Prepare Your Business Plan

Advantages of Having a Business Plan

• Clearly outlines your goals and objectives and how you plan to achieve them
• Acts as a guideline against which you can compare actual with anticipated results
• Provides a framework for next year's budget, production and marketing plans
• Helps you explain your ideas to financial institutions, investors or government agencies
• Helps you to foresee opportunities and challenges, enabling you to take action
• Enables you to monitor the progress of your operation and make changes when necessary
• Allows everyone to have an understanding of and commitment to the planning process

Steps to Prepare a Business Plan
Please note that the following information is just a guideline.

A business plan examines how your business will develop and operate. The plan, typically 20 to 30 pages in length, provides:

Prepare your plan using information from:

• company records
• surveys of customers and suppliers
• discussions with competitors
• industry specialists and consultants
• industry associations, publications and journals
• educational institutions and government agencies
• the Internet

Include these elements in your business plan:

1. Executive Summary (one to two pages)
   • Introduce the entire plan and explain who wrote it, when, why and who to contact.
   • Summarize the plan's key points.
   
   
2. Mission Statement and Objectives (one page)
   • Describe the central purpose and activities of the business (mission statement).
   • Outline key strategies and primary goals over the next three to five years.
   
   
3. Company History (two pages)
   • Summarize the company's achievements and growth.
   • Include a key ratio summary of financial performance focusing on the last five fiscal years, if available.
   • Describe significant changes that have occurred in the business and their impact.
   • List company strengths and weaknesses, business opportunities and threats.
   
   
4. Ownership and Management (two to three pages)
   • Describe ownership structure.
   • Provide a brief summary of each owner, focusing on personal successes over the last 10 years.
   • Outline a succession plan, if applicable.
   • Describe management reporting structure, roles and responsibilities of each position.
   • Provide a brief summary of each member of the management team focusing on key skills and qualifications.
   
   
5. Products and Services (one to two pages)
   • Describe each product and service provided by the company.
   • Describe what makes each of the products or services special to customers.
   
   
6. Industry Analysis (one to two pages)
   • Identify the industry within which the company competes.
   • Describe the overall size of the industry, its state of maturity and growth pattern.
   
   
7. Target Market Profile (two to three pages)
   • Describe size, segment, trends and customer profiles of the target market.
   • Describe key attributes that drive customers' buying decisions.
   • Describe potential product or service substitutes.
   
   
8. Competition (one to two pages)
   • Identify primary and secondary competitors within the target market.
   • Describe competitors' strengths and weaknesses compared to your own company.
   
   
9. Marketing Strategy and Sales Plan (two to three pages)
   • Describe your marketing plan and distribution channels.
   • Describe your sales efforts - how you will obtain and keep customers.
   • Outline your pricing strategy and any sales incentives or promotions used.
   
   
10. Research, Development and Technology (one page)
    • Describe your research and development efforts.
    • List any patents the company owns or intellectual property you have.
    • Explain how you will improve or develop products and what resources will be needed.
    
    
11. Operational and Manufacturing Plans (two to three pages)
    • Identify physical and processing capability of the business.
    • Outline steps in the processing cycle and include a timeline.
    • Identify primary sources for raw material and supplies and provisions for their continued availability.
    • Identify labour requirements at each stage of the processing to market cycle.
    • Describe plans to improve procurement, manufacturing, service, distribution and sales processes.
    
    
12. Human Resource (HR) Plan (one to two pages)
    • Describe HR issues facing your business.
    • Summarize the company's HR strategies in terms of attraction, retention, training, development and compensation.
    
    
13. Sources and Use of Funds (one page)
    • List the timing and cost of all planned capital expenditures.
    • List sources of funding: working capital, equity capital (cash contribution, share issue), operating loans and long-term debt capital.
    
    
14. Financial Position and Projections (two to three pages)
    • List key assumptions and provide support for forecasts of quantities sold, price, cost of goods sold, operating expenses, management salaries, depreciation, term interest costs, income taxes, principal debt service requirements, dividends, and repayment of shareholder loans.
    • For an existing business, include financial statements from the past five years and pro forma financial statements for the next two to three years. For a start-up, include opening and pro forma financial statements for the first three years of operation.
    • Include a monthly cash flow forecast covering at least 12 months for an existing business and at least 24 months for a start-up.
    • Outline the impact of significant changes to the key variables.
    
    
15. Appendix
    Attach these supporting materials, if applicable:
    • copy of the purchase agreement
    • development plans and cost quotations/estimates or fixed price contracts
    • permits and licences
    • research supporting historic industry norms for price and cost levels
    • copies of distribution agreements and sale/supply contracts 

Once you have created your business plan, you can use it to assess the growth of your farming operation and determine whether you are achieving your business goals. It can also be a useful guide for any future planning you undertake.