Business Tips

Why you need a business plan as an emerging farmer

Most people look at a business plan as a fund-raising tool. However, it’s much more than that. A good business plan provides a clear strategy and objectives, and helps everyone involved in the farming operation to stay productive and focused. You can use it to monitor progress, hold yourself accountable and control the business’s fate. Your agricultural business’s fate.

When you write out your business plan, it forces to review everything at once. Marketing assumptions, operations plan, value proposition, financial plan and staffing plan. This will require you to do some research on the internal and external business environment, including suppliers, competitors and consumers. Your plan will be a detailed action plan showing your competitive advantages and how to address problems.

Don’t mind the mistakes! You can correct them as you go.

When you have a business plan, it also shows banks and other investors that you take your farming operation seriously. Your business plan has to list all risks involved in the operation including drought and rising input costs, and explain how you intend to mitigate these.

An organisation lending money to an enterprise wants a return on its investment and to keep risk as low as possible. A business plan will show how this can be accomplished.

Follow these steps when drafting the document for a new farming enterprise:

  • Ensure that you have the knowledge and access to support before deciding on the product to farm.
  • Secure the land and ensure you have proof of ownership or lease agreement.
  • Get a farm map thatclearly indicates boundaries and watering points.
  • Research and identify potential markets and how to enter each.
  • Identify the resources especially financial available
  • Establish the possible opportunities for creating value-added products.
  • If you’ll be growing crops, consider aspects such as risk, soil and water quality,  the fertilisers and agrochemicals needed as well as rotation crops. Then formulate a crop rotation plan (what you’ll grow when).
  • If you’ll be rearing animals, consider all the risks.
  • Draft a fodder flow plan, where you’ll note the gaps and identify possible fillers.
  • Be honest with yourself. If you can see that what you have in mind won’t work, go back to the beginning and reconsider your options. If it will
    get as much information as possible on the different ways of producing
    and marketing your chosen product, and decide which suits you, and your budget, best.
  • Identify potential partners and mentors such as suppliers.
  • Register your business especially if you want to supply big businesses organisations.

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Watch out for these mistakes when drafting your business plan:

1. Don’t assume that the person reading your business plan knows what it’s all about. Try to give as much information as possible, explaining exactly what you will require financing for.

2. Most prospective farmers ignore cash flow and focus on the infrastructure required. Cash flow is crucial to your farming operation and helps to manage financial resources, debtors and creditors.

3. Yes, you have to assume that your business will succeed. However, try not  to make unrealistic assumptions when writing your business plan. Study similar businesses for acceptable standards. The goal of every business has to be achievable. It’s better to start small and expand.

4. You have to list all risks in your business plan and also explain how you intend to mitigate them.

5. Remember to include competitor information as it is very significant. Show your awareness of the competition and also discuss how you intend to do better.

6. Suppliers play a key role in every farming operation. So, mention them in your business plan. Build and strengthen relationships with suppliers as this will contribute to the long-term sustainability of your farming operation.

Look out for an article on how to write a business plan.

Download a business plan template here

Related Article: How to make your farming dream a reality

5 thoughts on “Why you need a business plan as an emerging farmer

  1. Good advice. Is it possible to send me a sample business plan for growing onions and potatoes . I intend to utilize a 5ha farmland recently bought.
    Thanks
    Joseph Assilidjoeh

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