Pierces Ck Road Farm Business Strategies - Example

Farm Business Plan Pierce’s Ck Road Farm P.O Box Contents Contents 2 Executive Summary 3 SWOT Analysis 4 Objectives 5 Mission 5 Keys to success 5 Farm Summary 6 Farm history 7 Farm Ownership 7 Products 8 Market analysis 9 Market segmentation 9 Competition and buying patterns 11 Summary and Implementation 12 Competitive edge 12 Marketing strategy 13 Sales strategy 13 Sales forecast 14 15 Management summary 15 Personnel plan 15 Financial plan 16 Important assumptions 16 Break even analysis 17 Projected profit and loss 17 Projected Cash Flow 17 Reference list 18 Executive Summary Pierce’s CK Road Farm occupies 65 hectares and is located approximately 10 km N of the town of Crow’s Nest, SEQ. The farm has a history of cattle grazing, irrigation-based dairy farming, and native cut flower production. It was purchased several years ago from a deceased estate, in neglected condition, and the intention is to develop it into a sustainable property that retains high values but is self-supporting through establishment of one or more profitable enterprises. By executing a well thought out business plan, the farm is projected to generate over $200,000 after the third year of sales. Three elements will be the force that will drive the attainment of this success. The first is to put into practice rigid financial controls. Appropriate controls ensure the farm realizes the most out of the production efficiency. The second element is to pursue the sector’s peak concentration of farm produce. The third element is to recognize customer satisfaction and implement it to guarantee a lucrative business. Earnings are as a result of satisfying clients. Pierce’s CK Road is a 65 hectares farm; 35 hectares will be utilized for fish, prawn and beef farming. The remaining 30 hectares will be leased out to a potential neighbor farmer. Pierce’s CK Road Farm will be managed by the owner, Emily. She does not have much knowledge on farming but will work with a team of skilled experts. The experts will bring in knowledge on prawn, fish and beef farming and as well as business and project management skills. She will mainly attend to the financial inspection of the enterprise activities. The intention is to develop Pierce’s CK Road Farm into a property that maintains good values but is self-supporting through establishment of three profitable enterprises. To finance the growth and full-time production, there is a dire need to purchase new equipment worth $40,000 as long term assets. This amount will be acquired through an 8-year loan facility of $250,000. Sales forecast indicate that the farm will generate $180,000 in the second year and $200,000 in the third year. SWOT Analysis The SWOT analysis takes into custody the main strengths and weaknesses in relation to market analysis. It also brings out the openings and risks in front of Pierce’s CK Road Farm. Pierce’s CK Road Farm is strong in that it is able to produce on a large scale. There is demonstrated capability to establish outstanding custom-made customer service, high quality client recommendation relations with local supermarkets, retailers, and wholesalers. Established client royalty via a firm repute among recurrent, high-worth customers is eminent. On the other hand, the partners are not highly experienced; they are progressing on the ‘vendors practice learning curve’. Pierce’s CK Road Farm has not set up itself in a market where various players are present. Seasonality in the business is also a confrontation. Opportunities exist. A considerable proportion of the target market is in dire need of the services Pierce’s CK Road Farm intends to produce. There are premeditated partnerships who offer recommendation sources to broaden our penetration. Moreover, fisheries and beef industries are promising and as the economy grows, demand is expected to go up. Risks are expected from pressure on prices propagated by competition or market protraction thereby reducing profit margins. Another threat is the spread out in products and services provided by other suppliers. From the foregoing, there is likelihood for success; however, weaknesses and risks have to be taken into account all the way through the business operations. Objectives Pierce’s CK Road Farm seeks to achieve the following business objectives: Become a top suppliers of animal products in the area Achieve of sustainable productivity Earn enough to slowly expand enterprise will maintaining an easy retirement life style Mission It is the aim of Pierce’s CK Road Farm to become among the top suppliers of animal products in area. The farm will enter a large market in Australia and will strengthen its position in the market as the business develops sustainable. This will be achieved by providing quality animal products at favorable prices while fulfilling clients’ expectations. Keys to success Pierce’s CK Road Farm will stick to three elements that will be instrumental in its success: Rigorous financial controls An insistent pursuit of the sector’s peak concentration of farm produce Recognize and guarantee customer satisfaction Highlights Farm Summary The Pierce’s Ck Road Farm occupies 65 hectares and is located approximately 10 km N of the town of Crow’s Nest, SEQ. The property was formerly located in the Crows Nest Shire, but since recent local government amalgamations has been part of Toowoomba Regional Council. The area sits on the Great Dividing Range, mostly on the eastern fall, and Pierces Creek which drains this property flows east and eventually into the Brisbane River. The catchments for Toowoomba’s main water supplies lie just to the south of Crow’s Nest (DAFF 2012). Farm history The Pierce’s Ck Road Farm has been in operation for three years since it was bought. Initially the farm been used for low intensity beef cattle grazing, either of egested stock owned by a neighbor or of steers purchased for fattening and resale. However, the lady has realized that the farm can be transformed into a profitable enterprise. The area’s underlying geology is complex with highly variable soil types. Some areas have fertile alluviums and the hill side soils are suitable for cultivation and irrigation. The south of Pierce’s Ck Road Farm has been chosen as the best position for prawn and fish farming. A total of 35 hectares will be used for animal farming while the remaining 30 hectares will be leased (15 hectares as irrigated land and 15 hectares as un-irrigated land for agriculture). There are plans to re-construct a dam for future developments in irrigation, but at the moment underground water will be used. The dam will provide sufficient water. It is estimated that each hectare will require 1-2 mega liters. There is a large dam that was used previously to support irrigated forage lands, pastures and a vast irrigation system for the flower production, but was later destroyed due to its inactivity and probably got affected during the 2011 floods. It is estimated the farm may hold around 100 mega litters. Farm Ownership Emily owns Pierce’s Ck Road Farm. Pierce’s Ck Road Farm is owned as a Limited Liability Company (L.L.C) purposefully to safeguard it from individual liability. Previously, Emily used the farm for low intensity beef cattle grazing, either of egested stock owned by a neighbor or of steers purchased for fattening and resale. However, the she has realized that the farm can be a profitable enterprise. Products Pierce’s Ck Road Farm will offer prawn, fish and beef products. These products are chosen for two main reasons. Prawns and fish are preferred because there is enough water and fit soils for pond construction whereas for beef, modern and world-class research findings are available, growth and production practices. The specific products offered are: The black tiger prawn (Penaeusmonodon) and the banana prawn (Fenneropenaeusmerguiensis) The two species have been approved in the business, above all, due to their broad-shouldered market value and booming hatchery knowledge that is suitable to the Australian environment and workplace. There is extensive state, as well as industry venture in research and development (genetics, grow out technology, health and environmental organization) that stimuli business growth and expansion. Australian prawn farming industry is considered globally as a leader in best practice administration and product superiority (Ruello and Associates 2002; DAFF 2012). Freshwater fish (River black fish and freshwater catfish) Commercial fisheries contribute significantly to the national and state economies. The sector is also quite profitable. These two species mainly survive in an area where there is flow of water. The Brisbane river that flows through the farm will therefore come in handy (Ruello and Associates 2002; DAFF 2012). Beef Queensland enjoys a superb international standing of quality-assured and secure product as it uses world’s most excellent animal ethics practices. According to DAFF (2012), the butchery of beef-veal and Australian-adult livestock production is projected to grow by 6 – 9 percent from 2007 to 2012. It is on this foundation that the beef industry is anticipated to grow substantially. This is expected to be realized due to efficient and suitable property management practices as well as the use of high quality genetics. Market analysis Pierce’s Ck Road Farm has set eyes on four main market groups: Seafood wholesalers, retailers and processors, Sydney fish market, paddock selling and other local buyers. (REF) The customer segments are discrete to enable targeting each one in a different way. The fisheries and prawn industries that Pierce’s Ck Road Farm aims to produce for have been going through consolidation for a number of years now. Market segmentation Pierce’s Ck Road Farm has spotted four distinct markets segments that it will sell to: Seafood wholesalers, retailers and processors This customer grouping captures areas of Melbourne, Sydney, Brisbane and Canberra. We shall arrange for transportation of the products and sales will be made on a pre-agreed Free in Store basis; including hiring of refrigerated vehicles as well as air transport where necessary. According to Ruello and Associates (2002), this segment accounted for more than a half of tiger prawn production in 2000/01. Sydney Fish Market The Sydney Fish Market (SFM) is the most common and preferred group. The market has an uncomplicated, transparent, safe and sound approach. The product at SFM shall be sold to retail at auctions. At peak times such as Christmas we shall take advantage of the SFM electronic purchasing system and auction purchasing combination. Paddock selling This includes live weight and carcass weight. This includes inter-property sales and direct consignments of beef to feedlots and market processors (DAFF 2012). Animals will be sold as long as they are ready for the market. In addition, calves will be sold to potential clients who intend to rear them at their own farms. Other local buyers This group captures local retail outlets, supermarkets, fishermen’s cooperatives. Market analysis (pie-chart) The chart below indicates the estimated share of our potential customers: Market analysis Year 1 2 3 Potential customers Seafood wholesalers, retailers and processors 10 12 14 Sydney Fish Market 5 5 5 Paddock selling 20 23 27 Other local buyers 17 22 25 Total 52 62 71 Competition and buying patterns Competition is expected from farms of the same or larger sizes and production capability. The number of farms involved in fisheries and beef production are spread out in Queensland as well as other states. (REF) Fisheries farms are mainly located along the coastal areas. The choice of the kind of prawns, fish and cattle to rear depends on the owner’s choice, location and ability of the local farming conditions to support the different breeds. The larger farms have the same range of species cultivated, but they vary in production capability. The farms are huge; however these farmers are small in number (DAFF 2012; DPIF 2012). The buying prototypes of the different clients are in general based on: Availability Price Consistency We shall make sure that these prototypes are taken into full consideration. Summary and Implementation Pierce’s Ck Road Farm will control its competitive edge so as to achieve a considerable market share. The competitive edge is the capability to over and over again produce healthy animals at a faster rate and lesser expenses. The marketing strategy will seek to lift up awareness and visibility of the farm’s industry-leading numbers of healthy animals grown humanly and sustainably. The strategy will speak out the verity that Pierce’s Ck Road Farm animals are of a high nutritious content. The sales strategy will strengthen the competitive edge and try to find to leads by concentrating on Pierce’s Ck Road Farm capacity to perform consistently on long-term contracts, becoming a constant supplier to clients who call for a stable supply flow. These are explained below: Competitive edge Pierce’s Ck Road Farm competitive edge will be based on producing highly nutritious, heal and healthy animals. The healthier the animal, the highly nutritious it is. This means boosting the production efficiency due to a huge number of animals that are sellable. Other features of heal and healthy animals which are significant on the production side are the control of diseases and poisonous substances/chemicals. Pierce’s Ck Road Farm intends to be consistent and sell products at favorable prices. Marketing strategy The marketing strategy will seek to lift up awareness of the farm. The stratagem will rely on diverse forms of communiqué. The central form of communication will be involvement in various industry trade shows. The trade shows are someplace each one from the industry draws together to meet and conduct business. This will include visual presentations, use of brochures as well as taking some animals for viewing. It is a magnificent place to set connections and gain knowledge of fresh developments in the industry. The next form will be making use of advertisements. The main channel for advertisements will be industry business magazines. The business magazines are a well read basis of information that sellers and buyers submit to for many diverse deals (Behind the scenes 2012). Sales strategy Pierce’s Ck Road Farm sales center of attention will be on discovering competent leads and spinning them into paying clients. The chief sales endeavor that Pierce’s Ck Road Farm will embark on is the strengthening of the fact that Pierce’s Ck Road Farm animals have the highest nutrition content. This will be fairly attractive to the buyers as this is just what they want; high nutrition. There will as well be stress on Pierce’s Ck Road Farm capability to carry out long-term supplies. Pierce’s Ck Road Farm is acquainted with the fact that transactions ought not to be thought of as personal sales, but as long lasting business connections. This is a logical supposition based on the verity that clients will from time to time require our products and that it is not as much costly to set up a connection with one vendor other than repeatedly having to look for new vendors. Sales forecast The sales projection points out to a slow but firm growth. Growth will be slow-moving owing to the time and endeavor needed to build up the clients and reputation in the industry. Although they were not producing at the same stage, or for that matter the equal ambition of business competence, in spite of that, they will lift up production to meet up sales requirements. There are a small number of dangers that could have a harmful outcome on sales. The first is diseases. Measures will be taken to ensure the animals are kept healthy and in case of a break out they are incubated. Another danger that could have an effect on sales is the availability of sufficient water. This will have a serious effect on fisheries. Pierce’s Ck Road Farm will take steps to reduce these dangers by appropriate instituting measures. This shall include reconstructing the dam and storage of sufficient water (DAFF 2012). Sales forecast Year 1 2 3 Sales Seafood wholesalers, retailers and processors $40,000 $91,500 $106,105 Sydney Fish Market $35,500 $80,050 $91,200 Paddock selling $61,250 $95,025 $114,250 Other local buyers $17,100 $45,600 $79,150 Total $153,850 $312,175 $390,705 Direct cost of sales Seafood wholesalers, retailers and processors $3,100 $7,200 $8,600 Sydney Fish Market $2,550 $6,125 $8.150 Paddock selling $3,550 $7,850 $10,150 Other local buyers $415 $705 $900 Sales forecast (yearly) Management summary Pierce’s Ck Road Farm will be managed by the owner, Emily. Emily studied at University of Sydney, a top university in Australia. She pursued her undergraduate studies in project management and business. Emily worked at a local bank for three years before joining the government of Queensland department of finance where she works to date. Through her interactions with people in business and project management, Emily noted the worth of offering exact, practice driving directions. She will manage the financial details of the farm, while she shall employ skilled staff to handle technical areas of the venture. Personnel plan Emily: Accounting, finance and general administration operations. Farm controller: Head animal rearing activities and sales. Skilled workers: Assist the farm controller in specific lines of fisheries and beef production. Laborers: Seasonal positions dependent upon work requirements, however there will be some laborers on the workforce right through the year. Some responsibilities will include feeding the cattle, pond cleaning and product collections. Personnel plan Year 1 2 3 Owner - - - Farm controller $34,110 $37,000 $40,500 Skilled workers $28,890 $33,000 $37,750 Laborers $26,235 $31,500 $36,000 Total $89,235 $101,500 $114,250 Financial plan The following section outlines important financial information. This information is just based on estimated values (Queens beef industry and DAFF). Important assumptions The table below indicates estimates of current interest rate, long-term interest rate, and tax rate. This is important as it presents a foundation of action (Queensland treasury and trade 2012). General assumptions Year 1 2 3 Current interest rate 8.5% 8.5% 8.5% Long-term interest rate 5.0% 5.0% 5.0% Tax rate 22% 22% 22% Break even analysis The break even analysis is supported by first year’s sales income, the cost of these sales together with other expenses. The figures are based on monthly sales revenue. Projected profit and loss The projected profit and loss indicates estimated profit and loss. It is expected that the farm will make a loss in the first year because it has not established itself in the market. However, in the second year it is expected that sales will increase as the marketing strategy is fully implemented thus attract more customers. This will go on to the third year as well as other subsequent periods (Queensland business and industry 2012). Projected Cash Flow The expected cash flow including procurement of new equipment, and the loan (and principal repayment) related to the farm's development are include in the projected cash flow. A higher cash flow is expected in the first year as a result of borrowing. In the second year a low cash flow is eminent, with increased sales, more cash flows will be observed (Queensland business and industry 2012). Reference list Andrews, T and Littler, B .2012.Market specifications for beef cattle. Australian government Australian Prawn Farmers Association .2008.Australian prawn farming; an industry development plan 2008-2011. Available from: http://www.daff.qld.gov.au/28_14627.htm Department of Agriculture, Fisheries and Forestry. 2012. Information for beef producers: http://www.daff.qld.gov.au/27_7771.htm Department of Agriculture, Fisheries and Forestry. 2012. Queensland beef situation snapshot: http://www.daff.qld.gov.au/16_14522.htm Department of Agriculture, Fisheries and Forestry. 2012. Commercial fisheries: http://www.daff.qld.gov.au/28_140.htm Department of Agriculture, Fisheries and Forestry. 2012. Freshwater catfish: http://www.daff.qld.gov.au/28_14679.htm Department of Agriculture, Fisheries and Forestry. 2012. River blackfish: http://www.daff.qld.gov.au/28_17676.htm Department of primary industries and fisheries. 2008. Australian prawn farming; an industry development plan 2008-2010. Available from: http://www.daff.qld.gov.au/documents/Fisheries_Aquaculture/Australian-Prawn-Farming-Industry-development-plan.pdf Meat and livestock Australia.2004. Australian beef industry; production and sale of beef. Available from: http://adl.brs.gov.au/data/warehouse/pe_abarebrs99001139/pc12892.pdf Queensland business and industry .2012. Retrieved on 27 October 2012 from: http://www.business.qld.gov.au/ Queensland treasury and trade .2012. Retrieved on 27 October 2012 from: http://www.treasury.qld.gov.au/ Ruello and Associates .2002. Australian Prawn Fish Market. Retrieved on 27 October 2012 from: http://www.apfa.com.au/wp-content/uploads/2010/03/Prawn-market-analysis-Nick-Ruello-2002.pdf Sydney Fish Market events: http://www.sydneyfishmarket.com.au/AttheMarket/Events/tabid/78/Default.aspx Sydney Fish Market; Behind the scenes at the market: http://www.sydneyfishmarket.com.au/AttheMarket/Tours/tabid/72/Default.aspx The Queensland Beef Industry. 2010. Current trends and future projections. Retrieved on 27 October 2012 from: http://www.daff.qld.gov.au/documents/BusinessAndTrade_IndustryTrends/Beef-situation-analysis-2010.pdf Read More