How to prepare a business plan for your farm

Set out your goals for the farm before your start – and get professional advice

Ist Published In Farming Independent 08/02/2022

Michael Brady.

Agricultural Consultant and managing director at Brady Group: Agricultural Consultants & Land Agents. The Lodge, Lee Road, Cork.

I know business plans are boring, but…………………………………………………………………………………………………………………….

In Brady Group, January and February of every year are spent with clients preparing Farm Business Plans for the coming year. This valuable document provides a road map for the year ahead and flags any speed bumps that may occur along the way.

However, before a composing a business plan, a farm business must have a ‘Strategy’ or ‘Clear Goals’ as to where the business is going. The following questions should be posed and answered:

  1. Is the current farming programme right for my holding and for me?
  2. How good is the physical and financial performance of the farm business?
  3. What actions am I going to take to change my situation?

If the client is comfortable with the existing goals and path for the farm business, it’s a good basis to commence the Farm Business Plan for 2022.

  1. Physical Plan

In a farm business one must always start with a physical plan. How many acres of land, how many livestock and what crops are planned? On a livestock farm such a plan will project the overall stocking rate and see if there will be enough fodder made for the winter of next year. If there is a shortage projected, decisions can be made early to reduce livestock or alternatively rent additional land.

The physical plan will also project milk yields, crop yields and livestock weight gains for cattle. Key Performance Indices (KPI’s) are an essential ingredient of any plan, but having accurate past performance data on grass grown and utilised, silage stocks, milk yields, crop yields, weight gains etc. enable much more accurate projections for the year ahead.

The physical plan for the farm business provides the basis for the financial plan. 

  • Financial Plan

The financial plan is effectively projecting the financial accounts for 2022 for a farm business.

The basic ingredients are the Profit & Loss Account, Source and Application of Funds and a Cashflow Statement.

Again, Key Performance Indices (KPI’s) with accurate past performance financial data help enormously with projecting the financial performance of the year ahead. The majority of this information is in previous years farm accounts. It is much better to project from your own financial accounts rather than standard farm profit figures, after all its your farm business you are projecting.

Some financially savvy farmers now have financial systems in place whereby their financial accounts are prepared on a monthly, bimonthly or quarterly basis, therefore they have upto date financial information on the farm business at all times. This is very powerful information for preparing or monitoring a farm business plan. Instead of looking at accounts which are two years out of date you are looking at real time financial information on your farm business.

 Whether your farm business is flying, coasting along or struggling, preparing a farm business plan forces you to examine your business, plan the year ahead and most importantly it provides peace of mind by clarifying that you are on the right path.

This country has many experienced consultants and advisors to help you in this process. Pick up the phone or send that email, you, your family and your business will be better for it.