If you're a small farmer who is just starting a farm business, you might wonder if you really need a farm business plan. Maybe you're a homesteader who might sell a few eggs or knitted items on the side. Or perhaps you are a hobby farmer who plans to live off retirement income, but still grow and sell vegetables—just not for profit. Do you need a farm business plan?
If you plan to actually start a business where you sell items you grow or produce on your farm, you really do need a business plan in some form. If you want to apply for loans or grants or involve a bank in any way in your farm venture, you will likely need a business plan. If you haven't yet purchased the land, you might want to begin with a business concept—just the idea—but you would still benefit from working through the whole business planning process. You can also work on designing your small farm. Even if you're a homesteader and don't plan to sell anything at all, you can use the business planning process to plan your homesteading and self-sufficiency goals for the next 5 years. Some sections below, like marketing, won't apply to you, but other aspects of the process will be very relevant.
Why Write a Small Farm Business Plan
A business plan can be structured a few different ways, but it typically consists of the following elements:
- Summary of your business concept
- Background information on the business
- Description of products you plan to offer
- Marketing plan
- Financial plan that includes cash flow, income, and expenses
The complexity of your business will determine the complexity of your business plan. If you are one person who wants to sell vegetables at the farmers market, your section on management structure and organization will be very short. Likewise, if you're just starting up, your background information section will be brief. So, writing a business plan doesn't always mean creating a huge, complicated document, especially if you're working on the small-to-micro end of the scale.
A business plan can be thought of as a process, not just a product. Even if you don't intend to apply for loans or grants (which often require a business plan as part of the application), writing a business plan for your small farm venture can help you, well, plan! That's the purpose: to get you thinking about where you want your farm to go, what you envision for the future—and how, specifically, you plan to get there.
A good portion of the business planning process is spent gathering information on markets. This is an extremely important part of making any small farm dream reality. You may want to grow a particular product or work with a particular animal, which is also something to consider. Matching your strengths and resources with the opportunities that exist in the real world is the key to writing a really effective, powerful business plan.
Another big part of writing a business plan is visioning. When you write your business mission statement, you will also take some time to vision: to look into the future. Where do you want to be in 5 years? 10 years? 20 years? How do you envision spending your work day? What time do you expect to not have to work and what will that look like? Thinking deeply about the answers to these questions is critical to not just the long term, but the goals you set for this year.