Farm Business Plan Basics

What is a farm business plan for?

A plan forces you to put assumptions on paper where they can be tested. It helps you decide whether to start, expand or stop an enterprise, and it is usually required when you apply for a loan or certain grants. It also gives family members and partners a shared reference.

Keep it short enough to update. Most small farms do well with a plan that fits in a few pages plus a spreadsheet, revisited each winter.

If a lender or grant program requires a certain format, ask for it before you start. Programs differ, and it is easier to write to their format at the start than to rework a finished plan.

What goes in the plan?

Most plans include a mission and goals, a description of the farm and its resources, products, markets and customers, a production plan, marketing plan, labor and management, and financial projections. Add a section on risks and what you will do about them.

Describe your land, water, buildings and equipment honestly. Note soil type, access to water, fencing, storage, and anything that limits production, such as slope or wet ground. Your extension office or the Web Soil Survey from the USDA can help you learn about your soils.

• Goals and mission in a few sentences
• Land, water, buildings and equipment
• Products, customers and sales channels
• Labor, skills and training needs
• Risks and backup plans

How do I research my market?

Visit the markets you plan to sell at, talk to buyers and note what is for sale and at what price range. Look at what is missing as well as what is crowded. A product with many sellers needs a clear reason for customers to choose you, such as quality, reliability or convenience.

Ask a few potential customers directly. Restaurants, grocery buyers, institutions and neighbors can tell you what they need and how they buy. Write down what they say, and do not rely only on friends who want to be polite.

Think about how customers will find and buy from you. Direct sales, wholesale, subscriptions and farm stands all need different amounts of time, packaging and paperwork, so match your choice to your capacity.

How do I build the numbers?

Financial projections have three main pieces: start-up costs, yearly operating costs and expected sales, shown month by month so that you can see cash flow. List costs by category: land and buildings, equipment, supplies, seed or animals, feed, labor, insurance, utilities, marketing, fees and repairs. Look up your own local numbers rather than borrowing someone else's.

Use enterprise budgets from your land-grant university extension service as templates. Adjust them to your own conditions and keep your assumptions visible, so you can change one and see what happens. Plan for a bad year as well as a good one.

Do not forget one-time costs such as fencing, water access, storage, a cooler or a vehicle. These can exceed yearly operating costs in the early years, so list them separately and decide how you will pay for them.

What do lenders and advisors look for?

Lenders want to see that you understand your costs, have a realistic market and can manage risk. They also look at your experience, your records and your other income. The USDA Farm Service Agency and other lenders can tell you which documents they require, so ask before you write.

A plan with honest weak spots and clear fixes is more convincing than one with perfect numbers. Be ready to explain every assumption in your projections.

How often should I update it?

Review the plan at least once a year and after any big change. Compare what happened with what you predicted and note why they differed. Over time those notes become the most valuable part of the plan, because they show how your farm actually behaves.

If you are not sure where to start, many extension offices and farm organizations offer planning courses and one-on-one help. Free or low-cost help is worth using.

How do I plan for risk?

Every farm faces production risk from weather, pests and disease, market risk from changing prices and demand, financial risk from debt and cash shortages, and personal risk from illness or injury. List the ones that apply to you and write one realistic response for each.

Insurance, savings, diversified products and written agreements with buyers all reduce risk in different ways. Ask your insurance agent and your extension office what protections exist for operations of your size, and what they cost in categories rather than guesses.

Last reviewed: November 12, 2026. Written by the Homestead & Small Farm Editorial Team. See our editorial policy.