Before I get on with the first installment of Farmer’s Kraal for 2024, let me take this opportunity to wholeheartedly wish all our esteemed readers a prosperous and blessed new year; one which I hope will be filled with abundant rain and greenery. 

In today’s column, I want to touch a bit on the growing importance of formulating or coming up with a comprehensive business plan for your farming operations and why a business plan is imperative for any farmer looking to secure funding from commercial banks or private financiers. 

Without a business plan, it is very difficult and at times, impossible to obtain much-needed funding from banks and private financiers. And without adequate funding or capital, it is impossible to run a thriving farming business. 

So, whether your farming operations are new or have been in existence for decades, drawing up a good business plan is a task that should be taken seriously by any farmer, because that is where you demonstrate your seriousness and devotion to your farming operations. 

Not only that, but a business plan also helps in showing the kinds of medium and long-term plans and ideas you have for your farm. 

Most importantly, especially when drawing up your business plan; always pay attention to the person or institution that you are planning to approach for possible funding and make sure your proposed business plan is in sync with the values, aspirations, and outlook of that particular financier or bank. 

When engaging commercial banks, always put special focus on what you have as collateral, how you plan to repay the loan you want, share your farming experience and the history of your financial records and other related incomes. 

In your business plan, it is also very important to share or highlight your farm’s growth potential and how you plan to create value and how the rates of return on investment by the bank will increase over time. 

I know it sounds a bit complicated to some, as not all farmers are well-trained and equipped with the knowledge and skills to come up with an appealing business plan. 

But if resources allow, rope in an expert to help you draft a comprehensive and apposite business plan for you, as the benefits of a successful business plan will help you secure much-needed funding that will serve your farming activities well in the long run. 

Nowadays, most commercial banks are becoming increasingly interested in wanting to know if your farming business will be sustainable, viable, and responsible (both socially and environmentally), as these factors have become important in a time when the emphasis has moved away from traditional shareholder capitalism to stakeholder activism. 

In line with that, it becomes pivotal for you to demonstrate in your plan how the farm’s key natural resources like land and water will be used responsibly and remain productive over time; especially in these unpredictable times of perennial droughts. 

Another aspect that most farmers don’t include or clearly indicate in their business plans is the level of skills and experience they possess as farmers, as well as those of their key personnel such as their foremen and others. 

Those details are important because banks also want to know the role and depth of your involvement in managing your team on the farm. 

Also, the value of current and long-term assets, with estimated increases by way of new purchases should be indicated and any planned purchases of land or equipment must be detailed, and the impact of interest on financing must be discussed in detail in your business plan. 

As I advised earlier, if possible, please seek the assistance of a business or financial expert to assist you with drawing up an apt business plan that will suit your current state of operations, your future goals, and where you want to see your business in the next 20 to 30 years on the global market. 

Until next time we meet in the kraal, bye-bye!