How to write a business plan for a chicken farm?

Writing a business plan for a chicken farm can be an intimidating task, especially for those just starting.

This in-depth guide is designed to help entrepreneurs like you understand how to create a comprehensive business plan so that you can approach the exercise with method and confidence.

We'll cover: why writing a chicken farm business plan is so important - both when starting up, and when running and growing the business - what information you need to include in your plan, how it should be structured, and what tools you can use to get the job done efficiently.

Let's get started!

Why write a business plan for a chicken farm?

Having a clear understanding of why you want to write a business plan for your chicken farm will make it simpler for you to grasp the rationale behind its structure and content. So before delving into the plan's actual details, let's take a moment to remind ourselves of the primary reasons why you'd want to create a chicken farm business plan.

To have a clear roadmap to grow the business

Small businesses rarely experience a constant and predictable environment. Economic cycles go up and down, while the business landscape is mutating constantly with new regulations, technologies, competitors, and consumer behaviours emerging when we least expect it.

In this dynamic context, it's essential to have a clear roadmap for your chicken farm. Otherwise, you are navigating in the dark which is dangerous given that - as a business owner - your capital is at risk.

That's why crafting a well-thought-out business plan is crucial to ensure the long-term success and sustainability of your venture.

To create an effective business plan, you'll need to take a step-by-step approach. First, you'll have to assess your current position (if you're already in business), and then identify where you'd like your chicken farm to be in the next three to five years.

Once you have a clear destination for your chicken farm, you'll focus on three key areas:

Resources: you'll determine the human, equipment, and capital resources needed to reach your goals successfully.
Speed: you'll establish the optimal pace at which your business needs to grow if it is to meet its objectives within the desired timeframe.
Risks: you'll identify and address potential risks you might encounter along the way.

By going through this process regularly, you'll be able to make informed decisions about resource allocation, paving the way for the long-term success of your business.

To maintain visibility on future cash flows

Businesses can go for years without making a profit, but they go bust as soon as they run out of cash. That's why "cash is king", and maintaining visibility on your chicken farm's future cash flows is critical.

How do I do that? That's simple: you need an up-to-date financial forecast.

The good news is that your chicken farm business plan already contains a financial forecast (more on that later in this guide), so all you have to do is to keep it up-to-date.

To do this, you need to regularly compare the actual financial performance of your business to what was planned in your financial forecast, and adjust the forecast based on the current trajectory of your business.

Monitoring your chicken farm's financial health will enable you to identify potential financial problems (such as an unexpected cash shortfall) early and to put in place corrective measures. It will also allow you to detect and capitalize on potential growth opportunities (higher demand from a given segment of customers for example).

To secure financing

Crafting a comprehensive business plan for your chicken farm, whether you're starting up or already established, is paramount when you're seeking financing from banks or investors.

Given how fragile small businesses are, financiers will want to ensure that you have a clear roadmap in place as well as command and control of your future cash flows before entertaining the idea of funding you.

For banks, the information in your business plan will be used to assess your borrowing capacity - which is defined as the maximum amount of debt your business can afford alongside your ability to repay the loan. This evaluation helps them decide whether to extend credit to your business and under what terms (interest rate, duration, repayment options, collateral, etc.).

Similarly, investors will thoroughly review your plan to determine if their investment can yield an attractive return. They'll be looking for evidence that your chicken farm has the potential for healthy growth, profitability, and consistent cash flow generation over time.

Now that you understand the importance of creating a business plan for your chicken farm, let's delve into the necessary information needed to craft an effective plan.

Information needed to create a business plan for a chicken farm

Drafting a chicken farm business plan requires research so that you can project sales, investments and cost accurately in your financial forecast, and convince the reader that there is a viable commercial opportunity to be seized.

Below, we'll focus on three critical pieces of information you should gather before starting to write your plan.

Carrying out market research for a chicken farm

Before you begin writing your business plan for a chicken farm, conducting market research is a critical step in ensuring precise and realistic financial projections.

Market research grants you valuable insights into your target customer base, competitors, pricing strategies, and other crucial factors that can impact the success of your business.

In the course of this research, you may stumble upon trends that could impact your chicken farm.

You could discover that there may be increasing demand for organic, free-range chicken. Additionally, market research might reveal that there might be a growing interest in alternative cuts of chicken, such as boneless thighs or wings.

Such market trends play a pivotal role in revenue forecasting, as they provide essential data regarding potential customers' spending habits and preferences.

By integrating these findings into your financial projections, you can provide investors with more accurate information, enabling them to make well-informed decisions about investing in your chicken farm.

Developing the sales and marketing plan for a chicken farm

Budgeting sales and marketing expenses is essential before creating a chicken farm business plan.

A comprehensive sales and marketing plan should provide an accurate projection of what actions need to be implemented to acquire and retain customers, how many people are needed to carry out these initiatives, and how much needs to be spent on promotions, advertising, and other aspects.

This helps ensure that the right amount of resources is allocated to these activities in order to hit the sales and growth objectives forecasted in your business plan.

The staffing and capital expenditure requirements of a chicken farm

Whether you are starting or expanding a chicken farm, it is important to have a clear plan for recruitment and capital expenditures (investment in equipment and real estate) in order to ensure the success of the business.

Both the recruitment and investment plans need to be coherent with the timing and level of growth planned in your forecast, and require appropriate funding.

Your chicken farm might incur staffing costs such as paying salaries for farm workers, purchasing protective clothing and safety equipment, as well as purchasing feed and supplies for the chickens.

You might also need to purchase the necessary equipment such as chicken coops, cages, feeders, incubators, and brooders. Additionally, you might need to invest in other equipment such as tractors, plows, and other farming equipment.

In order to create a realistic financial forecast, you will also need to consider the other operating expenses associated with running the business on a day-to-day basis (insurance, bookkeeping, etc.).

Once you have all the necessary information to create a business plan for your chicken farm, it is time to start creating your financial forecast.

What goes into your chicken farm's financial forecast?

The objective of the financial forecast of your chicken farm's business plan is to show the growth, profitability, funding requirements, and cash generation potential of your business over the next 3 to 5 years.

The four key outputs of a financial forecast for a chicken farm are:

The profit and loss (P&L) statement,
The projected balance sheet,
The cash flow forecast,
And the sources and uses table.

Let's look at each of these in a bit more detail.

The projected P&L statement

The projected P&L statement for a chicken farm shows how much revenue and profit your business is expected to make in the future.

example of projected profit and loss statement in a chicken farm business plan

A healthy chicken farm's P&L statement should show:

Sales growing at (minimum) or above (better) inflation
Stable (minimum) or expanding (better) profit margins
A healthy level of net profitability

This will of course depend on the stage of your business: numbers for a startup will look different than for an established chicken farm.

The forecasted balance sheet of your chicken farm

The projected balance sheet of your chicken farm will enable the reader of your business plan to assess the overall financial health of your business.

It shows three elements: assets, liabilities and equity:

Assets: are productive resources owned by the business, such as equipment, cash, and accounts receivable (money owed by clients).
Liabilities: are debts owed to creditors, lenders, and other entities, such as accounts payable (money owed to suppliers).
Equity: includes the sums invested by the shareholders or business owners and the profits and losses accumulated by the business to date (which are called retained earnings). It is a proxy for the value of the owner's stake in the business.

projected balance sheet in a chicken farm business plan example

Analysing your chicken farm projected balance sheet provides an understanding of your chicken farm's working capital structure, investment and financing policies.

In particular, the readers of your plan can compare the level of financial debt on the balance sheet to the equity value to measure the level of financial risk (equity doesn't need to be reimbursed, while financial debt must be repaid, making it riskier).

They can also use your balance sheet to assess your chicken farm's liquidity and solvency:

A liquidity analysis: focuses on whether or not your business has sufficient cash and short-term assets to cover its liabilities due in the next 12 months.
A solvency analysis: takes and longer view to assess whether or not your business has the capacity to repay its debts over the medium-term.

The cash flow forecast

A projected cash flow statement for a chicken farm is used to show how much cash the business is generating or consuming.

cash flow forecast in a chicken farm business plan example

The cash flow forecast is usually organized by nature to show three key metrics:

The operating cash flow: do the core business activities generate or consume cash?
The investing cash flow: how much is the business investing in long-term assets (this is usually compared to the level of fixed assets on the balance sheet to assess whether the business is regularly maintaining and renewing its equipment)?
The financing cash flow: is the business raising new financing or repaying financiers (debt repayment, dividends)?

As we discussed earlier, cash is king and keeping an eye on future cash flows an imperative for running a successful business. Therefore, you can expect the reader of your chicken farm business plan to pay close attention to your cash flow forecast.

Also, note that it is customary to provide both yearly and monthly cash flow forecasts in a business plan - so that the reader can analyze seasonal variation and ensure the chicken farm is appropriately funded.

The initial financing plan

The sources and uses table or initial financing plan is a key component of your business plan when starting a chicken farm.

It shows where the capital needed to set up the business will come from (sources) and how it will be spent (uses).

sources and uses table in a chicken farm business plan

This table helps size the investment required to set up the chicken farm, and understand how risks will be distributed between the business owners, and the financiers.

The sources and uses table also highlights what the starting cash position will be. This is key for startups as the business needs to have sufficient funding to sustain operations until the break-even point is reached.

Now that you have a clear understanding of what will go into the financial forecast of your chicken farm business plan, let's have a look at the written part of the plan.

The written part of a chicken farm business plan

The written part of a chicken farm business plan is composed of 7 main sections:

The executive summary
The presentation of the company
The products and services
The market analysis
The strategy
The operations
The financial plan

Throughout these sections, you will seek to provide the reader with the details and context needed for them to form a view on whether or not your business plan is achievable and your forecast a realistic possibility.

Let's go through the content of each section in more detail!

1. The executive summary

The executive summary, the first section of your chicken farm's business plan, serves as an inviting snapshot of your entire plan, leaving readers eager to know more about your business.

To compose an effective executive summary, start with a concise introduction of your business, covering its name, concept, location, history, and unique aspects. Share insights about the services or products you intend to offer and your target customer base.

Subsequently, provide an overview of your chicken farm's addressable market, highlighting current trends and potential growth opportunities.

Then, present a summary of critical financial figures, such as projected revenues, profits, and cash flows.

You should then include a summary of your key financial figures such as projected revenues, profits, and cash flows.

Lastly, address any funding needs in the "ask" section of your executive summary.

2. The presentation of the company

The second section in your chicken farm's business plan should focus on the structure and ownership, location, and management team of the company.

The structure and ownership part provides an overview of the legal structure of the business, who the owners are and how much each has invested and owns. If you are seeking financing it is important that the reader gets a clear picture of which legal entity is receiving the funds, and who controls the business.

The location part should give an overview of the premises from which the company is operating, and why that location is of particular interest (catchment area, accessibility, amenities nearby, etc.).

When describing the location of your chicken farm, you may want to emphasize the potential market for your product. You could point out the nearby access to transportation networks and the potential for increased sales due to the local population's demand for fresh poultry.

Additionally, you might highlight the potential for success due to the climate of the area: the warm temperatures and ample sunshine could provide ideal growing conditions for your chickens. Ultimately, you could note the potential for growth, both in terms of the market and the farm itself.

Finally, you should introduce the management team. Explain each member's role, background, and experience.

It is also important to emphasize any past successes that the members of the management team have achieved, and how long they've been working together, as this will help potential lenders or investors understand why they should trust in their leadership.

3. The products and services section

The products and services section of your business plan should include a detailed description of the offerings that your company provides to its customers.

For example, your chicken farm might offer fresh eggs, processed chicken meat, and chicken feed products to its customers.

Fresh eggs are a nutritious and versatile food product, and they can be used in a variety of recipes.
Processed chicken meat can provide customers with a convenient and tasty meal with minimal preparation.
Chicken feed products can help customers keep their chickens healthy and produce the highest quality eggs.

When drafting this section, you should be precise about the categories of products or services you sell, the types of customers you are targeting and how customers can buy them.

4. The market analysis

When presenting your market analysis in your chicken farm business plan, you should detail the customers' demographics and segmentation, target market, competition, barriers to entry, and any regulations that may apply.

The goal of this section is to help the reader understand how big and attractive your market is, and demonstrate that you have a solid understanding of the industry.

You should start with the demographics and segmentation subsection, which gives an overview of the addressable market for your chicken farm, the main trends in the marketplace, and introduces the different customer segments and their preferences in terms of purchasing habits and budgets.

The target market section should follow and zoom on the customer segments your chicken farm is targeting, and explain how your products and services meet the specific needs of these customers.

For example, your target market might include health-conscious individuals. People in this segment are looking for high-quality proteins and want to know the ingredients that are going into their food. They are willing to pay higher prices for organic and ethically-sourced products.

Then comes the competition subsection, where you should introduce your main competitors and explain what differentiates you from them.

Finally, you should finish your market analysis by giving an overview of the main regulations applicable to your chicken farm.

5. The strategy section

When you write the strategy section of your chicken farm business plan, remember to cover key elements such as your competitive edge, pricing strategy, sales & marketing plan, milestones, and risks and mitigants.

In the competitive edge subsection, elaborate on what makes your company stand out from competitors. This becomes especially important if you're a startup, aiming to carve a place for yourself amidst established players in the marketplace.

The pricing strategy subsection should demonstrate how you plan to maintain profitability while offering competitive prices to attract customers.

Outline your sales & marketing plan, detailing how you'll reach out to new customers and retain existing ones through loyalty programs or special offers.

For the milestones subsection, outline your company's achievements to date and your main objectives for the future, complete with specific dates to set clear expectations for progress.

Lastly, the risks and mitigants subsection should address the main risks that could affect your plan's execution. Explain the measures you've put in place to minimize these risks, assuring potential investors or lenders.

Your chicken farm faces a variety of risks. For example, your chickens could be impacted by diseases, such as avian flu. It is possible that an outbreak of avian flu could spread quickly among your chickens, leading to significant losses.

Additionally, your chickens may be vulnerable to predators, such as foxes or coyotes, who could sneak into the farm and harm or kill your chickens. It is possible that if you do not take adequate measures to protect your chickens, you could experience significant losses due to predators.

6. The operations section

The operations of your chicken farm must be presented in detail in your business plan.

The first thing you should cover in this section is your staffing team, the main roles, and the overall recruitment plan to support the growth expected in your business plan. You should also outline the qualifications and experience necessary to fulfil each role, and how you intend to recruit (using job boards, referrals, or headhunters).

You should then state the operating hours of your chicken farm - so that the reader can check the adequacy of your staffing levels - and any plans for varying opening times during peak season. Additionally, the plan should include details on how you will handle customer queries outside of normal operating hours.

The next part of this section should focus on the key assets and IP required to operate your business. If you depend on any licenses or trademarks, physical structures (equipment or property) or lease agreements, these should all go in there.

You may have key assets such as the land and the buildings, chicken coops and other infrastructure, necessary for running the farm. You could also have intellectual property such as proprietary feed formulas, or a unique egg-grading system. These may be the key assets and IP that the chicken farm needs to be a successful business.

Finally, you should include a list of suppliers that you plan to work with and a breakdown of their services and main commercial terms (price, payment terms, contract duration, etc.). Investors are always keen to know if there is a particular reason why you have chosen to work with a specific supplier (higher-quality products or past relationships for example).

7. The presentation of the financial plan

The financial plan section is where we will present the financial forecast we talked about earlier in this guide.

Now that you have a clear idea of what goes in your chicken farm business plan, let's look at the solutions you can use to draft yours.

What tool should I use to write my chicken farm's business plan?

There are two main ways of creating your chicken farm business plan:

Using specialized business planning software,
Hiring a business plan writer.

Using an online business plan software for your chicken farm's business plan

The modern and most efficient way to write a chicken farm business plan is to use business plan software.

There are several advantages to using specialized software:

You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
You are guided through the writing process by detailed instructions and examples for each part of the plan
You can access a library of dozens of complete business plan samples and templates for inspiration
You get a professional business plan, formatted and ready to be sent to your bank or investors
You can easily track your actual financial performance against your financial forecast
You can create scenarios to stress test your forecast's main assumptions
You can easily update your forecast as time goes by to maintain visibility on future cash flows
You have a friendly support team on standby to assist you when you are stuck

If you're interested in using this type of solution, you can try The Business Plan Shop for free by signing up here.

Hiring a business plan writer to write your chicken farm's business plan

Outsourcing your chicken farm business plan to a business plan writer can also be a viable option.

Business plan writers are experienced in writing business plans and adept at creating financial forecasts without errors. Furthermore, hiring a consultant can save you time and allow you to focus on the day-to-day operations of your business.

However, hiring business plan writers is expensive as you are paying for the software used by the consultant, plus their time, and their profit margin of course.

From experience, you need to budget at least £1.5k ($2.0k) excluding tax for a complete business plan, more if you need to make changes after the initial version (which happens frequently after the initial meetings with lenders or investors).

You also need to be careful when seeking investment. Investors want their money to be used to grow the business, not spent on consulting fees. Therefore, the amount you spend on business plan writing services (and other consulting services such as legal services) needs to be negligible relative to the amount raised.

The other drawback is that you usually don't own the business plan itself: you just get the output, while the actual document is saved in the consultant's business plan software - which makes it difficult to maintain the document up to date without hiring the consultant on a retainer.

For these reasons, outsourcing the chicken farm business plan to a business plan writer should be considered carefully, weighing both the advantages and disadvantages of hiring outside help.

Ultimately, it may be the right decision for some businesses, while others may find it beneficial to write their business plan using online software.

Why not create your chicken farm's business plan using Word or Excel?

I must advise against using Microsoft Excel and Word (or their Google, Apple, or open-source equivalents) to write your chicken farm business plan. Let me explain why.

Firstly, creating an accurate and error-free financial forecast on Excel (or any spreadsheet) is highly technical and requires a strong grasp of accounting principles and financial modelling skills. It is, therefore, unlikely that anyone will fully trust your numbers unless you have both a degree in finance and accounting and significant financial modelling experience, like us at The Business Plan Shop.

Secondly, relying on spreadsheets is inefficient. While it may have been the only option in the past, technology has advanced significantly, and software can now perform these tasks much faster and with greater accuracy. With the rise of AI, software can even help us detect mistakes in forecasts and analyze the numbers for better decision-making.

And with the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.

Moreover, software makes it easier to compare actuals versus forecasts and maintain up-to-date forecasts to keep visibility on future cash flows, as we discussed earlier in this guide. This task is cumbersome when using spreadsheets.

Now, let's talk about the written part of your chicken farm business plan. While it may be less error-prone, using software can bring tremendous gains in productivity. Word processors, for example, lack instructions and examples for each part of your business plan. They also won't automatically update your numbers when changes occur in your forecast, and they don't handle formatting for you.

Overall, while Word or Excel may seem viable for some entrepreneurs to create a business plan, it's by far becoming an antiquated way of doing things.

Takeaways

A business plan has 2 complementary parts: a financial forecast showcasing the expected growth, profits and cash flows of the business; and a written part which provides the context needed to judge if the forecast is realistic and relevant.
Having an up-to-date business plan is the only way to keep visibility on your chicken farm's future cash flows.
Using business plan software is the modern way of writing and maintaining business plans.

We hope that this practical guide gave you insights on how to write the business plan for your chicken farm. Do not hesitate to get in touch with our team if you still have questions.