# Has anyone done a business plan for their farm?



## FarmersDigest (Dec 29, 2014)

With wanting to purchase the farm we want, we need to do a business plan. I have heard from people we don't need to do the big expensive plans that you can do online, and then there are people that tell us it's our best bet. Anyone have any ideas? Thank you for any info you have! Have a great rest of the day!


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## Baymule (Dec 29, 2014)

Contact your nearest Small Business Administration office. I got a SBA loan years ago for a business and they gave me a lot of help on a business plan, plus gave me a sample business plan to follow on making my own plan. I was applying for a loan, but the help they gave me didn't cost me a thing. I am sure they would be happy to help or at least give you a sample copy of a business plan. I had never drawn up a business plan before and the banker just couldn't believe that I did it myself and that it wasn't professionally done. I drew it up on spread sheets. I saved every one, even the screw ups, and I wound up using info on the messed up spread sheets-glad I didn't throw them away. You will probably use the computer, I would advise you to print them out, especially when making changes. You might delete information that later you wished you had kept.

Make a list of every expense you can think of.
Barns or repairs if barns are existing
Water or wells
tractors and equipment
Seed for grasses or hay
Livestock
Fencing, gates
Taxes, income and property
Hired help, FICA taxes and workman's comp insurance
Insurance, property and liability
Electricity
Heat



What are you going to farm/raise?
How much will it cost for a starter herd?
How much will it cost for crop seed?
How much can you sell it for?
What is your projected income from the farm?
How will you be paid? Monthly? Yearly? Quarterly?
How often is harvest?
How often will you sell livestock?
Who is your market? What age group, ethnic group (if any) what income level?
Where is your market? City? Retail? Wholesale? Commodity buyer? Sale barn?
What is the top and bottom price?


What will your farm payment be? How much do you need to live each month and pay your bills? Make a list of all your current living expenses. Groceries you might be able to cut on spending if you raise vegetables on your farm for family consumption. Be sure to point this out on your business plan. Are there fruit trees or nut trees on the farm? Can you sell any of this or can/preserve it for family consumption?

Make at least a 3 year projection, possibly a 7 year plan.

List all of your assets, including personal property such as household furnishings, jewelry, china, antiques-anything of worth and what it is worth. List any stock, 401 plans, savings accounts, etc.

List all of your income.

List all of your financial liabilities, such as utility bills, food, insurance, car payments, any loan payments.

Combine assets, income and liabilities into a financial statement. You can probably find free examples online.

GO TO THE LIBRARY!!!!! Explain to them what you are doing and what kind of documents or books they have that can help you. The library can even order books for you. This will cost you nothing.

Your state almanac will have lots of helpful information too.

FOUND IT!!!!!!!!!!! START HERE!!!!!!!!!!!!!!!!

https://www.sba.gov/tools/business-plan/1

https://www.sba.gov/writing-business-plan

http://imedia.sba.gov/vd/media1/training/2/sbabp/bptemplate.pdf


Above all, RESEARCH. RESEARCH. RESEARCH.

Ask neighboring farms how weather and other conditions affect them, what do they raise, who do they sell to, etc.

BTW, what are you going to raise? Livestock? Crops? Just curious.

If you have any questions or need to vent from frustration, just PM me.


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## Bossroo (Dec 29, 2014)

Without a business plan, in the eyes of the IRS you are not in this venture for profit.  Also,  since you have to show a profit in 3 out of 5 years ,you would be very wise to hire a CPA that specializes in farming.  Anyone else is going to cost you when you get an invitation from the IRS for an audit.


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## Baymule (Dec 29, 2014)

Thanks @Bossroo for the "wet blanket" reminder of the "Infernal" Revenue Service. 

@FarmersDigest here's some more for you to wade through, so get your hip waders on! If you do your due diligence, study, learn what you can and can't do, then when you schedule an appointment with a farm specialist CPA, you will have a much better grasp of what he/she is even talking about. Won't do you any good to go get advice if it is all Greek to you. Study First, learn all you can, make a LIST OF QUESTIONS to ask your CPA. Leave space for answers and take notes.

http://www.irs.gov/publications/p225/index.html

http://www.irs.gov/uac/Reporting-Farm-Income-and-Expenses

Well, do you have brain freeze yet?


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## FarmersDigest (Dec 29, 2014)

Baymule said:


> Contact your nearest Small Business Administration office. I got a SBA loan years ago for a business and they gave me a lot of help on a business plan, plus gave me a sample business plan to follow on making my own plan. I was applying for a loan, but the help they gave me didn't cost me a thing. I am sure they would be happy to help or at least give you a sample copy of a business plan. I had never drawn up a business plan before and the banker just couldn't believe that I did it myself and that it wasn't professionally done. I drew it up on spread sheets. I saved every one, even the screw ups, and I wound up using info on the messed up spread sheets-glad I didn't throw them away. You will probably use the computer, I would advise you to print them out, especially when making changes. You might delete information that later you wished you had kept.
> 
> Make a list of every expense you can think of.
> Barns or repairs if barns are existing
> ...



 You are awesome, thank you so very much!!! I was like this  and  oh and you made me like this now so thank you I really appreciate this. We have gone to our library and have read the books we can, as there isn't a whole lot. BUT I was only looking in the farm section. We did buy The Completed Illustrated Guide To Farming and Farms With A Future. We have also done a lot of research on the internet, and talked to farmers that we know. Well there is Angus already on the property, and he has some expensive bulls, he does alfalfa and then he grows Triticale in the winter. My DH is a butcher, and we want to put a processing plant on the property. The cattle and processing plant I know my DH knows the ins and outs, it's the hay that we need to know about. So we have been watching videos on Youtube, and then talking to my DH's friend who is growing it on the farm we want.  

Feel free to ask us questions! We are wanting to learn as much as possible, and if talking with people will prevent this  or  then PLEASE ask away or tell us anything you think we need to know! Thank you as well for being someone I can vent to, or have any questions. You are so very awesome!


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## FarmersDigest (Dec 29, 2014)

Bossroo said:


> Without a business plan, in the eyes of the IRS you are not in this venture for profit.  Also,  since you have to show a profit in 3 out of 5 years ,you would be very wise to hire a CPA that specializes in farming.  Anyone else is going to cost you when you get an invitation from the IRS for an audit.



Yeah that's why we want to ask questions, and are doing as much research as possible. We don't want that at all! Thank you for your info. It's much appreciated.


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## FarmersDigest (Dec 29, 2014)

Baymule said:


> Thanks @Bossroo for the "wet blanket" reminder of the "Infernal" Revenue Service.
> 
> @FarmersDigest here's some more for you to wade through, so get your hip waders on! If you do your due diligence, study, learn what you can and can't do, then when you schedule an appointment with a farm specialist CPA, you will have a much better grasp of what he/she is even talking about. Won't do you any good to go get advice if it is all Greek to you. Study First, learn all you can, make a LIST OF QUESTIONS to ask your CPA. Leave space for answers and take notes.
> 
> ...



 

I got my hip waders on, and oh my thank you as well! This is great! I seriously can't thank you enough.  No brain freeze, but a little overwhelmed. BUT the good thing, I can save this and reread it. I wish I could say I was smart enough to remember all this. Again thank you.


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## Baymule (Dec 29, 2014)

Print out anything you don't understand and ask the CPA what it means. Get detailed answers that you understand. If you get a snippy answer or a condescending tone, get another CPA. YOU are paying for their service, so that puts you in the drivers seat. Never let anyone get a better-than-you attitude with you because they work for YOU. Most professionals are genuinely concerned and helpful. Every now and then you get someone that is real full of themselves, don't put up with it, that's all I am saying.


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## FarmersDigest (Dec 30, 2014)

Thank you, that's great info as well. Never would have even thought of not having to put up with someone acting snotty. So thank you very much!


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## Bossroo (Dec 30, 2014)

My wife is an Business Auditor for the IRS . This Jan. 2015  she will be intensive teaching the new IRS hires in Indianapolis.  I can assure you that there are plenty of CPAs that do not fully understand the farm codes and others that get quite creative in your tax returns as most of them do the garbage in and garbage out thing  depending on what receipts and other information that you provide them.  Guess who gets to pay the $$$ penalties for incorrect returns?    Then too, Congress enacted a law for  the IRS   to catch these creative   CPA's by going to their offices and comb through their files. If found at fault, these CPAs receive quite hefty fines  ( and penalties and in some cases jail time ) as well as the clients with creative tax returns.      ( Just 3 months ago, one such tax payer was found to be less than honest in their tax returns for the last 3 years and was assessed over $80,000 in taxes due PLUS a fine of $ 100,000. This case is going to Tax Court.  Their CPA of the last 6 years  is now being audited in his office with all client files being examined.  ).  Getting caught up in this type of a scenario in not fun so do your due diligence and double check who you hire !


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## FarmersDigest (Dec 30, 2014)

Bossroo said:


> My wife is an Business Auditor for the IRS . This Jan. 2015  she will be intensive teaching the new IRS hires in Indianapolis.  I can assure you that there are plenty of CPAs that do not fully understand the farm codes and others that get quite creative in your tax returns as most of them do the garbage in and garbage out thing  depending on what receipts and other information that you provide them.  Guess who gets to pay the $$$ penalties for incorrect returns?    Then too, Congress enacted a law for  the IRS   to catch these creative   CPA's by going to their offices and comb through their files. If found at fault, these CPAs receive quite hefty fines  ( and penalties and in some cases jail time ) as well as the clients with creative tax returns.      ( Just 3 months ago, one such tax payer was found to be less than honest in their tax returns for the last 3 years and was assessed over $80,000 in taxes due PLUS a fine of $ 100,000. This case is going to Tax Court.  Their CPA of the last 6 years  is now being audited in his office with all client files being examined.  ).  Getting caught up in this type of a scenario in not fun so do your due diligence and double check who you hire !




Oh my gosh! See this kind of stuff gets me so sick to my stomach.  I feel like we are going to be way over ours heads! It makes me have second thoughts about what we are wanting to do. I just wish it could be simple as living off the land, but I know I am dreaming. Well again, thank you for info. as this is the stuff we need to know and watch out for!


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## Bossroo (Dec 30, 2014)

Each of my parents owned a farm , also My father was a Vet. , my mom owned a general store in town too.   I was born and raised on a farm and owned my own farm all of my life.  If one watches their  "P" s and "Q"s and keep good records and have a very knowledgable and reputable farm CPA ... life is GOOD on a farm ...


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## Baymule (Dec 30, 2014)

I think what Bossroo is trying to tell you about the IRS, is if you get hold of one of those "creative" CPA's and it sounds fishy, then politely decline. Common sense, just common sense. Read the IRS links, then you know what you can and can't do. Educate yourself.

Basically, you write off farm expenses. That does not include that trip to Disney World where you stopped at a farmer's market on the way doing "research".

You add up farm income. Subtract expenses from income, the resulting number will either be a plus (pay taxes on it) or a minus.

No need for second thoughts. Don't let any of this scare you, just because it is new to you. You will learn the rules, you are not stupid, you can learn this and you are smart enough not to try to cheat or lie. This is a wonderful opportunity for you and your family. There will be ups and downs, but aren't there ups and downs in life anyway?


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## FarmersDigest (Dec 30, 2014)

Bossroo said:


> Each of my parents owned a farm , also My father was a Vet. , my mom owned a general store in town too.   I was born and raised on a farm and owned my own farm all of my life.  If one watches their  "P" s and "Q"s and keep good records and have a very knowledgable and reputable farm CPA ... life is GOOD on a farm ...



That's great news! That's one thing that I was telling my DH, I want to keep everything separate. So all info for the cattle, in one specific place, and same thing for the processing plant, and alfalfa. We will have to more research on a farm CPA in the area of the farm. Thank you.


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## FarmersDigest (Dec 30, 2014)

Baymule said:


> I think what Bossroo is trying to tell you about the IRS, is if you get hold of one of those "creative" CPA's and it sounds fishy, then politely decline. Common sense, just common sense. Read the IRS links, then you know what you can and can't do. Educate yourself.
> 
> Basically, you write off farm expenses. That does not include that trip to Disney World where you stopped at a farmer's market on the way doing "research".
> 
> ...



Thank you! We will for sure read the IRS site. You are right, common sense is what we need to make sure to have when doing this all. Thanks to the comp, people like you, and books we are being able to educate ourselves.

Lol that would be insane to think would be something you can claim. My DH and I are honest people, we don't like doing thing's by lying or cheating. 1 because we take pride in being honest and being people that someone can trust and 2 because it's not worth all the stress and trouble that comes along with the lying!

Hey you made that sound real simple!

Thank you! I think that is my serious fear, all this being so new. I'm great with knowing how thing's are supposed to go or the routine, and when it's something I don't know, it really stresses me out! Thank you for saying I'm not stupid and that I can learn all this. It does really sound awesome for my family. That's the other reason why we want to do this. My DH and I have always felt we were born in the wrong era. We have always wanted to live off the land, provide great food for our family, and use our hands everyday! Not be stuck in an office. Again, you are so right! There are ups and downs in life anyway. So why not at least live the way we want, and have the same ups and downs. Again thank you, thank you!


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## SheepGirl (Jan 4, 2015)

I have a business plan I wrote for my college business class that I am actually using fir my farm that I registered as a business with the state of MD. I then rewrote and edited it for a different business class to reflect the changes over 2 years including the additions of chickens and now my ability to sell livestock supplies and equip. I can pm it to you if you want.


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## lcertuche (May 9, 2017)

I haven't but then again I only get 3 or 4 eggs a day but I think it behooves everyone to work out a budget. I figure my eggs are finally down to about $28 per egg, lol. I got this off the internet. Anyone seriously wanting to farm for a profit should consider the government and the future. 

https://www.irs.gov/uac/newsroom/10-things-to-know-about-farm-income-and-deductions


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## Sara Ranch (Oct 29, 2017)

Lol - I gotta laugh.  $28 per egg - I am right there with you!!  And people just don't get it.  

This is an old thread, but the topics are still important.  When I took classes, including one to write a Farm/Ranch business plan, nobody knew anything about food, where it comes from, what it should cost, how to get the product to market, or the laws/tax rules for the city, the county, or the state!  So frustrating!


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