The basics of writing a business plan for your farm. We cover the six major sections of the business plan, suggestions on how to tackle each of them, and present an example of a simple business plan for a fictional dairy operation. Finally, we offer a series of tips to make the farm business plan stand out.

1. HOW TO WRITE A BUSINESS PLAN
PAUL DIETMANN
SENIOR LENDING OFFICER – MISSION FINANCING
Groundbreakers Conference
February 9, 2018
Bloomington, MN

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COMPEER FINANCIAL
 Formed by merger of three Farm Credit System cooperatives: Badgerland
Financial; AgStar; 1st Farm Credit
 Rural lending (& other financial services) cooperative
 Any owner of agricultural assets or person engaged in ag production is an
eligible borrower
 Largest ag lender in Upper Midwest…$18 billion in assets
 Approximately 45,000 members
 1,200 employees in 144 counties across three states

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WHAT WE’LL COVER TODAY
• Purposes of a business plan
• Structure of a plan – traditional or lean?
• Contents of the plan
• A bunch of suggestions based on experience
• Time for you to draft your own plan

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WHAT IS THE PURPOSE OF YOUR BUSINESS
PLAN?
• A place to consolidate and give structure to your ideas
• A guide to follow from great idea, to feasibility analysis, through
startup and expansion
• A vehicle to attract investment of debt and/or equity

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SOME KEY POINTS
• Just getting started is the most difficult part
• A good business plan isn’t set in stone; it should change over time
• Anticipating and planning for risks is critical
 Some factors increase chance of success
 Some create a recipe for disaster
• Understanding financial statements will put you far ahead

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STRUCTURE OF A BUSINESS PLAN
1) Executive Summary
2) Business Description
3) Operations
4) Marketing Plan
5) Management and Organization
6) Financial Plan

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1) EXECUTIVE SUMMARY
• Appears first but should be written last
• Brief summary of the whole plan
• Think of it as a cover letter for your plan
• No more than one page
• Be sure to include a summary of your financing request

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2) BUSINESS DESCRIPTION
• An overview of your business
• Where is it located?
• What are the facilities like?
• What is the history of the business?
• What is the ownership structure?
• Don’t go too deep or too far into the weeds

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3) OPERATIONS
• What products or services do you offer?
• What is your production system? How is it unique?
• How do you maintain high standards of quality and customer
service?
• How do you manage inventory?
• What licenses, permits, patents do you hold?
• What are the risks in your business and how do you manage them?
• What gives your business a moat to thwart competition?
• What are your plans for business growth & expansion?
• What is the timeline for implementation of your business plan?

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4) MARKETING PLAN
• What are the market trends in your business?
• What are your target markets and who are your customers?
• How do you price your products?
• How do you promote and distribute your products?
• Include brief historic and projected sales data.
• Describe any strategic partners or contracts that give you an edge
over your competition.

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5) MANAGEMENT AND ORGANIZATION
• Who are the members of the management team? What knowledge,
skills, and abilities do they have that enhance the business’ success?
• Do you have a board of directors or advisory team? If so, describe
how they add value to your business.
• How is the business structured?
• Who provides professional services such as tax, accounting, legal
work?

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6) FINANCIAL PLAN
• Balance sheets – current, historical, and projected
• Cash flow projections – month-by-month for at least one year, then
annual projections for at least two more years
• Sources and uses of cash
• Projected income statements
• Detailed assumptions to back up the projections
• Financing request – think like a lender
 Need cash flow to support loan payments
 Need collateral to back the loan

14. OUR EXAMPLE FARM:
TRASK FARMS LLC

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OVERVIEW
Adam and Cathy Trask are beginning dairy farmers in western
Wisconsin operating as Trask Farms LLC. They milk 100 cows in
rented facilities and purchase all of their feed.
The Trasks have some debt on their current herd and a small line of
machinery. They would like to borrow an additional $50,000 to add 35
cows to their herd.
The Trasks long-term plan is to pay off their cattle and machinery, and
use the equity to purchase a farm.

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2) BUSINESS DESCRIPTION
Trask Farms LLC is a family dairy located in Buffalo County,
Wisconsin. It is owned and operated by Adam and Cathy Trask. The
operation consists of a herd of 100 Holstein cows and approximately
100 heifers ranging in age from calves to springers. Since starting
their operation in spring of 2016, the Trasks have been renting their
facilities, which consist of a milking parlor, 120-cow freestall barn,
manure storage, housing for young stock, storage for machinery and
feed, and a house. The majority of their forage and grain is purchased
from their landlord.

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3) OPERATIONS
Trask Farms LLC owns its cattle and a small line of machinery, and leases its milking
facilities, cattle housing, and storage. There are 100 cows in the dairy herd, with
approximately 85 milking and 15 dry. Milk sold is 22,000 pounds/cow/year. Bull
calves are sold at birth and all heifers are raised on the farm. Machinery includes a
tractor, portable TMR, and a skid steer. Forages and grain are purchased on contract
from the landowner who owns their dairy facilities. Other feed is purchased from a
local co-op. Manure hauling is contracted on a custom basis with application on the
landlord’s fields.
The lease arrangement has allowed Trask Farms to keep its overhead costs relatively
low during its first few years in business. The feed purchase agreement allows
Trasks to focus their attention on their dairy herd.
Trask Farms would like to expand its dairy herd to 135 cows in 2018. By 2021, the
Trasks would like to have all existing debt paid off and to purchase a farm.

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4) MARKETING PLAN
Milk is currently being sold to Foremost Farms. The milk market is
experiencing a period of high production and soft demand for dairy
products, which has hurt farm-level prices. Trask Farms expects its
average 2018 mailbox price to be $15/cwt, which is roughly $2 less
than 2017. The price is early 2018 is likely to be lower than $15.
Bull calves and cull cows are sold through Equity Livestock. Bull
calves have been bringing an average of $90/head and cull cows 50
cents/pound.

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5) MANAGEMENT AND ORGANIZATION
Trask Farms is organized as a Limited Liability Company (LLC).
Adam and Cathy Trask manage the business and provide most of the
labor. Both grew up on dairy farms. They both furthered their
education by attending Farm and Industry Short Course at UW-
Madison. They are enrolled in the Farm Business Production
Management Program offered through Western Technical College, and
attend many conferences and workshops to keep up to date on best
practices in the dairy industry.
The Trasks have a team of experts they rely on to help them with
managing their operation including their veterinarian, nutritionist,
accountant, and lender. Their landlord has been a great mentor for
them as well.

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6) FINANCIAL PLAN
• Assumptions - 2018
 Milk price $14/cwt Jan-June; $16
July-Dec
 Add 35 cows in April purchased
for $1300/hd
 Production 22,000/cow x 85
cows Jan-Apr; x 115 cows May-
Dec
 Estimated costs:
Feed/cow $1,600/year
Rent $2,500/month
Cull rate 30%
Etc, etc
• Assumptions - 2019
 Milk price $16
 Maintain 135 cows with 115
milking
 Production 22,000/cow x 115
cows
 Estimated costs:
Feed/cow $1,700/year
Rent $2,500/month
Cull rate 30%
Etc, etc

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Jan 1, 2018

22. 2 2
2018CashFlow

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Jan 1, 2019

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2019CashFlow

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Jan 1, 2020

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1) EXECUTIVE SUMMARY
Trask Farms LLC is a successful 100-cow dairy operation owned by
Adam and Cathy Trask. The operation started in 2016 and is located
on a leased dairy farm in Buffalo County. Along with its cattle, Trask
Farms owns a small line of equipment. The farm produces milk but not
crops; all feed is purchased. Milk sold per cow averaged 22,000
pounds in 2017.
The business intends to finance the purchase an additional 35 cows
this year, which will require an intermediate term loan of $45,000.
While cash flow is likely to remain tight in 2018, the additional cows
will allow Trask Farms to spread overhead costs and reduce its per-
cow cost of production.
Long-term goals include paying off existing debt, building equity and,
in 2021, purchasing a farm.

27. A BUNCH OF TIPS ON
BUSINESS PLANNING

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DO…
• Keep it as simple and short as possible
• Put very detailed info into appendixes
• Include your funding request in both Executive Summary and
financial section
• Keep quality of life as a central goal while building your plan
• Be honest with yourself about risks and liabilities
• Keep overhead costs as low as possible in the early years

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DON’T…
• Assume that the quality of a plan is measured by the pound
• Leave the financial section blank
• Forget to put your financing request in the plan
• Be too quick to buy capital items such as land, buildings
• Be afraid to borrow money IF it makes financial sense to borrow
money
• Underestimate the amount of money needed at startup
• Use credit cards as your source of operating capital!

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Approximately 58% of new firms financed
operations with credit cards in their first year.
Every $1,000 increase in credit card debt
increased the probability of failure by 2.2%
Source: The Use of Credit Card Debt by New Firms, The Kauffman Firm Study.
kfs_credit_card_debt_report.pdf, 2009.

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IT HELPS TO…
• Be open to suggestions and accepting of different ideas
• Have patience. Things will take more time than you’d like.
• Take time to plan, analyze, re-plan
• Have the ability to swallow your pride occasionally
• Have intestinal fortitude during tough times
• Communicate with lender and others--and seek help--when problems
are still small

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WHERE TO GET HELP
• University Extension, Tech Colleges
• MN Department of Agriculture, WI Farm Center
• https://www.agplan.umn.edu/
• Fearless Farm Finances: Farm Financial Management Demystified
• SCORE (Service Corps of Retired Executives)
• Small Business Development Centers

33. THANK YOU!