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Make A Farm Business Plan

How to Get Your First Farm Loan

❶Include your email address to get a message when this question is answered. Getting that first agricultural loan can be a challenge.

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Business Plan Templates

Which loan department will you go to? If your home or car is the collateral for the loan and your wages are going to make the payments, you need to go to the personal loan department.

Even if you are starting a business, your home may still be considered collateral for the loan, and your wages may continue to make payments until your business gets off the ground. Once your business is in good shape, then the lender may choose to move you over to the business department. Approval for a loan will depend upon how well you present yourself, your business and your financial needs.

The first step is to ask yourself exactly how much money do you need? Why do you need it? How will you pay it back? Lenders will look at your credit worthiness, your experience and training, and business management skills. Need a business plan? A loan proposal or business plan is the best way you can demonstrate to a lender your understanding of and commitment to the success of your business. Lenders expect that you know your business and understand your finances.

The more informed you are, the better your chances of getting the financing you need. Most lenders will also want to see income tax returns from previous years. Above all, lenders think about risk. Are you a good risk for their money? Should they invest in you? Most lenders have a goal of making a profit for their shareholders. All lenders have a primary goal of getting their money back, with interest.

To ensure these goals are met, lenders will measure the amount of risk you pose. Higher risk may mean that you need to offer more collateral, pay a higher interest rate, or that you will not be able to receive the loan.

How is your credit history? Are you up-to-date on payments, loans, credit cards, and taxes? All lenders expect to be paid back.

They want to know that the business they lend to will generate enough cash to pay back the loan and make additional money for paying their costs of operation and for profit. No lender will loan you all of the money you need for a project; they expect you to be risking some money as well. Lenders will take the information that you give them, study it, and make a decision as to whether or not they want to take a chance on you.

They will need to have their names on more collateral than just the asset that you buy with the borrowed money. This gives them some security that their money will be recovered if you default on the loan. Most lenders expect to see you make the first investment. Then, after a couple of years of managing the business, you might be able to borrow to expand. Or after successfully operating equipment for a few years, you may be able to borrow to get additional equipment or a newer tractor.

Start up businesses are very risky. It only takes a few hours for a top-notch animal to end up a cull, equipment can turn into spare parts after just a little poor maintenance, and crops can be instantly unmarketable due to damage caused by a mis- identified insect. Think about your risks and how you will address them before they occur. If your loan application is turned down by a lender, federal law requires that the lender tell you, in writing, the specific reasons for the denial.

If your loan is turned down because of a poor credit report, you may request a free copy of the report from the credit report company. If you visualize your business plan as a journey, it is not difficult to understand that you will need to measure your progress along the way and determine if you are moving towards your goals, spinning your wheels or rolling backwards. This is done by defining, collecting and reviewing metrics, measurements and Key Performance Indicators on a regular basis in order to validate your plan and decisions, direct your future activities, justify any modifications to the plan and intervene when things are not happening according to the plan.

All your goals should be measurable. Metrics and measurements will give you the answer to this important question. Create the Business Plan by making three main plans: This is where you tie in all your brainstorming thoughts, ideas, objectives and goals together from steps 2 to 4.

Basically, the kind of business plan you would see other firms develop is the following: A statement of what you or your farm will look like in the next 5 to 10 years. This determines or defines the purpose the organization attempts to perform in society. This statement should concisely explain what the company does, for whom and why.

These are general standards or guidelines that are important to your farm and farm family. This is the process of identifying and understanding how your business is positioned within the environment you operate, both internal and external. Step 3 is what this part of the strategic plan is all about.

What are the major achievements you would like to accomplish in the next 3 to 5 years? How do you plan on achieving your goals? Areas of performance critical to long-term successes of an organization, and its development, growth and achievement. CSFs are expressed as general statements of goals "Maintain customer satisfaction.

Strategies and actions that are implemented to meet the targeted objectives. Instead, use the three simple questions above in Step 4 as a means to answer all 8 of these standard business-plan questions. This plan is generally shorter term and usually revolves around a production cycle. There are four sub-plans that are important to this plan: Production plan, Marketing plan , Financial plan, and Human Resources plan: What will be grown or processed to be sold?

For livestock producers this includes two main components: Animals, and Cropping systems. With the animals, this is where you lay out things like breeding, culling, weaning, care of newborn animals, herd health , etc. The second includes number of acres and type of commodity to be grown to support the herd hay, silage, green feed, pasture, grain, etc.

Identify all types of enterprises on your farm. Production resources are also important to mention: Land base, Equipment base, and Buildings and Structures.

Where and how will you sell your commodities? Remember, selling is just getting rid of what you have. When you market, you have to plan to sell commodities at a good price.

This includes budget analysis , revenues and expenses, debt, unpaid labour, opportunity costs, benchmark analysis of yourself from other operations, statements of cash flow , depreciation of machinery, animals, buildings, etc. Most farms rely on one worker i. But, nonetheless, human resource plans should highlight hiring issues facing the business and how to address them.

It should further describe the kind of people that are required to operate the business general responsibilities, title, skills, availability and any training programs needed. Quality control is the ability to define what you will produce and the desired quality you must achieve in your products, establish the processes required to do so, continually check your product against quality parameters, recognize when you have not delivered the desired quality and have the means to improve your process activities to correct the issue and return your product to the desired quality.

There are many quality frameworks and methodologies, but one of the simplest is Dr. It has four steps, which are repeated continuously to gradually improve quality and process maturity over time. Establish the objectives for whatever it is you intend to do, the processes necessary achieve those objectives and the metrics and measurements required to control the processes and prove that the objectives are being achieved.

Execute the plan and collect metrics and measurements along the way as defined in the previous phase. Review the results, metrics and measurements and determine if any improvements can and should be made to the plan. Implement the improvements so the next time the process is executed the results will be better. This can be the hardest part of a business plan, as one has to plan what should happen if the main operator is injured or worse, dies.

Succession planning includes developing a continuity plan for your business and determining the process of transitioning a business to new owners. This transition may be an outside sale equipment and land auction sale , or an inheritance sale passing the business down to the next generation. Identify the type of farm ownership. There are seven main types of ownership: These are outlined briefly next: This is the simplest form of business organization.

It primarily involves one person running the whole she-bang. Debts and negligent acts committed by employees are the responsibility of the proprietor. But, all the legal complications and expenses and negotiations for agreements are not required, nor is a business name required. This means two or three people running an operation. With more than one person running a farm, this means that the business must have a registered name, and each partner is responsible for all debts, obligations and liabilities of the operation.

This partnership automatically dissolves with a death, bankruptcy, or insolvency. This is basically one person is responsible for everything in the firm, whereas the other is only there to supply capital, nothing more or less. A limited partner has no active part in the goings-on of an operation, but he may inspect the books of the firm and advise management.

This is where two or more persons own property jointly. This is commonly used in farming, where there is a joint partnership between parties, and is created in order to conduct a specific or limited commercial venture without creating a partnership. This is commonly a temporary arrangement between two parties.

These are legal entities where shareholders own the corporation through the ownership of shares. It is a separate legal entity, distinct from its shareholders. A corporation can provide very flexible framework in terms of succession to the next generation.

The owner may also give employees shares in the growth and profit of the operation without giving up management rights of a partner. This is a relationship where legal ownership of the property is separated from beneficial ownership of the property. Tie it all together. A business plan is not some rigid rule-setting standard that must be set in stone. Rather, it is a paper that can be changed as the business grows and as new ideas and new issues arise.

Usually a business plan should be reviewed at least once a month to once a year to look at what was written and what changes should be made. What are the measures that I can put in place to improve farming as account officer? An accounting officer cannot do much to improve farming, rather than look at the books and the financials of the farming operation and use that analysis to determine what is failing and what is not, or what needs improvement and what is doing well.

As an accounting officer, it is more your job to provide advice on what is going to work for that farming operation in order to help improve that farming operation. Not Helpful 0 Helpful 5. It depends on the size of the farm and type of farm you are wanting to start. The more land you buy, the more you have to pay for it.

Next, you have to build facilities, like a barn or two , corrals and pens, feed storage areas, and a house to live in, and install water well s , plumbing, electricity, etc. Not Helpful 1 Helpful 5. How can I acquire hector land to start farming? Answer this question Flag as How about level of education that you are required to conduct that activities?

Include your email address to get a message when this question is answered. Already answered Not a question Bad question Other. By using this service, some information may be shared with YouTube. Tips Ask for help when writing a business plan. Get a professional business analyst or someone similar with lots of experience analyzing and writing up such plans so they can help you if and when you are stuck on a particular section.

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Nothing is more critical to a new farm business than a good farm business plan. This is your roadmap to start-up, profitability, and growth, and provides the foundation for your conversation with USDA about how our programs can complement your operation.

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A good business plan will help your farm or food production business succeed. Before you start writing your business plan, take a look at some sample business plans for farms, food growers, food production facilities, and other agriculture-related businesses. Building a Sustainable Business: A Guide to Developing a Business Plan for Farms and Rural Businesses Published by Minnesota Institute for Sustainable Agriculture, A page, 5 chapter, step-by-step guide to developing a business plan- with a focus on agricultural businesses.