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SIC 0161 Agricultural Production - Crops - Vegetables and melons

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Agriculture Fruit Farm Business Plan

Farmers Group

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Financial Plan Summary

The following topics and tables outline our financial plan.

8.1 Start-up Funding

Funding Requirements and Uses

The company is seeking to raise of $830,000 for the purpose of financing the acquisition of the Green Acres Vegetable Farm and Mobile Farmers Vegetable Farm, facilities modifications, equipment, and funding operating expenses. Another $1,000,000 will be invested in the company by its four co-owners. The following is a breakdown of how the funds will be used:

Breakdown of Use of Funds
Acquisition:
Property	$1,300,000
Equipment System	$400,000
Sub-total	$1,700,000
Operating Expenses:
Salaries	$80,000
Marketing and promotion	$10,000
Other operating expenses	$10,000
Sub-total	$100,000
Total	$1,800,000

8.2 Important Assumptions

Nature and Limitation of Projections

This financial projection is based on sales volume at the levels described in the sales forecast section and presents, to the best of management's knowledge, the company's expected assets, liabilities, capital, and revenues and expenses. The projections reflect management's judgement of the expected conditions and its expected course of action given the hypothetical assumptions.

Nature of Operations

The company is in the business of vegetable farming, greens cultivation, and composting. The company expects to be operating in 2000.

Revenues

The company's revenue is derived primarily from the sale of vegetables, strawberries, and bagged composted manure products.

Expenses

The company's expenses are primarily those of salaries, utilities, and insurance costs. Other expenses are based on management's estimates and industry averages.

8.3 Break-even Analysis

The company's break-even analysis is given below.

8.4 Projected Profit and Loss

As the profit and loss table shows, Farmers Group expects a steady growth in profitability over the next few years.

8.5 Projected Cash Flow

The chart and table below contain the cash flow assumptions and projections for Farmers Group during the first five years of plan implementation. Year 1 monthlies are presented in the appendix.

8.6 Projected Balance Sheet

We project solid cash balance and net worth over the years of the plan.

8.7 Business Ratios

The business ratios given below are contrasted to industry standards for SIC code 0161 which covers vegetable and melon growers. Within this category, research has shown that there can be significant deviations from industry standards due to farm size, product life cycle, and capital resources.

Farmers Group is a start-up venture, and therefore has a more heavy debt to equity ratio than most existing farms. Furthermore, due to its move into a niche market, the company is expected to spend more on advertising than its competitors. The first two years of operations are expected also to have a higher growth rate than average as it gains market share.