How to write a business plan for an agricultural machinery wholesaler?

Creating a business plan for an agricultural machinery wholesaler is an essential process for any entrepreneur. It serves as a roadmap that outlines the necessary steps to be taken to start or grow the business, the resources required, and the anticipated financial outcomes. It should be crafted with method and confidence.

This guide is designed to provide you with the tools and knowledge necessary for creating an agricultural machinery wholesaler business plan, covering why it is so important both when starting up and running an established business, what should be included in your plan, how it should be structured, what tools should be used to save time and avoid errors, and other helpful tips.

We have a lot to cover, so let's get to it!

Why write a business plan for an agricultural machinery wholesaler?

Having a clear understanding of why you want to write a business plan for your agricultural machinery wholesaler 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 an agricultural machinery wholesaler 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 agricultural machinery wholesaler. 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 agricultural machinery wholesaler to be in the next three to five years.

Once you have a clear destination for your agricultural machinery wholesaler, 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 get visibility on future cash flows

If your small agricultural machinery wholesaler runs out of cash: it's game over. That's why we often say "cash is king", and it's crucial to have a clear view of your agricultural machinery wholesaler's future cash flows.

So, how can you achieve this? It's simple - you need to have an up-to-date financial forecast.

The good news is that your agricultural machinery wholesaler business plan already includes a financial forecast (which we'll discuss further in this guide). Your task is to ensure it stays current.

To accomplish this, it's essential to regularly compare your actual financial performance with what was planned in your financial forecast. Based on your business's current trajectory, you can make adjustments to the forecast.

By diligently monitoring your agricultural machinery wholesaler's financial health, you'll be able to spot potential financial issues, like unexpected cash shortfalls, early on and take corrective actions. Moreover, this practice will enable you to recognize and capitalize on growth opportunities, such as excess cash flow enabling you to expand to new locations.

To secure financing

A detailed business plan becomes a crucial tool when seeking financing from banks or investors for your agricultural machinery wholesaler.

Investing and lending to small businesses are very risky activities given how fragile they are. Therefore, financiers have to take extra precautions before putting their capital at risk.

At a minimum, financiers will want to ensure that you have a clear roadmap and a solid understanding of your future cash flows (like we just explained above). But they will also want to ensure that your business plan fits the risk/reward profile they seek.

This will off-course vary from bank to bank and investor to investor, but as a rule of thumb. Banks will want to see a conservative financial management style (low risk), and they will use the information in your business plan to assess your borrowing capacity — the level of debt they think your business can comfortably handle — and your ability to repay the loan. This evaluation will determine whether they'll provide credit to your agricultural machinery wholesaler and the terms of the agreement.

Whereas investors will carefully analyze your business plan to gauge the potential return on their investment. Their focus lies on evidence indicating your agricultural machinery wholesaler's potential for high growth, profitability, and consistent cash flow generation over time.

Now that you recognize the importance of creating a business plan for your agricultural machinery wholesaler, let's explore what information is required to create a compelling plan.

What information is needed to create a business plan for an agricultural machinery wholesaler?

Writing an agricultural machinery wholesaler business plan requires research so that you can project sales, investments and cost accurately in your financial forecast.

In this section, we cover three key pieces of information you should gather before drafting your business plan!

Carrying out market research for an agricultural machinery wholesaler

Carrying out market research before writing a business plan for an agricultural machinery wholesaler is essential to ensure that the financial projections are accurate and realistic.

Market research helps you gain insight into your target customer base, competitors, pricing strategies and other key factors which can have an impact on the commercial success of your business.

In particular, it is useful in forecasting revenue as it provides valuable data regarding potential customers’ spending habits and preferences.

Your market research might reveal that farmers may be looking for more efficient and cost-effective machinery that could make their operations more productive. Additionally, your research might indicate that there could be an increasing demand for machinery that is designed for specific crops or uses, such as corn harvesters or hay balers.

This information can then be used to create more accurate financial projections which will help investors make informed decisions about investing in your agricultural machinery wholesaler.

Developing the sales and marketing plan for an agricultural machinery wholesaler

As you embark on creating your agricultural machinery wholesaler business plan, it is crucial to budget sales and marketing expenses beforehand.

A well-defined sales and marketing plan should include precise projections of the actions required to acquire and retain customers. It will also outline the necessary workforce to execute these initiatives and the budget required for promotions, advertising, and other marketing efforts.

This approach ensures that the appropriate amount of resources is allocated to these activities, aligning with the sales and growth objectives outlined in your business plan.

The staffing and capital expenditure requirements of an agricultural machinery wholesaler

Whether you are starting or expanding an agricultural machinery wholesaler, 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.

Staffing costs may include salaries for sales and administrative personnel, as well as benefits such as health insurance. Equipment costs may include items such as forklifts, computers, and other machinery needed to store and transport agricultural machinery.

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 agricultural machinery wholesaler, it is time to start creating your financial forecast.

What goes into your agricultural machinery wholesaler's financial forecast?

The objective of the financial forecast of your agricultural machinery wholesaler'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 an agricultural machinery wholesaler 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 an agricultural machinery wholesaler shows how much revenue and profits your business is expected to generate in the future.

Ideally, your agricultural machinery wholesaler's P&L statement should show:

• Healthy growth - above inflation level
• Improving or stable profit margins
• Positive net profit

Expectations will vary based on the stage of your business. A startup will be expected to grow faster than an established agricultural machinery wholesaler. And similarly, an established company should showcase a higher level of profitability than a new venture.

The projected balance sheet of your agricultural machinery wholesaler

Your agricultural machinery wholesaler's forecasted balance sheet enables the reader of your plan to assess your financial structure, working capital, and investment policy.

It is composed of three types of elements: assets, liabilities and equity:

• Assets: represent what the business owns and uses to produce cash flows. It includes resources such as cash, equipment, and accounts receivable (money owed by clients).
• Liabilities: represent funds advanced to the business by lenders and other creditors. It includes items such as accounts payable (money owed to suppliers), taxes due and loans.
• Equity: is the combination of what has been invested by the business owners and the cumulative profits and losses generated by the business to date (which are called retained earnings). Equity is a proxy for the value of the owner's stake in the business.

Your agricultural machinery wholesaler's balance sheet will usually be analyzed in conjunction with the other financial statements included in your forecast.

Two key points of focus will be:

• Your agricultural machinery wholesaler's liquidity: does your business have sufficient cash and short-term assets to pay what it owes over the next 12 months?
• And its solvency: does your business have the capacity to repay its debt over the medium-term?

The cash flow forecast

A projected cash flow statement for an agricultural machinery wholesaler is used to show how much cash the business is generating or consuming.

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 agricultural machinery wholesaler 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 agricultural machinery wholesaler 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 an agricultural machinery wholesaler.

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

This table helps size the investment required to set up the agricultural machinery wholesaler, 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 agricultural machinery wholesaler business plan, let's have a look at the written part of the plan.

The written part of an agricultural machinery wholesaler business plan

The written part of the business plan is where you will explain what your business does and how it operates, what your target market is, whom you compete against, and what strategy you will put in place to seize the commercial opportunity you've identified.

Having this context is key for the reader to form a view on whether or not they believe that your plan is achievable and the numbers in your forecast realistic.

The written part of an agricultural machinery wholesaler business plan is composed of 7 main sections:

1. The executive summary
2. The presentation of the company
3. The products and services
4. The market analysis
5. The strategy
6. The operations
7. The financial plan

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

1. The executive summary

In your agricultural machinery wholesaler's business plan, the first section is the executive summary — a captivating overview of your plan that aims to pique the reader's interest and leave them eager to learn more about your business.

When crafting the executive summary, start with an introduction to your business, including its name, concept, location, how long it has been running, and what sets it apart. Briefly mention the products and services you plan to offer and your target customer profile.

Following that, provide an overview of the addressable market for your agricultural machinery wholesaler, current trends, and potential growth opportunities.

Next, include a summary of key financial figures like projected revenues, profits, and cash flows.

Finally, in the "ask" section, detail any funding requirements you may have.

2. The presentation of the company

In your agricultural machinery wholesaler business plan, the second section should focus on the structure and ownership, location, and management team of your company.

In the structure and ownership part, you'll provide an overview of the business's legal structure, details about the owners, and their respective investments and ownership shares. This clarity is crucial, especially if you're seeking financing, as it helps the reader understand which legal entity will receive the funds and who controls the business.

Moving on to the location part, you'll offer an overview of the company's premises and their surroundings. Explain why this particular location is of interest, highlighting factors like catchment area, accessibility, and nearby amenities.

When describing the location of your agricultural machinery wholesaler, you could emphasize its convenience and accessibility. It may be located close to a major transportation hub, such as an airport or a highway, which could make it easier for customers to access the wholesaler. Additionally, it could be situated near a densely populated area, providing you with a greater potential customer base. You could also point out that the location may be in a safe and secure region, with a low crime rate and a reliable infrastructure. Lastly, you could emphasize that the wholesaler could benefit from the local resources and amenities, such as a skilled workforce and a suitable climate.

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

Don't forget to emphasize any past successes achieved by the management team and how long they've been working together. Demonstrating their track record and teamwork will help potential lenders or investors gain confidence in their leadership and ability to execute the business plan.

3. The products and services section

The products and services section of your agricultural machinery wholesaler business plan should include a detailed description of what your company sells to its customers. 

For example, your agricultural machinery wholesaler might offer customers access to a wide selection of tractors, combines, and other farming equipment, as well as maintenance and repair services. They might also provide advice on selecting the best machinery for specific needs, such as guidance on choosing the most efficient and cost-effective products. Additionally, they may offer delivery and installation services, ensuring customers receive their products quickly and safely. These offerings enable customers to purchase reliable and cost-effective agricultural machinery, with the assurance that their equipment and services are of the highest quality.

The reader will want to understand what makes your agricultural machinery wholesaler unique from other businesses in this competitive market.

When drafting this section, you should be precise about the categories of products or services you sell, the clients you are targeting and the channels that you are targeting them through. 

4. The market analysis

When outlining your market analysis in the agricultural machinery wholesaler business plan, it's essential to include comprehensive details about customers' demographics and segmentation, target market, competition, barriers to entry, and relevant regulations.

The primary aim of this section is to give the reader an understanding of the market size and appeal while demonstrating your expertise in the industry.

To begin, delve into the demographics and segmentation subsection, providing an overview of the addressable market for your agricultural machinery wholesaler, key marketplace trends, and introducing various customer segments and their preferences in terms of purchasing habits and budgets.

Next, shift your focus to the target market subsection, where you can zoom in on the specific customer segments your agricultural machinery wholesaler targets. Explain how your products and services are tailored to meet the unique needs of these customers.

For example, your target market might include farmers who need to purchase large amounts of agricultural machinery for their operations. These customers need to buy large quantities of items like tractors, harvesters, and other types of farm equipment. They typically have high budgets and need to purchase their machinery from a reliable wholesaler.

In the competition subsection, introduce your main competitors and explain what sets your agricultural machinery wholesaler apart from them.

Finally, round off your market analysis by providing an overview of the main regulations that apply to your agricultural machinery wholesaler.

5. The strategy section

When writing the strategy section of a business plan for your agricultural machinery wholesaler, it is essential to include information about your competitive edge, pricing strategy, sales & marketing plan, milestones, and risks and mitigants.

The competitive edge subsection should explain what sets your company apart from its competitors. This part is especially key if you are writing the business plan of a startup, as you have to make a name for yourself in the marketplace against established players.

The pricing strategy subsection should demonstrate how you intend to remain profitable while still offering competitive prices to your customers.

The sales & marketing plan should outline how you intend to reach out and acquire new customers, as well as retain existing ones with loyalty programs or special offers. 

The milestones subsection should outline what your company has achieved to date, and its main objectives for the years to come - along with dates so that everyone involved has clear expectations of when progress can be expected.

The risks and mitigants subsection should list the main risks that jeopardize the execution of your plan and explain what measures you have taken to minimize these. This is essential in order for investors or lenders to feel secure in investing in your venture.

Your agricultural machinery wholesaler could face market risks. These may include fluctuating prices of the machinery, or changing demand for the machinery due to changes in the market. Your agricultural machinery wholesaler could also face operational risks. This may include disruption in the supply chain, or a breakdown in the machinery that is being sold. These risks could result in a disruption in services or a decrease in customer satisfaction.

6. The operations section

The operations of your agricultural machinery wholesaler must be presented in detail in your business plan.

Begin by addressing your staff, specifying the main roles and your recruitment plan to support the anticipated growth. Outline the qualifications and experience needed for each role and discuss your recruitment strategies, which may involve using job boards, referrals, or headhunters.

Next, clearly state your agricultural machinery wholesaler's operating hours, allowing the reader to gauge the adequacy of your staffing levels. Additionally, mention any considerations for varying opening times during peak seasons and your approach to handling customer queries outside regular operating hours.

The key assets and intellectual property (IP) required to run your business should also be highlighted. If you rely on licenses, trademarks, physical structures like equipment or property, or lease agreements, ensure they are well-documented in this section.

You may have key assets such as physical equipment, such as tractors, harvesters, and other agricultural machinery, as well as intellectual property such as proprietary software and sales data. These could be important to the success of your business, as they may help you increase efficiency and maximize profits.

Finally, provide a comprehensive list of suppliers you intend to collaborate with, along with a breakdown of their services and main commercial terms, such as price, payment terms, break clauses and contract duration. Investors often seek insight into the reasons behind your supplier choices, which may include a preference for higher-quality products or established relationships from past ventures.

7. The presentation of the financial plan

The financial plan section is where we will include the financial forecast we discussed earlier in this guide.

Now that you have a clear idea of what goes into an agricultural machinery wholesaler business plan, let's look at some of the tools you can use to create yours efficiently.

What tool should I use to write my agricultural machinery wholesaler's business plan?

There are two main ways of creating your agricultural machinery wholesaler business plan:

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

Using an online business plan software for your agricultural machinery wholesaler's business plan

Using online business planning software is the most efficient and modern way to create an agricultural machinery wholesaler business plan.

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 agricultural machinery wholesaler's business plan

Outsourcing your agricultural machinery wholesaler business plan to a business plan writer can also be a viable option.

These writers possess valuable experience in crafting business plans and creating accurate financial forecasts. Additionally, enlisting their services can save you precious time, enabling you to concentrate on the day-to-day operations of your business.

It's important to be mindful, though, that hiring business plan writers comes with a cost. You'll be paying not just for their time but also for the software they use, and their profit margin.

Based on experience, a complete business plan usually requires a budget of at least £1.5k ($2.0k) excluding tax, and more if revisions are needed after initial meetings with lenders or investors - changes often arise following these discussions.

When seeking investment, be cautious about spending too much on consulting fees. Investors prefer their funds to contribute directly to business growth. Thus, the amount you spend on business plan writing services and other consulting services should be negligible compared to the amount you raise.

Another aspect to consider is that while you'll receive the output of the business plan, you usually won't own the actual document. It will be saved in the consultant's business plan software, which will make updating the plan challenging without retaining the consultant on a retainer.

Given these factors, it's essential to carefully weigh the pros and cons of outsourcing your agricultural machinery wholesaler business plan to a business plan writer and decide what best suits your business's unique needs.

Why not create your agricultural machinery wholesaler's business plan using Word or Excel?

Using Microsoft Excel and Word (or their Google, Apple, or open-source equivalents) to write an agricultural machinery wholesaler business plan is a terrible idea.

Why?

For starters, creating an accurate and error-free financial forecast on Excel (or any spreadsheet) is very technical and requires both a strong grasp of accounting principles and solid skills in financial modelling.

As a result, it is unlikely anyone will trust your numbers unless - like us at The Business Plan Shop - you hold a degree in finance and accounting and have significant financial modelling experience in your past.

The second reason is that it is inefficient. Building forecasts on spreadsheets was the only option in the 1990s and early 2000s, nowadays technology has advanced and software can do it much faster and much more accurately.

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.

Also, using software makes it easy to compare actuals vs. forecasts and maintain our forecasts up to date to maintain visibility on future cash flows - as we discussed earlier in this guide - whereas this is a pain to do with a spreadsheet.

That's for the forecast, but what about the written part of my agricultural machinery wholesaler business plan?

This part is less error-prone, but here also software brings tremendous gains in productivity:

• Word processors don't include instructions and examples for each part of your business plan
• Word processors don't update your numbers automatically when they change in your forecast
• Word processors don't handle the formatting for you
• ...

Overall, while Word or Excel may be viable options for creating an agricultural machinery wholesaler business plan for some entrepreneurs, it is by far not the best or most efficient solution.

Takeaways

1. Using business plan software is a modern and cost-effective way of writing and maintaining business plans.
2. A business plan is not a one-shot exercise as maintaining it current is the only way to keep visibility on your future cash flows.
3. A business plan has 2 main parts: a financial forecast outlining the funding requirements of your agricultural machinery wholesaler and the expected growth, profits and cash flows for the next 3 to 5 years; and a written part which gives the reader the information needed to decide if they believe the forecast is achievable.

We hope that this in-depth guide met your expectations and that you now have a clear understanding of how to write your agricultural machinery wholesaler business plan. Do not hesitate to contact our friendly team if you have questions additional questions we haven't addressed here.

Also on The Business Plan Shop

• How to write a business plan to secure a bank loan?
• Internal business plan guide
• How long is a business plan?
• How to make a business plan look professional
• Key steps to write a business plan?
• Top mistakes to avoid in your business plan

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