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Farmers Group

Executive Summary

Problem & Solution

Problem Worth Solving

People want and need vegetables and related food with good taste and high nutritional quality. Our national diet is a disgrace. We have a huge problem of obesity.

Our Solution

We use present and future agricultural technology to produce organic, tasty, and nutritional vegetables. We start with an existing farm that has custom-innovated equipment. To that we add horticultural technology in the production of strawberries will allow double utilization of the climate controlled portion of the overhead.

Target Market

Competition

Current Alternatives

Alabama is one of the premier farming areas of the eastern United States. This creates an intensely competitive environment with a large number of industry participants. Since almost all of the produce is considered to be commodities, and large scale buyers are more consolidated than the farmers themselves, overall margins are small and rivalries for wholesaler contracts are strong. Competitive threats come from three main segments:

  • Imported vegetables of lower quality.>
  • Mississippi pound raised vegetables.
  • Alabama vegetable producers.

Direct competition in the individual buyers market segment comes from three farms in the immediate area including the Anniston farm, Organics-To-You farm, and the Terrance Livingston vegetable farm. Each of these competitors has produce stands as well as selling to local farmers’ markets. However, with the exception of Organics-To-You Farm, none of the others focus on a niche market and depend heavily on federal subsidies.

 

 

Our Advantages

The Farmers Group strategy is to profitably and efficiently utilize present and future agricultural technology in the production of vegetables. The company, by acquiring an existing profitable vegetable farm with all the necessary custom-innovated equipment, will gain a significant industry advantage. Additional application and utilization of horticultural technology in the production of strawberries will allow double utilization of the climate controled portion of the overhead. Farmers Group hopes to consolidate considerable goodwill already created by exercising the option of not adding another high-production facility to the present supply-demand scenario.

The company’s goals in the first year are to:

  • Prepare the future site.
  • Relocate and expand Green Acres vegetable system and get it operational.
  • Integrate greens culture into the system.
  • Have the composting system in full production by early spring of the second year.

The company’s long-term plan is to phase out whichever products are least lucrative and replace them with products that are practical and cost efficient.

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Execution

Marketing & Sales

Marketing Plan

Farmers Group will initially market and supply its products to target customers. The company is further exploring marketing opportunities on the Internet. To this extent, the company would like to set up a website to market its products.

The company will utilize aggressive advertising strategies to further market its products. These strategies include the promotion of products through the sponsoring of spots on cooking shows and exhibitions, and also engaging prominent chefs to help promote this fledgling industry.

Sales Plan

At Farmers Group, the sales process is primarily the same for vegetables as it is for composting products, in that both products will be mainly sold through wholesale marketing. As in the past, live shipments will be delivered by contract carriers in special oxygenated tanks carrying 8,000 vegetables or more, and will be continued as demanded. Farmers Group’s bagged manure products will be delivered and unloaded in sizable wholesale quantities by the pallet.

Smaller, more local orders will significantly increase the overall sales when the 300-450 live vegetables carrying tank system is put into service late in 2000 or early in 2001.

The company’s average sales cycle from first contact to closing of the sale is approximately 3 to 12 days for vegetable products. Farmers Group plans to shorten this cycle. Furthermore, the company estimates that from first contact to sale conclusion, the cycle for fresh strawberries will run 3 days or less. Composted products sale cycle should run from 3 to 12 days.

Operations

Locations & Facilities

The farm is located in Calhoun county approximately 4.5 miles outside of Jasper.

The operation will utilize:

  • One large greenhouse, enclosing the vegetable area.
  • Horticultural greenhouse.
  • Filters, water treatment devices.
  • Backwash facilities.
  • Outdoor vegetable facilities.
  • Business office building.

An additional portion of the operation will be the manure composting facility. Local and regional dairy operations have trouble with manure accumulations, and the company hopes to enter into contracts in removing the manure. Farmers Group will then turn this into a saleable product. The company plans to supply the region’s nursery outlets with a top-quality, premium garden and soil amendment product for area horticulture.

Technology

While at Mobile Farmers Vegetable Farm James Jackson, steadily used and experimented with compost and fertilized with manure of different kinds. The most important things with manure usage is to eliminate the viable weed seed drawback by thoroughly composting the manure, to add enough cellulose on product to bring it to the proper ratio and to bring its water content to proper levels. A properly composted manure product has no seeds that will germinate and proliferate in it. Additionally, a properly composted manure product has something a chemically formulated synthetic fertilizer does not have: enzymes. Enzymes are critical for producing a truly nutritious and superior flavored product. Research has shown that the superior flavor of a fruit or vegetable is closely related to vitamin content and folic acid content in green vegetables. 

The company is currently seeking contact with Alabama universities in order to learn about and acquire new hybrids of strawberries and vegetables that are hardier and grow faster in our local microclimates. These and other available species and systems will be constantly tracked.

In addition to the above, the company is seeking contacts at Universities in Italy and Germany that are involved in greens, and will continue the quest for the best flavored, large, and firm fall and winter strawberries.

Currently, Farmers Group is conducting research to test certain clay-sand-manure mixture levels to obtain better, cheaper bedding and agronomic soil mixtures that are more effective than the standard used in the industry in Alabama (Pine bark mulch-composted).

Equipment & Tools

The state-of-the-art vegetable equipment starting up in the new location utilizes revolutionary harvest designs that:

  • Allow faster, longer growth
  • Cut the harvest labor by over 80%
  • Cut the harvest time and by so doing:
    • Decrease loss in weight gain, and
    • Eliminate weight loss from shock.

Products

Vegetables

Farmers Group’s first line of production will be the green vegetable and red vegetable. During the summer months Farmers Group will be growing carrots, romaine lettuce, leeks, red onions, summer squash, and spinach. In the fall, production will center on pumpkins, winter squash, globe beets and winter greens. With the growth of the popular organic food niche, and the federal government’s new organic labeling policy, Farmers Group will focus its produce on the intermediate organic label. This means that approximately 70% of the food production process will be organic and all foods produced by Farmers Group will be eligible for the "contains organic ingredients" label. The company’s farm will have a capacity sufficient to produce in excess of 200,000 lbs. of vegetables per year.

Strawberries

The company’s more technical horticultural aspects include efforts to utilize traditional and more advanced plant technologies to produce new cultivars of crops such as strawberries and lima beans with locally-adapted superior characteristics for the Gulf-South growing area. Flavor, disease resistance, adaptability to green-house culture, fall and winter season production are factors being combined in greens cultivation to tap into the $2.99 pint berry market of the fall and winter.

Farmers Group’s strategy is a combination of the two technologies during the cool winter months which will allow the utilization of normally wasted space in the greenhouses for the high price winter greens production. This will allow double cultivation of the greenhouses with almost no additional heating necessary in this climate.

Future Products

In the meantime, the company would like to explore the possibilities of crayfish production. Farmers Group believes this to be a high revenue venture with retail prices running in excess of $15.00 per pound in most places. The company also believes that if crayfish production is successful then it could become the number one endeavor of Farmers Group.

Currently there is a defunct fish farming production facility with all the necessary capital equipment approximately two miles from the current farm. Purchase of this facility would allow Farmers Group to begin production and to capitalize on this higher margin product. What makes this most attractive is the two ventures have significant joint cost potential, allowing for a reduction in marginal costs for all products and creation of real economies of scale that would provide Farmers Group with a competitive advantage.

Milestones & Metrics

Milestones Table

Milestone Due Date
Legal terms laid out
Oct 09, 2020
Purchase/merger completed
Oct 09, 2020
Launch ready
Dec 09, 2020
Q1 review
Apr 18, 2021
Q2 review
July 18, 2021
Q3 Review
Oct 10, 2021
Q4 Review
Jan 09, 2022

Key Metrics

  • Sales and cost of sales
  • Greenhouse output by crop
  • overall output per crop
  • spoilage
  • Fertilizer usage
  • Water usage
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Company

Overview

Ownership & Structure

Farmers Group’s management team is led by Mr. James Jackson, Business Manager, and the current manager of Mobile Farmers Vegetable Farm, who has extensive knowledge of the industry and has been tracking vegetable trends for 30 years.

The company’s management philosophy is based on responsibility and mutual respect. Farmers Group has an environment and structure that encourages productivity and respect for customers and fellow employees.

Team

Management Team

Management will be responsible for supervising and participating in the daily operations of the facility. Management consists of:

  • James Jackson, Business Manager, Full Time
  • Terry Howard, Executive Director, Full Time
  • Kevin Perry, Management Trainee, 3/4 Time
  • Victor Green, Management Trainee, 1/4 Time

Daily Maintenance

This group will consist of the following:

  • Henry Jones, Logistical Engineer, Full Time
  • Colin Henry, Heavy Equipment, Full Time
  • Michael Owen, Welder, 1/2 Time

Personnel Table

2020 2021 2022
Business Manager $48,000 $48,960 $49,939
Executive Director $57,600 $58,752 $59,927
Logistic Engineer $45,600 $46,512 $47,442
Welder $19,200 $19,584 $19,976
Heavy Equipment $45,600 $46,512 $47,442
Trainee 3/4 $24,000 $24,480 $24,970
Trainee 1/4 $12,000 $12,240 $12,485
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Financial Plan

Forecast

Key Assumptions

Key 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.

However, our initial projections indicate profitability well beyond realistic expectations. We’ve added a substantial "other expense" category, especially as we get on our feet in the second half of year one, to allow for realistic expenses … even if we can’t categorize them exactly. Even with these "other expenses" we are still unusually profitable, but we believe that’s because of our innovative technology. 

Revenue by Month

Chart visualizing the data for Revenue by Month

Expenses by Month

Chart visualizing the data for Expenses by Month

Net Profit (or Loss) by Year

Chart visualizing the data for Net Profit (or Loss) by Year

Financing

Use of Funds

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 total is $1,830,000. The following is a breakdown of how the funds will be used:

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

 

Part of the $1,830,00 are the $684,600 startup expenses listed as net worth in Dec 2016. More details are: 

Legal $19,000

Facilities modification $300,000

Seed $600

Organic Herbicides/Pesticides $5,000

Consultants $25,000

Insurance $10,000

Research and development $25,000

Expensed equipment $250,000

Other $50,000

TOTAL START-UP EXPENSES $684,600

Sources of Funds

We will have four investors. Each investor has committed to giving us $250,000, totally $1,000,000. 

We will also have $400,000 in long term borrowing, we will have $400,000 in short term loan and $30,000 worth of bills to pay. 

Statements

Projected Profit & Loss

2020 2021 2022
Gross Margin $714,656 $841,800 $1,035,000
Operating Expenses
Salaries & Wages $252,000 $257,040 $262,181
Employee Related Expenses $50,400 $51,408 $52,436
Marketing $15,536 $18,300 $22,500
Gas and Oil $15,536 $18,300 $22,500
Utilities $15,536 $18,300 $22,500
Insurance $5,160 $5,160 $5,160
Other $63,500 $125,000 $250,000
Amortization of Other Current Assets $0 $0 $0
Interest Incurred $39,665 $23,228 $19,670
Depreciation and Amortization $25,000 $25,000 $25,000
Gain or Loss from Sale of Assets
Income Taxes $46,465 $60,012 $70,611
Total Expenses $590,942 $674,948 $842,558
Net Profit $185,858 $240,052 $282,442

Projected Balance Sheet

Starting Balances 2020 2021 2022
Cash $315,400 $54,576 $257,355 $520,604
Accounts Receivable $39,600 $54,900 $67,500
Inventory $150,000 $150,000 $150,000 $150,000
Other Current Assets $180,000 $180,000 $180,000 $180,000
Total Current Assets $645,400 $424,176 $642,255 $918,104
Long-Term Assets $500,000 $500,000 $500,000 $500,000
Accumulated Depreciation $0 ($25,000) ($50,000) ($75,000)
Total Long-Term Assets $500,000 $475,000 $450,000 $425,000
Accounts Payable $30,000 $32,299 $30,991 $49,519
Income Taxes Payable $11,517 $15,068 $17,720
Sales Taxes Payable $0 $0 $0
Short-Term Debt $445,898 $49,216 $52,774 $56,589
Prepaid Revenue
Total Current Liabilities $475,898 $93,032 $98,833 $123,828
Long-Term Debt $354,102 $304,886 $252,112 $195,523
Long-Term Liabilities $354,102 $304,886 $252,112 $195,523
Paid-In Capital $1,000,000 $1,000,000 $1,000,000 $1,000,000
Retained Earnings ($684,600) ($684,600) ($498,742) ($258,690)
Earnings $185,858 $240,052 $282,442

Projected Cash Flow Statement

2020 2021 2022
Net Cash Flow from Operations
Net Profit $185,858 $240,052 $282,442
Depreciation & Amortization $25,000 $25,000 $25,000
Change in Accounts Receivable ($39,600) ($15,300) ($12,600)
Change in Inventory $0 $0 $0
Change in Accounts Payable $2,299 ($1,308) $18,528
Change in Income Tax Payable $11,517 $3,551 $2,652
Change in Sales Tax Payable $0 $0 $0
Change in Prepaid Revenue
Investing & Financing
Assets Purchased or Sold
Investments Received
Dividends & Distributions
Change in Short-Term Debt ($396,682) $3,558 $3,815
Change in Long-Term Debt ($49,216) ($52,774) ($56,589)
Cash at Beginning of Period $315,400 $54,576 $257,355
Net Change in Cash ($260,824) $202,779 $263,248
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