Planning & General Business Information
Starting a new business enterprise or diversifying an existing operation in San Diego is a challenging task which requires extensive research and careful planning. Whether the business is in operation or just starting out, owners and/or managers need a business plan.
Having an established business plan will help identify weaknesses, strengths, and important issues that may be otherwise ignored or overlooked. It will give focus and direction, and serve as a road map that will help owners and managers concentrate on what is needed for the business to succeed. Most importantly, a good business plan acts as the deciding factor to whether or not your agricultural business is feasible before committing any resources.
| What is a Business Plan? |
| A business plan can be described as a document that tells the story of a business or enterprise. They are interactive documents that must be reviewed, updated, adjusted and fine-tuned regularly. Business plans may be presented in many different sizes and formats, depending on the type of plan and the type of business. However, in general, there are three commonly used business plan formats: the summary plan, the full business plan, and the operational business plan. They differ in length and detail depending on their intended use. |
What is a business plan used for?
There are two categories of uses for a business plan. The chart below outlines those uses.
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External Uses |
Internal Uses |
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Acquiring Information for Your Business Plan:
The first thing you need to do before you write a business plan is to assess your interests and your resources. This will help determine what you have, what you want, and how you may get it. The following format will provide a structure that can help you organize your ideas:
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List the skills and experiences of those involved with the business. |
Emphasize skills, abilities, and experiences that are related to the business or that will be useful for the operation of your agricultural business or new enterprise. |
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Inventory all resources available to start and operate the business.
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Documentation of acreage, soil type, topography, location, access, facilities, equipment, time, capital, labor, supplies, labor, and so much more are examples of the type of necessary inventory lists. It is also important to inventory the kind and amount of support/assistance that is available locally and how important these resources are to your specific operation. |
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Define the industry in which you wish to join and the direction you would like to take your business within that industry.
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Before a commitment is made and resources are used, it is important to establish the type of business you are getting into. These are some important questions to answer: Why do you want to start farming What business will you be in? What are your goals? What is your desired timeline? How will you achieve these goals? |
A clearly defined business or enterprise plan will be an aid as you research issues, market trends, niches, and other opportunities that may be relevant to your business and result in more efficient use of your resources.
| Business Plan Outline |
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The Executive Summary or Introduction Should provide a brief, detailed description of your business. It must hook readers to read the whole plan. This is the most concise version of your plan and should include and highlight the major points of your business, your products, marketing, management, experience, etc. If applying for a loan, the summary should include a statement requesting the funds and explanation for the need, the amount and intended uses for the loan. |
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The Business Charter This section should define your business and or the type of business you are in. Who are you? What is the purpose of your business? When are you going to begin operations or when are you going to reach your milestones? Where are you going to see your products? Why is your business being formed? Answers to these questions will help you develop a clear definition of your business and identify and set short, intermediate and long-term goals. |
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Products and Services Describe all crops, products or services you will be selling. Emphasize the unique features of your products and or value-added activities that make them stand out over the competition. What makes your product different and or better than the products of thousands of other farmers? Is it the production system, the soil, the origin, the standards for quality, the freshness, the ripeness or the packaging? What specific need, market window or market niche will your products fill? Describe the operating schedule, production and harvest calendar for all crops and products and the expected production volumes for each. |
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Markets and Marketing Identify and explain who the potential buyers are and who they will be in the future. Assess the need and demand for all the crops or products you will sell. Explain what the market is, its size, its location and important trends. Evaluate the competition and determine how segmented the market is. What is your targeted share of the market? How will you advertise and sell your crops or products? Will you use wholesale or conventional marketing methods or a combination of both? The marketing method(s) used will impact the strategy, distribution and the type of advertising or promotion you use with your crops, products or services. |
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Financial Information Prepare records, statements and or projections that describe the financial situation of the business. What resources are available? What are the sources for and the need for start up funds? Financial statements needed may include an income statement, cash flow statement and a depreciation schedule. For new businesses, personal financial statements and income tax information for the past 3-5 years may be required. Projected financial statements for a t least two years may also be needed. A monthly operating budget and a statement of cash flow may be required for the first year of operation. Projections must be consistent with actual performance or other estimates used for the business. Finally, if applying for a loan, a funding request should be included. It should indicate the amount of funds needed, justify the need and explain how the funds will be used. |
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Sales and Costs of Production Project sales and expenses for the first year of operation. Determine costs of production and break even analysis. Enterprise budgets may be a useful tool for estimating costs of production. Enterprise budgets for a variety of crops are available from UC Cooperative Extension offices. Estimate the cash flow fo the business. This will help identify the need for and timing for borrowed funds. It will also help determine the repayment capacity fo the business. Regardless of the reasoning, cash flow projections should provide a road map and a true picture of the surplus or deficit of the business. |
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Organization and/or Legal Structure The choice of legal structure may affect the actual cost of doing business, the operation and management of the business, the type and amount of taxes, and the level of exposure to risks and liabilities. It may also constrain the transfer of ownership for the farm business. This is a major issue for farms and agribusiness across the United States. Six types of legal structures are available, including sole proprietorships, general partnerships, limited partnerships, "C" corporations, "S" corporations and limited liability companies. Each has specific pros and cons depending on the type and size fo the business. You should contact your lawyer or accountant about the pros and cons for each. |
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Management Structure, Key Personnel and Operations Explain how the business will be managed on a day to day basis. Provide a description of the skills and experience of everyone involved with the business. Resumes for you and key family members and employees should be included. All duties and qualifications should be clearly stated, with emphasis placed on management or administrative responsibilities and chain of command. It may discuss hiring and personnel procedures, insurance needs, lease or rental agreements, equipment needs, production, delivery and any other issues pertinent to the business. |
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Concluding Statement This should summarize the business and the goals and objectives. This statement should also reiterate your commitment to the success of the business. |
Once the business plan is completed and you feel comfortable with the content and structure, review it and discuss it with your banker, if you are applying for a loan. If not, then start taking the necessary steps to make your business or new enterprise a reality. You must remember that business planning is a process and your plan should remain a flexible document that must be reviewed and updated as our business grows or local conditions change.