I’ve got some bad news for you. Growing the food is the easy part. There’s a whole world of logistics, planning and frustration that comes between growing great food and making a living doing growing great food.
This is the start of a series of posts about the logistics of running a business. We’ll keep these short and sweet, and end each with resources for tackling these topics on your own or folks you can trust to help you.
What’s the Plan?? Business Plans, Projections and Budgets
When it comes to starting a farm, there is nothing more exhilarating than the freewheeling and experimental stage of business development. However, it is crucial to recognize that this phase can also be a potential money pit.
Running your farm on ideas like “I’m going to grow this and then sell it” or “Meat makes money, let’s raise more pigs” is an excellent way to find yourself scrounging change from your jacket pockets to make the feed bill. To go from “this seemed to work well” to “ this is how I pay my bills” requires business plans, projections, and budgets.
Let’s make one thing clear – it’s impossible to predict the future. And no model survives contact with reality. But that being said, creating these models is incredibly valuable. They provide a structured framework for thinking through various scenarios and allow you to anticipate potential challenges and opportunities.
You can go online and find all sorts of directions for creating a business plan online that advise you to conduct market analyses, create customer prototypes and consider everything from energy consumption to current interest rates. While those will all be important eventually, if you’re just starting the process with a “this seemed to work well” idea, it’s overkill.
Let’s say you have a small strawberry patch and got a good response from your community to running a u-pick. Sit down and look at your infrastructure and space. What would it take to triple your number of plants? How much would it cost to buy plugs and plant them? What amendments would you have to order? Who would you sell to? Are there enough neighbors within a 3 mile radius to buy all your strawberries? How will you let them know you’re open?
Write all this down, do some online research, and then bring your thinking to friends, family, customers and mentors. Ask them to rip your ideas apart. You want them to find the flaws and point out potential problems. Take the feedback into account and use it to make your plans better.
Next it’s time to build yourself a model so you can get a sense of how cash will flow into and out of your strawberry patch. When will you need to have cash on hand to order your plugs? How much will you be paying people to help you plant, cultivate and man the u-pick stand? Ideally, you’ll build this in a spreadsheet so that you can adjust your assumptions up and down to get an understanding of when things fall apart financially. That can be a bit of a challenge, though, so it is one of the services we offer at Good Agriculture. It can be part of your monthly financial services at the premium level, or we can tackle it a la carte for a very reasonable fee if you’re just getting started.
Regardless of how you handle it, a plans, projections and budgets are essential for going from a promising idea to an actual business. Over the next months, we’ll tackle the other aspects of business management so that you can build the framework you need to keep your business running smoothly.