How to write a business plan for setting up a breeding business

How to write a business plan for setting up a breeding business
How to write a business plan for setting up a breeding business
Anonim

It is important to develop a business plan before starting a breeding business, no matter how you prepare for it. Today, intensive farming is more complex and variable than it was 100 years ago. Markets are constantly changing, costs are higher, profit margins are falling, livestock farming methods are varied and new niche markets are emerging. The type of business plan you develop is up to you, but the detailed process to guide you in developing a meaningful business plan will help you in the long run.

Steps

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Step 1. Gather the necessary materials

Find paper, pencil, or a computer with Microsoft Word, One-Note, or other word processing software. This will allow you to jot down any ideas that come to mind, including the goals and aspirations you have set for yourself to start this livestock operation.

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Step 2. Start by thinking

You don't need to write a critical essay, moreover, grammar, spelling, or writing doesn't matter here. The best way to start is to make a list of what you want to do, what to do, and how much effort you are willing to put into this project.

  • Above all, you should think about your goals and objectives. You will get much more effective results if you set goals rather than vague ideas about “what you want to do with animals”. It's just not enough, and it won't get you going either!
  • When thinking about your goals, remember that strategy is different from marketing. The strategy you are going to implement for your business is to know how you plan to provide added value to your customers (the value proposition), how you plan to convince potential customers to take advantage of this added value by letting them know what sets you apart from other livestock producers and why you can do it better than other producers. Rather, the marketing plan should explain what communication strategy you want to adopt to reach existing and potential customers.
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Step 3. Perform a SWOT analysis

SWOT Analysis is a very popular strategy tool in economics and commerce that allows you to assess Strengths, Weaknesses, Opportunities and Threats. Strengths and weaknesses represent the internal (or controllable) characteristics of a company. Opportunities and threats represent the external characteristics that are beyond your control or your business or the industry. To perform a SWOT analysis, design a table with four columns and the following headings: Strengths, Weaknesses, Opportunities, and Threats. You should place them at the top of each column. But if you think that using a table will be very tedious and inconvenient for you, you can also expand on each of these points on a separate page.

  • This analysis is very simple and flexible, as it allows you to analyze your personality, your company or the industry in which you plan to have a career.
  • These four elements should describe everything that relates to you including what you are capable of doing, what aspects of the business you might need help from more professional and experienced people, what you are ready for. to learn, the difficulties and challenges you may encounter, as well as your chances of success and your level of profitability.

    • Remember that two forces can impact your business and should be analyzed.

      • Internal forces, that is, factors that you can control such as which breeds to choose, husbandry techniques, either intensive or extensive, animal feeding, etc.
      • External forces, that is, factors that you cannot control, include the climate, topography and soil type of the land on which you want to farm, local industrial issues, domestic and international, market prices, product demand and customer preferences.
  • Perform an internal SWOT analysis on you and your business. Try to find out what areas you are good at and areas for improvement, what you can do to improve them, and what might make you reconsider your decision to go into farming. You should also consider whether you need help from people with more experience in some aspect of your plan and your knowledge. You may need, for example, the advice of a veterinarian, an accountant with experience in financial evaluations of livestock operations, an expert who provides inspection services, a breeder with more than 20 years of experience, etc.

    Also do an analysis of your farm, the land on which it is located and your family. Ask yourself the same questions as mentioned above with your family in mind: How are you going to manage your schedule to spend time with your family? What if you spend more time on your farm than your family? What can you do to encourage your children to take an interest in your activity?

  • Do an external SWOT analysis of the type of farming you plan to do, whether it's cattle (beef or dairy), horses, pigs, poultry, sheep and goats or even exotic species (such as bison, emu or elk). It is strongly recommended to carry out research in order to carry out a detailed SWOT analysis of the sector in which you are interested. You can find more information about the national livestock industry in well-known agricultural newspapers and magazines and on reliable websites. For example, if you are interested in the livestock and meat industry, visit the website of the National Interprofessional Livestock and Meat Association. There you will find a lot of information on the rules governing the activity of the livestock and meat sector in France. The CIWF France website is an excellent source to learn more about the conditions of animal husbandry in Europe and especially in France.

    The more research you research into the type of animal husbandry industry that interests you, the better prepared you will be for any eventuality. Once you start writing the actual business plan, you will be much more aware of the pitfalls, difficulties, needs and demands of the type of farm or ranching operation that interests you

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Step 4. Create another table

In a separate table, draw four columns starting with the following headings: "Where am I now?" "," Where do I want to go? "," How do I get there "and" how do I know if I got there? " ". Again, list the ideas that answer these questions. There is nothing wrong with writing down just a few ideas, but in order to answer these questions, it will be best to break them down. Here are some things to consider when answering these questions.

  • "Where am I now? ": Perform a SWOT analysis (see previous step) for the following areas: customers, operations, personnel and financial resources. Even if you don't have a business, you can do a SWOT analysis as mentioned in the previous step.
  • "Where do I want to go? ": This is where you will set the goals and objectives you want to achieve over the next 3 to 5 years. You should address here aspects such as financing, marketing, herd health, reproduction, birth, weaning, slaughter, sale, pasture management, feeding, cost analysis, etc.

    • This question is also useful for achieving your personal, family, and business goals. When setting family goals, have each member of your family write down their own goals, without sharing anything, and discuss them when they're done.

      • Personal goals include things like the idea of ​​working fewer hours, continuing your education in areas like commodity markets or comparability and production programs, etc.
      • The business objectives primarily focus on the breeding unit as a business entity. These include your maximum debt threshold, the ability to own or operate a certain number of hectares.
  • "How do I get there? ": This is the most important question in your business plan, since this is the section where you should describe how you want to achieve your personal, family and business goals. Brainstorming is very useful in this section, as it will allow you to have several back-up plans.
  • "How do I know if I've made it? ": If you think of your business plan as a journey, it's easy to understand that you'll need to measure your progress along the way and determine whether you are getting closer to your goals or deviating from them. To do this, you must define, collect and regularly review metrics, measures and key performance indicators in order to validate your plan and decisions, guide your future activities, justify any changes to the plan and intervene when things go wrong. All of your goals should be measurable. Metrics and metrics will give you the answers to this important question.
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Step 5. Start writing your business plan

If you are using a computer, open another file, otherwise take another sheet of paper. Make sure you develop a business plan that will focus on three main points: the strategic plan, the operating plan and the succession plan.

  • The strategic plan. In this section, you should relate your thoughts, ideas, objectives and goals (see steps 2-4). Basically, the business plan template written for other companies is as follows.

    • The vision statement: a sentence to describe how you see yourself in 5 to 10 years.
    • The mission: it helps to determine or define the goal that the company is trying to achieve in society. This statement should briefly explain what the company does, for whom, and why.
    • Values: These are general standards or guidelines that are important to your business and your family.
    • Situational Analysis: This is the process of identifying and understanding the position of your business within the environment in which you operate, both internally and externally. Step 3 is the subject of this part of the strategic plan.
    • The goals: what are the main achievements you want to accomplish in 3 to 5 years?
    • The objectives: how do you plan to achieve your goals?
    • Key Success Factors (KFs): These are the areas of performance critical to a business’s long-term success, development, growth and achievement. For each FCS, you need to define one or more key performance indicators (KPIs), which are nothing more than metrics that you will use to determine if you are meeting your FCS. These FCS are expressed as general statements on objectives (maintain customer satisfaction), while KPIs are more specific (decrease in the number of complaints related to product packaging).
    • The action plan: it includes the strategies and actions implemented to achieve the stated objectives.

      In a nutshell, you don't have to worry about answering all of the aforementioned questions. Instead, use the three questions above described in step 4 to help you answer the 8 classic business plan questions

  • The operating plan. This is where you should describe the day-to-day activities of the business, including what was done, how it was done, who did it, and when. This plan is usually for a shorter period and usually revolves around a production cycle. This section includes four sub-plans: the production plan, the marketing plan, the financial plan and the human resources plan.

    • The production plan: what will be produced and processed for sale? For breeders, this involves two main elements: animals and cropping systems. Regarding the first element, it is a question of describing points such as breeding, slaughter, weaning, newborn care, herd health, etc. The second includes the number of acres and the type of crops to be grown to feed the herd (hay, silage, green fodder, pasture, grain, etc.). Identify all activities related to the farm.

      It is also important to mention the production resources: land, equipment, buildings and structures

    • The marketing plan: where and how will you sell your commodities? Remember that selling is just a way to get rid of what you have. When developing a marketing plan, you should plan to sell your commodities at a good price.
    • The financial plan: it includes budget analysis, income and expenditure, debt, unpaid labor, opportunity cost, benchmarking, cash flow statement, depreciation (on equipment, animals, buildings, etc.), wages, family expenses, etc.
    • The human resources plan: Generally, the operation of a farm is managed by a single worker (i.e. the owner). However, the human resources management plan should focus on the hiring problems that companies face and how to deal with them. It should describe in more detail the qualities that employees should have in order to carry out their activities (general responsibilities, title, skills, availability and necessary training programs).
    • The quality plan: quality control is the ability to determine what you will produce as well as the desired quality of your products, to put in place the processes required to achieve this goal, to constantly check the quality of products according to parameters, recognize when you are not achieving the quality you want, and you have the means to improve process activities to correct the problem and achieve the quality you want. There are many good frameworks and methodologies out there, but one of the simplest is the PDCA (plan-do-check-act) cycle. It has four steps, which are repeated continuously to gradually improve the quality and maturity of the process over time.

      • Plan: State the goals you intend to accomplish, describe the processes needed to achieve them, as well as the parameters and actions needed to control those processes, and prove that these goals have been achieved.
      • Do: run the plan and collect metrics and metrics as defined in the previous phase.
      • Check: Examine results, metrics, and metrics, determine if improvements can and should be made to the plan.
      • Act: Implement the improvements so that the results improve the next time the process runs.
  • The succession plan. This is probably the most difficult section to write in the business plan because you have to plan for what will happen if the primary operator is injured or dies. The succession plan involves developing a business continuity plan and planning the transition of the business. This transition could take the form of an external sale (auction of land and equipment) or of joint ownership (transfer of the business to descendants).
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Step 6. Choose the legal status of your business

There are 7 main legal statuses for carrying out agricultural activity: sole proprietorship, general partnership, co-ownership, limited partnership, joint venture, public limited company or trust company. Each of these legal statuses is briefly described below.

  • Sole proprietorship: this is the simplest legal form of a business. First and foremost, he is one person leading this type of organization. Employee debts and wrongdoing are the responsibility of the owner. However, all the legal complications, expenses and negotiations to reach agreements are not obligatory, nor the company name.
  • The general partnership: it is managed by two or three people. Having more than one person running a farm means that the business must have a registered name and that each partner is responsible for all the obligations, debts and responsibilities of the company. This company is automatically dissolved in the event of death, bankruptcy or insolvency.
  • The limited partnership: in this case, one person is responsible for the whole business, while the other person is responsible for providing the necessary capital, nothing more. A limited partner is not directly involved in the management of the company, but could consult the books of account and provide advice to management.
  • Co-ownership: we speak of co-ownership when two or more people jointly own property.
  • Joint venture or joint venture: this is the most common legal form for farms. It is an agreement between the parties involved to conduct a limited or specific business venture without the need for a partnership. This is usually a temporary arrangement between the two parties.
  • Public limited company: This is a form of limited risk capital company where shareholders own the business through shares. The liability of each shareholder is limited to his investments, except if he has guaranteed the obligations of the company. This type of business can provide a very flexible framework for succession to the next generation. The owner can also allow his employees to enjoy the growth and profits of the business, without giving up his management rights.
  • The trust company: this is a relationship in which legal ownership of the asset is separated from beneficial ownership.
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Step 7. Link all the sections

Don't be afraid to make changes to your plan. A business plan is not a rule to be followed to the letter. Rather, it is a document that can change as the business grows and new ideas and challenges arise. A business plan should normally be reviewed at least once a month or once a year to review the content and what changes need to be made.

Advice

  • Get help writing a business plan. Seek assistance from a business analyst or other professional with sufficient experience in analyzing and writing such documents. Thus, he can guide you if you do not understand a particular section.
  • It's a good idea to have a business plan when signing a loan agreement with the bank. The bank will pay more attention to the financial section of your business plan to see how much profit it can make.
  • No business plan is static. So remember to always have it on hand so that you can edit any section if something unexpected happens.

    Every good company should revise its business plan several times whenever necessary. For new business owners, it is necessary to review the business plan much more frequently than well-established business owners

  • Put everything in writing. There is nothing worse than not writing down an idea and suddenly forgetting about it. Plus, keep your business plan in a filing cabinet so you can access it when you need it. If you have it on your computer, save it to your hard drive or USB stick so you can safely recover your work in case your system crashes.

Warnings

  • Don't try to write a business plan in one sitting. It could take a week or more, so take your time. In fact, many well-established businesses have taken six months or more to prepare their business plans - rushing you will just hurt your business in the long run.
  • Don't think you'll never have to revise your business plan again while running your business. You should always try to analyze your own achievements as well as those of your business at least once a year to get a sense of your obstacles and progress.

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