Agriculture

Business Planning
Workbook

Propertyof:___________________

Rod Sharp and Jeff Tranel

Agricultural and Business Management Economists

Purpose of Workbook
Thisworkbookisdesignedtoprovideanoutlinefordevelopingabusinessplanforyour
agriculturalbusiness.Eachsectioncontainsanexplanation,exampleandspaceforyoutobegin
developingabusinessplan.Therearenumerousresourcespertainingtothedevelopmentof
businessplansavailable;itisthehopeoftheauthorsthatthisdocumentwillputyouonyour
waytoprepareabusinessplanforasuccessfulbusiness.

About the Authors

RodSharpandJeffTranel,authorsofAgricultureBusinessPlanningWorkbookareAgriculture
andBusinessManagementEconomistswithColoradoStateUniversity.Thehaveappointments
withColoradoStateUniversityExtensionandfacultyaffiliationwiththeDepartmentof
AgriculturalandResourceEconomics.RodandJeffhaveextensiveexperienceworkingwith
farmandranchfamiliesthroughoutColoradoaswellasnationalandglobalaudiences.

Colorado State University, U.S. Department of Agriculture and Colorado counties cooperating.
Extension programs are available to all without discrimination.

Table of Contents
PurposeofWorkbook.....................................................................................................................2
AbouttheAuthors..........................................................................................................................2
TableofContents............................................................................................................................3
CoverPage......................................................................................................................................5
ExecutiveSummary.........................................................................................................................7
BusinessDescription...................................................................................................................7
MissionStatement......................................................................................................................7
GoalsandObjectives...................................................................................................................8
PlanSummary.............................................................................................................................9
CapitalRequest(ifapplicable)..................................................................................................10
BusinessDescriptionSection........................................................................................................11
BusinessOverview....................................................................................................................11
LocationofBusiness..................................................................................................................11
Facilities....................................................................................................................................12
BusinessHistory........................................................................................................................13
OwnershipStructure.................................................................................................................15
OperationsSection........................................................................................................................15
ProductsandServices...............................................................................................................16
Licenses,Permits,andRegulations...........................................................................................17
RiskManagement.....................................................................................................................17
ImplementationTimeline.........................................................................................................19
MarketingPlan..............................................................................................................................20
MarketTrends...........................................................................................................................20
Customers.................................................................................................................................22
MarketingContracts.................................................................................................................22
StrategicPartners......................................................................................................................23
Pricing........................................................................................................................................23
Promotion.................................................................................................................................24
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Distribution...............................................................................................................................25
TargetMarkets..........................................................................................................................26
CompetitiveAdvantage............................................................................................................27
ManagementandOrganization....................................................................................................29
ManagementTeam...................................................................................................................29
BoardofDirectors.....................................................................................................................30
AdvisoryBoard..........................................................................................................................30
PersonnelPlan..........................................................................................................................31
ProfessionalServices.................................................................................................................32
FinancialPlan................................................................................................................................33
FinancialPositionandHistoricalPerformance.........................................................................33
FinancialProjections.................................................................................................................34
AssetManagement...................................................................................................................35

Sourceofinformation:AgPlan:TheAgriculture,Fisheries,andSmallBusinessPlanningWebsite,
https://www.agplan.umn.edu/,20072010CenterforFarmFinancialManagement.Regents
oftheUniversityofMinnesota.(800)2341111

Cover Page

Nameofyourbusiness
Contactinformation
o Names,address,telephone,cellphone,fax,emailaddress
Dateprepared
SampleCoverPage:

YourCoverPageDesignIdeas:

Executive Summary

BusinessDescription
MissionStatement
GoalsandObjectives
PlanSummary
CapitalRequest

Business Description
Provideabriefdescriptionofthefarm,ranch,andotheragriculturalrelatedbusiness.
o Fewsentencesthatwillhelpreaderstounderstandwhatyouproduce,sizeof
youroperation,andhowyoumarketyourproducts.
SampleBusinessDescription:
Lakeshore Orchardis a seasonal rural business in Hector, New
York.Lakeshore orchardproduces apples and pumpkins and provides
entertainment,meals, and shopping during the autumn season.Lakeshore
was started in 1998 byKelly and Steve Miller, who have the vision of
makinglakeshore the bestfall family experience in New York'sFinger Lake
region.

YourBusinessDescription:

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Mission Statement
Describethepurposeofyourbusiness.
o Whatyoudo.
o Whyyoudoit.
o Forwhomyoudoit.
Identifyyourproducts,services,andcustomers.
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MissionStatementSample:
Our mission is to produce a healthy and safe food product, maximize
profitability,andmaintainourruralheritage.Itisimportantforustoprovide
a quality product and agricultural education for the tristate farm market
consumer. Building on our strong reputation, we will continue to grow our
businessandourpeopletoensurelongtermsuccess.

YourMissionStatement:

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Goals and Objectives
Describeyourgoals.
o Useclearstatementsofwhereyouwanttobeafteraperiodoftime(shortterm,
intermediateterm,andlongterm).
o GoalsshouldbeSMART(Specific,Measurable,Achievable,Relevant,andTime
Bound).
GoalsSample:
SteveandKellyMillerhavemadeittheirgoaltoincreasesalesandrevenue
by makingLakeshore the most unique and surprising entertainment and
shopping venue. In 1998, the Upick orchard opened. Soon, hay rides
andcorn mazes were added. By 2005, a retail store had been built. Now,
in2008,SteveandKellyarelookingtowardthefuturebyaddingaproduction
greenhouse.SpecificgoalsthatSteveandKellyhaveare:

Increasegrossrevenuetoover$1,500,000by2012throughexpansion
andinnovation.
Provideasafe,enjoyableenvironmenttoallwhovisitorworkfor
LakeshoreOrchard.
KeepLakeshoreaseasonalbusinesssothatSteveandKellycanstillhave
somepersonaltimewiththeirfamily.

Havetheeconomicandmanagementabilitytopassthebusinessdownto
thenextgenerationbythetimeSteveandKellyturn65.

Setclearobjectives(therequiredactionstoachieveyourgoals).
o Prioritizeyouactionsandactivities.
o Identifyanyadditionalresourcesrequiredtoaccomplishyourobjectives.

YourGoalsandObjectives:

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Plan Summary
Developabriefsummaryofyourbusinessplan.
o Summarizeanyplannedchangestothebusiness.
o Summarizeyourmarketingandfinancialplans.
o Clearlystatewhyyourplanwillbesuccessful.
PlanSummarySample:
The purpose of this plan is to secure funding for Lakeshore Orchard's next
expansion:a10,000squarefootgreenhouseforornamentalcropproduction.
The financials will show that this is a feasible plan, saving production costs
whileprovidinganothersourceofrevenue.Thisexpansionisconsistentwith
ourgoalstokeepLakeshore'sproductsfreshandexciting,asitwillprovidean
opportunitytooffercustomersmoreuniquechoices.

YourPlanSummary:

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Capital Request (if applicable)
Acquiringadditionalcapitalisacommonreasonfordevelopingabusinessplan.
Clearlyexplainyourbusinessideastopotentiallendersand/orinvestors.
Documenthowmuchmoneyyouwillneed.
Identifythepurposeofthefunds.
CapitalRequestSample:
The amount of capital requested is $100,000 in addition to the credit lines
andequipmentloansthatLakeshoreOrchardisalreadypaying.Thepurpose
oftherequestistopurchasea10,000squarefootgreenhouseforornamental
cropproduction.

YourCapitalRequest:

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Business Description Section

BusinessOverview
LocationofBusiness
Facilities
BusinessHistory
OwnershipStructure

Business Overview
Identifywhatcropandlivestockenterprisesyouproduceorwillproduce
Describewhatproductsyouwillsell.
Describewhatservicesyouwillprovide.
Describethesizeofyourbusinessandthenumberofemployees.
BusinessOverviewSample:
Lakeshore Orchard is a seasonal agritourism business offering youpick
applesandpumpkins,hayridesandcornmazewalks,aswellasretailingfall
perennials,decorativeitems,andbakedgoodsduringtheautumnseason.

YourBusinessOverview:

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Location of Business
Clearlydescribethelocationofthefarmorranch.
o Mayconsiderincludinglegaldescriptions.
Describeanybusinessadvantagesyourlocationmayhave.
LocationofBusinessSample:
Lakeshore Orchardislocated half way up the east side of Seneca
Lake. Hector, New York, has been a farming communityfor well over 200
years and has a rich history in orchards, vineyards, and livestock
production.Businesscorrespondenceshouldbeaddressedtothefollowing:

LakeshoreOrchard
6ShadyHillLane
Hector,NewYork14841
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YourBusinessLocation:

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Facilities
Describethesize,type,andqualityofyourfacilitiesandequipment.
FacilitiesSample:
Realestate:Theorchard,pumpkinpatch,cornmaze,andretailstoresitona
totalof40acresoffamilyland.Theappleorchardisapproximately20acres,
thecornmazeandhayridestakeuproughly10acres,andthepumpkinpatch
andretailstoreareboth5acreseach.
Retail shop: The 4500 sq. ft. retail shop is a newly completed onestory
woodenstructure.3000squarefeetdedicatedtotheretailstore.
Greenhouse: It is hoped that within the next year,Lakeshore Orchardwill
constructanew10,000squarefootgreenhouse.
Productionequipment:Orchardtractorsandwagonsareingoodrepair.The
besttractorsandwagonsarereservedforthehayrides.Theremainingfield
cropequipmentisoldbutwellmaintained.

YourFacilities:

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Business History
Describehowthebusinessstartedandhowlongyouhaveownedand/ormanagedit.
Identifywhatimportanteventsandchangeshaveoccurred.
o Ownershipchanges
o Farmsizeorstructure
o Sales
o Profitability
o Challenges
BusinessHistorySample:
AlotofefforthasbeenexpendedtomakeLakeshoreOrchardthebusinessit
is today. The business idea began when Kelly Miller inherited the private
residence and property, including the nonworking orchard, from her Great
Aunt.

SteveandKellybeganrestoringtheappleorchardinMayof1998.Theapple
orchard needed to be renovated and planted into newer, more appealing
varieties. It took approximately six years and $40,000 to bring the orchard
back into full production. The first Upick customers started arriving in
Septemberof2004.Inadditiontopickingtheirownproduce,customerscould
enjoyahayrideorawalkthroughacornmaze.
It was soon obvious that the fastest growing profit center in the produce
business was the addon retail items. Items such as pie plates and mixes,
apple corers and peelers, and Halloween items were big sellers with big
margins. Construction of the retail shop was completed before the 2005
autumn season, costing approximately $200,000. The new retail space not
onlyhousesthetraditionalfallitems,buthasbeenexpandedtoincluderetail
giftsfortheholidayssuchascandles,stuffedanimals,preservedfoods,and
candies.Afterthreeyearsofsalesinthenewretailstore,werealizethatthis
was one of the best moves that we could have made to contribute to our
businessgrowth.

Lookingtowardthefuture,weplanonbuildinganewgreenhousein2009to
produce most of our fall perennials and chrysanthemums. This space could
alsobeusedtogrowotherproductsthataretypicallyboughtintoberesold.

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YourBusinessHistory:

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Ownership Structure
Describetheownershipandlegalstructureofthebusiness.
Describewhytheownershipstructurewasselected.
OwnershipStructureSample:

Lakeshore Orchard is owned and operated by Steve and Kelly Miller. The
business is structured as a Limited Liability Company (LLC) with Kelly and
Stevebeing50%member/owners.

TheLimitedLiabilityCompanyonlyholdstheassetsneededforthebusiness
operations (machinery, equipment, and inventory). All the real estate and
buildingsareownedpersonallybySteveandKellyandrentedtotheLLC.This
limits the amount of assets exposed to liabilities arising from business
activities.
YourOwnershipStructure:
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Operations Section

ProductsandServices
ProductionSystem
CustomerService
InventoryManagement
Licenses,Permits,andRegulations
PatentsandTrademarks
RiskManagement
EnvironmentalIssues
QualityControl
ImplementationTimeline

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Products and Services

Provideashortdescriptionoftheproductsyouproduceandservices(customwork,
huntingleases,andagritourism)youprovide.
o Describetherelativeimportanceofeach.
ProductsandServicesSample:
Products:
Apples:Lakeshore offers ten different apple varieties: Mcintosh, Cortland,
Rome Beauty,Northern Spy, Honey Crisp, Mutsu, Gala, Golden Delicious,
GrannySmith,andEmpire.ApplesaresoldviaUpickandattheretailshop.
Pumpkins:Lakeshoreretailshopcarriessixdifferentvarietiesofornamental
pumpkins,pumpkinpiepumpkinsanddecorativegourds.Pumpkinsaresold
bothintheretailshopandUpick.
Services:
Corn maze walks:Lakeshore Orchardhires a top notch corn maze design
companytodesignitsmazeseveryyear.Whilethiscostsextra,itreallyadds
excitement.Lakeshore offers walks through its corn maze up until
Halloween.This is a rapidly growing segment of sales for Lakeshore.
Hay rides and haunted hay rides:Lakeshore Orchardwas rated the scariest
haunted hay ride three years in a row.For thosethat are more faint of
heart,Lakeshoredoesofferahayridearoundthefarmandthroughtheapple
orchard.

YourProductsandServices:

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Licenses, Permits, and Regulations

Listallthelicensesandpermitsrequiredtodobusiness.
o Agency.
o Theprocessandrequirements.
o Costandtiming.
Licenses,Permits,andRegulationsSample:
Business permits: The filings for the LLC are in place with the New York
DepartmentofState.
Foodservicepermits:Inordertosellpreparedfood,Lakeshoreorchardneeds
tokeepafoodprocessingpermitaswellasaNewYorkStateDepartmentof
Healthfoodservicepermit.
Other regulations:Lakeshore Orcharddoes not offer a petting zoo or
exposure to farm animals. If this is something that we decide to offer in
thefuture,wewillneedtohavealicenseforthis"pettingzoo"aspect.

YourLicenses,Permits,andRegulations:

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Risk Management
Describetherisks(production,financial,market,human,andlegal)associatedwithyour
agriculturalbusiness.
Describethetools,methods,andstrategiesformanagingyourrisks.
RiskManagementSample:
The most critical areas of risk faced by Lakeshore Orchard are legal,
production,andmarketrelatedrisks.
Legalriskmanagement:Probablytheriskiestpartsofouroperationarethe
customersbeingonthefarm.Justonecustomergettinghurtcouldseriously
jeopardizeLakeshoreOrchard'soperation.ThatiswhyLakeshoreisorganized
as a Limited Liability Company funded with very few assets. Lakeshore also
holds a farm liability insurance policy with a three million dollar umbrella.
Mostofall,LakeshoreOrchardsstrivestoenhancesafety.Wehaveplanted
dwarf and semi dwarf apple trees to avoid the use of a ladder for Upick
customers. The farm is kept free of debris and unnecessary equipment.
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Productionrisk:thetraditionalcropsgrownonthefarmareprotectedbycrop
specific insurance policies (apples, vegetable crops, and field crops). The
specialty crops and greenhouse crops are covered by the Farm Service
Agency'sNonInsuredAssistanceProgram(NAP).
Market risk: a cold and rainy autumn can really be bad for business
sometimes cutting the annual revenue in half. That is why we purchase a
grossrevenueinsurancepolicy(AdjustedGrossRevenue)toprotectagainsta
drasticlossofrevenueduetoweather.

YourRiskManagementPlan:

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Implementation Timeline
Describehowandwhenmajoraccomplishmentsmusttakeplacetoimplementyour
plan.
o Whendoyouexpecttobegin?
o Whenareaccomplishmentsexpectedtobecompleted?
o Whowillberesponsibletocompletethestepsnecessarytomeettimelines?
ImplementationTimelineSample:
Theimplementationtimelineforthechangesproposedinthisbusinessplan
areasfollows:
Phase I: Design Greenhouse (Present): Steve and Kelly have already paid a
LEED(LeadershipinEnergyandEnvironmentalDesign)accreditedarchitectto
designthegreenhouse.
PhaseII:BuildGreenhouse(Autumn2008Spring2009):Oncesecuringthe
financing for the project, it is hoped that the building will be completed by
Springof2009.ThiswillallowustostartFullProductionintimeforthe2009
autumnsalesseason.
PhaseIII:FullProductioninGreenhouse(Autumn2009):Thegreenhousewill
beopenforfullproduction,sales,andtoursfortheautumn2009season.
Itiscriticalthatthesetimelinesaremet.Iffinancingcannotbeobtainedby
theendof2008,itisexpectedthatLakeshoreOrchardwillhavethecapability
tosecurealeaseforthegreenhousestructureandstillbeabletohaveitbuilt
byspringof2009.Theleaseisnotasappealing,asitwouldtieupmorecash
duetothequickerpaybackperiodversusaloan.Whileaffordable,thiscash
crunchmaystiflegrowthinotherareasofthebusiness.

YourTimelines:

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Marketing Plan

MarketTrends
Customers
MarketingContracts
StrategicPartners
Pricing
Promotion
Distribution
TargetMarkets
CompetitiveAdvantage

Market Trends
Describethemarkettrendsofyourprimaryproductsandservices
o Whatopportunitiesdoesthisopenupforyourbusiness?
o Whatthreatsorchallengesdoesitcreateforyourbusiness?
Whatchangesmightbeonthehorizonforyourmarkets?
Willconsumerdemographics,technologicalinnovations,globalization,laboravailability,
legislativechanges,foodconsumptionpatternsorhealthandfoodsafetyissueschange
themarketforyourproductsandservices?
Isconsumerdemandgrowingorshrinking?
MarketTrendsSample:
The primary consumers that visit Lakeshore Orchard are local families with
children that drive from as far away as Rochester and Syracuse. The next most
commonvisitoristheFingerLakestourist,whoispredominantlyfromNewYork
City,NewJersey,Pennsylvania,andOhio.
TourismtrendsintheFingerLakes:TourismisontheincreaseintheFingerLakes
with the increase in fuel prices and more travelers choosing to take short
distance trips rather than fly to outofstate vacation destinations. Wine tours
offervisitorsaninexpensivewaytofeelasenseofescape.Hectorandtheeast
sideofSenecaLakeareseeinganincreaseinitsnumberofwineries.Anorganic
brewery and distillery are expected to open in 2009. In August of 2008, a four
starhotelopenedindowntownWatkinsGlen.Hotelsalesstaffwillbetouringthe
state as well as Pennsylvania and parts of Canada near the New York State
border to promote the hotel and the Finger Lakes as a yearround destination
spot.
PermanentresidencetrendsonSenecaLake:WiththegrowthoftheFingerLakes
wineindustry,thedemographicsofresidentslivingonSenecaLakeisexpectedto
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change with more higherincome residents moving into the area. Realestate
prices for properties on the water are increasing with more people from New
YorkCityandNewJerseypurchasinghomes.
Agritourism trends: Currently in Hector, New York there are three farm stands
within the same niche as Lakeshore Orchard produce sales (except for apples).
Onefarmsellsprimarilypumpkinsandmums.Onestandsellspumpkins,fruits&
vegetables, and fall decorative items, and the last sells pumpkins, and Finger
Lakeslogoclothing.NostandisaslargeasLakeshoreoroffersasmanyproducts
and services. Most importantly, no other market offers the entertainment or
ready to eat food offerings. No other stands are expected to open in the near
future,andnonearepromotingtheirbusinessesonthelevelthatLakeshoredoes.
Generalfreshapplemarkettrends:AccordingtoamarketingstudybyTheHale
Group,GetachewAbateandChristopherPetersonfoundthattherewereindeed
broadopportunitiesinthefreshapplemarket.Infact,fruitconsumptionisonthe
rise;growingbydoubledigitsinthelastfewyears.Ithasbeentheprocessedfruit
segmentsofthemarketthathavedeclinedorremainedflat(i.e.fruitjuices,cider,
cannedfruit).Themarketopportunitiesforfreshfruitaremainlybasedonaccess
to marketing channelsgetting the product to the retail store. Lakeshore's U
pick and fresh fruit sales are one of the only markets of its kind in the Finger
LakesandLakeshoreislookingtocapitalizeonthesemarkettrends.

YourMarketTrends:

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Customers
Whoarethecustomersforyourprimaryproducts?
Doyouanticipatecustomerschangingandifso,whatarethecharacteristicsabout
thesenewcustomersthatmustbefactoredintoyourmarketingplan?
Whatopportunitiesdoesthisopenupforyourbusiness?
Whatthreatsorchallengesdoesitcreateforyourbusiness?
Inthissection,demonstrateyouhaveastrongunderstandingofyourcurrent
and future customers and have designed a marketing plan capable of
effectivelytargetingandsellingtothosecustomers.

YourCustomers:

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Marketing Contracts
Describecontractsthatyouhavetoproduceandmarketproductswithprocessors,
otherproducers,valueaddedventures,orretailmarkets.Ifyouprovideservices,
describecontractsthatyouhavetodeliveryourservices.
Aretherenewcontractsthatyouneedtoestablishtoproduceyourvalueadded
productsorservices?
Whatproductsdoyouproduceoncontractandwhatportionofyourproductionin
undercontract?
Doyouproduceproductsthatarenotundercontract,andifso,whatpercentofyour
grossrevenueisderivedfromcontractproduction?
Whatarethetermsofyourcontracts?Howlongarethey,howmanyyearshaveyou
hadthem,andhowmuchlongerarecurrentcontracts?Arethetermschangedmuch
whenthecontractisrenegotiated?
YourMarketingContracts:
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Strategic Partners
Describeanystrategicmarketing,purchasing,distribution,promotion,ordevelopment
alliancesandhowimportantaretheytoyourbusiness.
Describehowtheystrengthenyourpositionintheindustryandifyouaredependenton
themforyoursuccess?
Aretherenewstrategicalliancesthatyouwanttoestablish?
Strategic partnerships can be formal or informal. In some cases, you might
thinkofyourlender,suppliersormajorcustomersasstrategicpartners.

YourStrategicPartners:

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Pricing
Listthepricesthatyouchargeforyourprimaryproductsorservices.
Describewhyyouchargetheseprices(yourcostofproduction,marketpriceof
comparableproductsorservices,etc.).
Describehowyourpricescomparetocompetitiveproductsorservices.
Tellhowyourpricesprovideyouwithasatisfactoryprofitmargin.
Describeanycontractsthatlockinpricesforaperiodoftime.
Canyoucapturepremiumpricesbasedonhighquality,limitedavailability,orspecial
nicheproducts?
PricingSample:
LakeshoreOrchard'sproduce:Productdifferentiationisthekeyandwithfood
products, this can be difficult. So with farm produce, Lakeshore has to
competeonprice.Thepricesonthefoodproductsaregenerally10%below
the competition because Lakeshore can move more volume with lower
overheadcoststhanitscompetition.Also,thecheaperfoodproductsareused
asadrawtogetpeopleontothefarm.Then,itisuptoLakeshoretosellthem
somethingofhighervalue.
Lakeshore's ornamental products: The ornamental products (mums,
pumpkins, perennials) are priced in line with the competition. While the
selection is better on these items, there is not a large quality difference
becausetheseitemsarepurchasedofffarmandcanbereadilyavailableto
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thecompetitionaswell.Again,theconstructionofthegreenhousewillallow
Lakeshoretodifferentiateitsornamentalproductsandchargehigherprices.
Lakeshore'sretailshop:Lakeshoredoesnothavetocompeteonpriceforthe
giftshopaspectsofitsbusiness.Infact,Lakeshoreisplanningonincreasing
therevenuefromthissideofthebusiness,asitisexpectedthatproducesales
willnothavethepotentialtoincreaseasrapidly.Thekeyfactorsforthegift
shoparetokeepinventoryfreshalwaysoffersomethinguniquethatcannot
befounddownthestreet.Thedisplaysinthegiftshoparealwayschanging
andbeingupdatedforthechangingseason.KellyMiller'sartistictalentsare
themainreasonwhythisgiftshopperformssowell.

YourPricingPlan:

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Promotion
Describehowyouwillpromoteyourproductorservices.Yourpromotionplanwillbe
differentifyouhaveanestablishedmarketandnamerecognitioncomparedto
promotingnewproductsorstartinganewbusiness.
Describehowpotentialcustomerswillbecomeawareofyourproductsandservices.
Ifyouareanestablishedbusinessseekingtoexpandsales,describehowyouwillutilize
yourexistingreputationandcustomerbasetocreateabrandimagetopromoteyour
business.
Describehowyouusepromotionalpricingstrategies:volumediscounts,introductory
pricing,limitedtimepricing,frequentbuyerprograms,orcoupons?

24

Ifyouuseadvertising,identifywhatmediawillyouusetoadvertise;flyers,direct
mailings,tradeshows,newspapers,magazines,radio,TV,other.
Willyoudoyourownpromotionorwillyouhireanoutsidefirmtohelpyou?
PromotionSample:
There are two keys to Lakeshore Orchard's promotional strategy. First, get
the customer to visit the farm. Second, get the customer to buy something.
Therefore, the two metrics that Lakeshore monitors closely are customer
counts (daily, weekly, monthly) and the average transaction size for each
customer. The basic promotional strategy is to continually advertise in key
markets to get customers onto the farm. This includes road signage,
newspaperadvertisements,andsomeradiospots.Brochuresarealsoplaced
ineverywineryonthewinetrail.Oncethecustomerisonthefarm,itisupto
Lakeshore's product selection, displays, and the retail skills of the staff to
convincethecustomertospendmoremoney.

YourPromotionPlan:

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Distribution
Describehowyoudistributeyourproductorservicestoyourcustomers.
o Doyoudistributetowholesaleorretailmarkets?
o Geographicallydoyoudistributeyourproductslocally,regionally,nationally,or
internationally?
o Docustomerscometoyourlocationordoyoudeliveryourproductorserviceto
them?Doyouhavearetailbuilding?Cancustomersorderproductsfromyou
online,byphone,orbymail?Ifyoutakeorders,howfastdoyouprocessorders
anddeliveryourproduct?
o Doyoudirectmarketyourproductstocustomersusingmethodssuchas
farmersmarkets,pickyourown,roadsidestands,ordirectorders?
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o Areyoupartofacooperative?
o Doyouhavedistributionagreementswithwholesalers,distributors,retailers,or
brokers?
YourDistributionPlan:

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Target Markets
Describeyourtargetmarkets.
o Isamarketsegmentlargeenoughtojustifytargetingitasoneofprimary
markets?
o Isitanemergingorgrowingmarket?
o Howmuchcompetitionistheretryingtomarkettoaparticularmarketsegment?
TargetMarketsSample:
Lakeshore Orchard's food service: the food service segments of Lakeshore
businessaretargetedtotwodifferentcustomers.Firstthereisthewinetrail
customer that is in a hurry to visit as many wineries as possible and wants
somethinggoodtoeatthatisconvenient.Forthiscustomer,Lakeshoreoffers
wine trail picnic baskets with Lakeshore's apples, cheese, salami, and fresh
made bread. The other typical customer is the customer who is visiting
Lakeshorefortheentertainmentandwantssomethingtoeatwhiletheyare
enjoyingthemselves.Thefoodproductshaveveryhighmarginsandcontinue
to be a very profitable part of Lakeshore's business. There is no direct
competitionforLakeshore'sfoodserviceitemsatthispointintime.
Lakeshore's entertainment services: Hay rides and haunted hay rides are
unique to the area and provide fun for the whole family. Without a doubt,
entertainment services are the highest margin item in Lakeshore's product
mix. Lakeshore Orchard will continue to research and provide more
entertainmentitemsinthefuture.
Generating Long Term Sales and Customers: Lakeshore tracks all of its
customerdatathroughitspointofsalesoftwareandmailinglists.Over70%
ofLakeshoreOrchard'scustomersarerepeatcustomers.Exemplarycustomer
serviceiskeytoallaspectsofmakingLakeshoresuccessful.Thefactthatwe
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are a family owned and operated business helps with this. Everyone that
worksatLakeshoreOrchardknowsthatthesuccessofthebusinessandthe
livelihoodoftheMillerfamilyisdependentonthecustomerbeinghappy.

YourTargetedMarkets:

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Competitive Advantage
Describeyourcompetitorsandhowwellyoucompetewiththem.
o Areyourproductsdifferent?
o Doyouproduceatalowercost?
o Doyouhavebetterdeliveryorcustomerservice?
o Doyouhavebettermarketaccess?
o Doyouhavebetterbrandrecognitionorcustomerloyalty?
Describeyouruniquestrengthsandweaknesses.
o Whatstrengthscanyoucapitalizeonandwhatweaknessesdoyouneedto
address?
o Whywillyousucceedwhilecompetinginyourmarket,whetheritisalocal
marketoraglobalenvironment?
Listwhatyourcompetitorsaredoingthatcreateschallengesforyouandhowareyou
respondingtoremaincompetitiveandsuccessful.
o Consideryourproductionefficiencies,location,facilities,financialcondition,
alliances,partnerships,marketingchannels,employees,management,and
family.

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CompetitiveAdvantageSample:
Lakeshore Orchard's competitive advantage in produce and plants: Price,
service, and product differentiation: Lakeshore Orchard has very little
overhead. The retail store is currently run on the location of the Miller
residence.Mostlyfamilylaborandmanagementareusedaswell.Thisallows
Lakeshore to charge more than 10% less than its competition (Perry's
PumpkinPatch).
For the competition that competes with Lakeshore Orchard on price (i.e.
WallyMart),Lakeshorehasadjusteditsproductmixtoincludeverylittleof
theofferingsthatmightbefoundatWallyMartinWatkinsGlen.Inaddition,
Lakeshoreprovidesadviceonhowtoplanttheirperennialsandfamilyrecipes
for their produce products. After 10 years of doing business in the area,
customerstrustLakeshoreOrchardtoprovidethemwithqualityproducts,a
funafternoon,andqualityplantsthatwillthriveintheirgardens.
Theadditionofthegreenhousewillbecriticaltomaintainingthiscompetitive
advantage, as the quality of the plants offered at Lakeshore can be more
closelycontrolled.Inaddition,itisalwaysmoreappealingtobuyaplantfrom
the location it was growninstead of knowing it was shipped in from
somewhereelse.
Lakeshore Orchard's competitive advantage in food service and
entertainment: As mentioned before, no other farm market in the area
provides entertainment or ready to eat food on the scale of Lakeshore
Orchard.ThereasonwhythisissopopularisthattheWineTrailonSeneca
Lakeoffersverylittlereadytoeatfoodthatisconvenient.Thereareupscale
restaurants,butmanyfamiliesandtouristspreferthepicnicstylefoodtothe
sitdownrestaurantenvironment.

YourCompetitiveAdvantages:

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Management and Organization

ManagementTeam
BoardofDirectors
AdvisoryBoard
PersonnelPlan
ProfessionalServices

Management Team
Listthemembersofyourmanagementteam.
Brieflydescribetheirqualificationsandtheirmanagementroles.
Describethemajormanagementfunctionsinyourbusinessandanygapsthatneedto
befilled?
Identifyhowmanagementwillchangeasthebusinessgrowsandexpands?
ManagementTeamSample:
The Key Management Personnel:

GeneralManager:SteveMiller
10yearsexperiencemanagingLakeshoreOrchard
Worked15yearsatKraftFoodsinProductionManagementand
QualityControl
Worked15yearsonthefamilyfarmwhileinhighschoolandcollege
GraduateofOhioStateUniversityinbusinessmanagement
RetailStoreandEmployeeManager:KellyMiller
17yearsexperienceinretailstoremanagement(10yearsat
Lakeshore)
9yearsexperiencemanagingemployeesinthesolidwasteand
constructionbusiness
Workedonthefamilyfarmfor15yearswhileinHighSchooland
College
GraduateofSUNYPlattsburginRetailMarketing
Business/AccountingManager:TinaHalpin
1yearcourseofmerchandisinganddisplay
11yearsexperienceinflowerandshrubbusiness
SecretaryforKelley'sIslandWineCompanyfor15years
7yearsatKraftFoodsInvolvedinmeetingsandsecretarialwork
CompletedProvenWinnersCertifiedGardenCentertraining

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YourManagementTeam:

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Board of Directors
Ifyouareacorporation,listtheboardmembers,theiraffiliations,andthestrengths
theybringtoyourbusiness.
Describehowtheboardfunctionsandhowitparticipatesinoroverseesthe
managementofthebusiness.
Ifyoudonotcurrentlyhaveaboardofdirectors,butintendtohaveoneinthefuture,
describethequalificationsyouwillseekinboardmembers.
YourBoardofDirectors:
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Advisory Board
Ifyouhaveanadvisoryboard,listtheboardmembers,theiraffiliations,andthe
strengthstheybringtoyourbusiness.
Describehowtheboardfunctionsandhowitcontributestothebusiness.
Ifyoudonotcurrentlyhaveanadvisoryboard,butintendtohaveoneinthefuture,
describethequalificationsyouwillseekinboardmembersandhowyouenvisionthe
boardfunctioning.

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YourAdvisoryBoard:

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Personnel Plan
Listthemajortasks,includingoperations,marketing,andfinancialthatmustbe
accomplishedinyourbusinessanddescribewhoisresponsibleforeachtaskorhow
manyemployeesworkineacharea.
Ifyourbusinessplanincludesmakingmajorchangestothebusinessthatwillrequire
newpositionsorfunctions,talkabouthowyouplantofillthesepositions.Howwillyou
findorrecruitemployeestofillthesepositions.
Describeyouremployeemanagementplan.
o Jobdescriptions,compensationplans,incentiveplans,employeehandbooks,
trainingprocedures.
Describewhatyoudotoattractandretaingoodemployees.
PersonnelPlanSample:
GeneralStaffingPlan:
FamilyEmployees:
LoriMillerparttime
JodiMillerparttime
SamanthaMillerfulltime
TimothyMillerfulltime
TinaMillerparttime
Belowistheestimatednonfamilystaffingneeds:
Food Service: 3 part time employees 2 full time employees
Entertainment: 3 part time employees 2 full time employees
RetailSales:2parttimeemployees3fulltimeemployees
NewGreenhouse:20091parttimeemployee
Allofthenonfamilymembersarerepeatemployeesthatlivelocally.We
maketheworkingenvironmentsofunthatmanyofouremployeeshave
been working with us for the entire 10 years that we have been in
business.Forthoseemployeesthatleavetogotocollege,etc.,weoften
haveareplacementlinedupwithindays.

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It is hoped that one of Steve and Kelly's five children will eventually be
interestedinjoiningthecompanyasowners.Atthispointintimeitistoo
earlytotell,asallfivechildrenarestillinhighschoolandcollege.

YourPersonnelPlan:

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Professional Services
Listanyprofessionalservicesorconsultants,likecustomoperators,accountants,tax
preparers,financialplanning,cropscouting,nutrition,andveterinariansthebusiness
mayhire.
o Describetheirfunctions.
Ifyouarestartingorexpandingabusiness,youmaywanttolisttheareaswhereyou
anticipateneedingtohireprofessionalservicesorconsultants.
ProfessionalServicesSample:
Lakeshoreusesthefollowingprofessionalservices:
Accounting:JoeChiappone,CPA.1031WestLakeRoad,Hector,NY.
Legal:JeffFetteroftheScolaroLawFirm.501PlumStreet,Syracuse,NY.
Tax:AmyNemitzatFarmCreditofWesternNewYork.1450Route14,
Phelps,NY.

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YourProfessionalServices:

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Financial Plan

FinancialPosition
HistoricalPerformance
FinancialProjections
AssetManagement
Benchmarks

Financial Position and Historical Performance

Describethefinancialpositionofyourbusinessintermsofliquidity.
o Discussyourliquidassets,cashreservesandhowyouuseoperatingloans.
o Calculateyourcurrentratioandworkingcapital.
o YourLiquidityMeasuresforthepastthreeyears:
CurrentRatios:
__________ __________ __________
WorkingCapital
__________ __________ __________
o LiquidityBenchmarks:
LowRisk
MediumRiskHighRisk
CurrentRatio
>1.5
1.01.5
<1.0
WorkingCapital
willvaryprimarilyduetofarmsize
Describethefinancialpositionofyourbusinessintermsofsolvencyandyourabilityto
withstandfuturerisks.
o Calculateyourdebttoassetratio.
o Howhasyournetworthchangedinthepastthreeyears?
o Yoursolvencymeasuresforthepastthreeyears:
Debt/AssetRatio: __________ __________ __________
NetWorth
__________ __________ __________
o SolvencyBenchmark
LowRisk
MediumRiskHighRisk
Debt/AssetRatio
>30%
3070%
>70%

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Describethefinancialpositionofyourbusinessintermsofprofitability.
o Discusstheprofitabilityofyourbusinessandwhichenterprisesweremost
profitable.
o Calculateyourreturnonassetsandnetfarmincome.
o Yourprofitabilitymeasuresforthepastthreeyears:
ReturnonAssets: __________ __________ __________
NetFarmIncome
__________ __________ __________
o ProfitabilityBenchmarks:
LowRisk
MediumRiskHighRisk
ReturnonAssets
>5%
15%
<1%
Describethefinancialpositionofyourbusinessintermsoffinancialefficiency.
o Calculateyourassetturnoverratio,operatingexpenseratio,andinterest
expenseratio.
o YourfinancialefficiencymeasuresforthePast3Years:
AssetTurnover:
__________ __________ __________
OperatingExpense __________ __________ __________
InterestExpense
__________ ____________________
o EfficiencyBenchmarks
LowRisk
MediumRiskHighRisk
AssetTurnover
dependsonthetypeofoperation
OperatingExpense <70%
7085%
>85%
InterestExpense
<10%
1020%
<20%
Explainanymajorchangesinthetrendsoverthepastfewyears.
o Explainwhatadjustmentswillbemadetoimprovenegativetrends

Financial Projections
Ifyouarestartingorexpandingabusiness,yourfinancialprojectionsmaybethemost
importantcomponentofyourbusinessplan.Howdoyouknowifyourplanswillbe
financiallyfeasibleandhowwillyoucommunicateyourfinancialprojectionstoothers?
Mostlendersorinvestorswillwanttoseeaprojectedcashflow,incomestatementand
balancesheet.
Aprojectedcashflowwillhelpyoudetermineifyourplancanmeetexpenses,make
debtpaymentsandmakeitthroughthetransitionperiod.
Aprojectedincomestatementwilldocumentyourincome,expenses,andprofitability
whenyourplanisfullyimplemented.Itisanimportanttooltohelpyoudetermineif
yourplanisfinanciallyfeasible.
Youmayalsowanttodevelopaprojectedbalancesheettoevaluateyourplanwill
impactyoursolvencyornetworth.

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YourFinancialProjections:

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Asset Management
Describehowyouacquireandmanagecapitalassets.Doyoupurchaseorleaseyour
equipmentandfacilities?
Ifyourentrealestateorfacilities,describeyourleasearrangements.
Ifyouareplanningmajorchangestothebusiness,willyouchangehowyoumanage
theseassets?
Describehowwellyouutilizeyourcapitalassets?Atwhatpercentofcapacityareyour
equipmentandfacilitiesused?Considerhowwellyourmachinerylineismatchedtothe
sizeofyourbusiness.Goodmanagementofmajorassetshasalargeimpactonfarm
profitability.
Doyouhaveofffarmassets?Howaretheymanaged?
YourAssetManagementPlan:
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