Compile a BUSINESS PLAN for your farming operation

July 2024

YOLANDI KRUGER, AGRICULTURAL ADVISOR AT DUNAMUS

Part 1

To begin farming, you need knowledge of farming practices, where to obtain the right inputs and money to buy the inputs. To become a successful farmer requires proper planning. A business plan can help you to establish exactly what you want to do, how you are going to do it and what returns you can expect, before you spend any money to farm.

A business plan represents the roadmap of the future for successfully developing or expanding a farming business. It spells out where the farm is heading and explains how it intends to reach this destination. Figure 1 illustrates a business roadmap for the future, containing elements to be included in a business plan.

Every business has a past, present and an ideal future. If you are only starting on your farming journey, the past will be very short – but if you have been involved in farming for a while, the past will include some aspects such as:

• Your journey as a farmer.
• Where you worked before you started farming.
• What type of experience you have.
• What you have done that worked well and what did not work out at all.

The current reality will describe the farming business’ present characteristics, including aspects such as:

• Do you have access to land and if so, how many hectares?
• Are you producing anything currently? List the animals and crops, as well as the income that is currently being generated on the farm.
• How many people are working on the farm?
• What are your strengths, weaknesses, opportunities and threats?

For some farmers, the reality will be good, while for others it may be a bad situation. However, it does not matter whether it is good or bad – it is necessary to understand what your current reality looks like so that you know whether you want to do something about it or not. If your current reality is already good, you may find that you do not want to change it, but rather want to find ways to keep it up.

When describing your farm’s ideal future, you will answer the same questions listed above, but the answers will include your dreams of what you want your own and your farm’s ideal future to look like. Although the future is unknown, everybody needs to have a picture of where they want to go and what it will look like. Some businesses refer to it as their vision and mission, or the reason why they do what they do.

A business plan for your farm is a written plan mentioning your past, present and ideal future. Lists the decisions, steps and actions you are going to take to move the business from where it is now to where you would like to see it in the future. As you can see, it will require time and effort to compile a business plan. So why would you invest time and effort into compiling one?

A business plan can be compiled to:

• Support a loan or finance application.
• Determine project feasibility.
• Define new business goals and steps to achieve them.
• Evaluate the effectiveness of business and marketing strategies.
• Attract possible outside investors.
• Set directions for the business for the next five to ten years.
• Provide a growth and development plan for an established business.

And also for possible future mergers and strategic alliances, getting contracts and off-take agreements and to qualify for funding and support from government programmes. The next article in this series will focus on how to write a business plan.

Publication: July 2024

Section: Pula/Imvula