, why they do it and how they do it. The mission statement doesn’t have to be lengthy, but it should be clear.
By listing goals and objectives in this portion of the business plan, the reader knows what the business owner wants to accomplish. Goals should be Specific, Measurable, Attainable, Rewarding and Timed (SMART).
2 Background information
This section of the business plan should include a history of the industry, current state of the industry and future of the industry your business is a part of. It should also include the “state” of your own farm business.
By reading this portion of the business plan, a reader could determine what the business is, the size of the operation, how long the operation has been in business, where it is located and where the business is headed.
3 Organizational matters
This section of the plan describes the current or planned business structure, the management team, and risk management strategies.
The business structure is an important decision and can require the advice of an attorney and/or accountant. The business structure should fit the management skills and styles of the owner and take into account the risk management needs (both liability and financial) of the business.
4 Marketing plan
This portion of the plan should include what markets you intend to sell your product to, industry trends, who the customers are and what they want, and who is your competition. Use SWOT analysis to determine your strengths, weaknesses, opportunities and threats in the current marketplace.
This section will be most crucial to a lender, as he or she will want to know if and how you will be able to pay back any borrowed money.
The business or executive summary should be the first part of your business plan, but should be written last. The summary describes the purpose of the business, research findings and recommendations and an outline of the direction of the business (future plans or goals).
Putting together an effective business plan requires time and communication, but an effective plan will help you determine where your business stands in the market today, determine your goals and how to achieve them, and will be a useful tool when applying for additional funding of your operation.
Source: Ohio State University Extension and Penn State University Extension
(Farm and Dairy is featuring a series of “101” columns throughout the year to help young and beginning farmers master farm living. From finances to management to machinery repair and animal care, farmers do it all.)
More Farming 101 columns:
- 5 things young farmers should know about finances
- The farm balance sheet
- 5 items for your farm’s cash flow statement
- Personal and business records: Keep them separate
- How to approach a lender: Tips for getting a farm loan
- How to use microloans to get your farm started
- Saving for the future: 6 tips for young farmers
- How to create a farm safety kit
- 5 tips for child safety on the farm
- 6 tips for livestock safety
- 4 tips for transporting livestock
- 5 ways to better understand tractor stability
- 6 farm equipment hacks