MMFS Manual

Tool 1.3 How to prepare a business plan

Before embarking on any new enterprise or undertaking major changes to the farm business, prepare a detailed business plan. This is a formal plan that brings together the physical, financial and human resources needed for the operation, and examines the costs, risks and possible rewards from the enterprise.

Identify what you want to to achieve

What are the core values of business owners and/or family members (tool 1.4)?
Add goals and objectives (from tool 1.2) here.
What is the purpose of the enterprise?
What is the scale of the operation?
What resources do you have or require?
What are the critical factors for achieving the desired level of profitability?

Identify clients and customers

Which clients will provide the services, collaboration and/or expertise your business will need?
What are the requirements and product specifications of your customers?

Identify the key risks

Current farm performance (benchmarking results for at least the last two-five years).
What are the risks – production, people, finance, environment, market, etc.?
What can be done to minimise the risks?
How will you know if things are going wrong?

Write your plan using available information, practical experience, financial and market research

Gain input from all stakeholders, such as managers, owners, family members and/or employees.
Prepare a detailed annual operational plan that consider the scale and objectives of the operation.
At critical stages in the production cycle, have a back-up plan that may include an exit strategy.
Add in your SWOT that you prepared earlier (tool 1.1).
Outline the procedures, labour requirements, target market specifications and financial involvement to be used.
Prepare a detailed budget to include possible variation in costs and income (five-year budget is preferred).
Specify targets/key performance indicators (KPIs) to be achieved. What are the possible barriers to achieving these targets, and what is the plan to overcome them?
Determine an appropriate record keeping and reporting system to enable ongoing monitoring and financial analysis.
How will you remain accountable to this plan? Create an action plan and review regularly.

Review the plan with an independent advisor

Seek assistance from a technical or financial advisor or industry representative familiar with the proposed enterprise.

Update periodically to retain relevance

As changes (e.g., technical, financial, operational, etc.) occur the plan should be reviewed and updated.
Industry practice is to annually review your business plan.

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Tool 1.3 How to prepare a business plan