How to open a maté farm?

There's no doubt that starting a maté farm requires a lot of work, but with expert planning, you'll be well on your way to creating a profitable business venture.

This guide will give you a low down on all of the major steps involved, from choosing a legal structure to creating a financial forecast and registering your business.

We will also walk you through the process of checking whether or not your idea can be viable given market conditions.

Let's embark on this exciting journey together!

Understanding how a maté farm works

The very first step when exploring a business idea such as starting a maté farm is to make sure you understand how the business operates and makes money (which is what we call the business model).

This will not only give you an initial idea of how profitable the business can be, but it will also enable you to make sure that this is the right business idea for you, given your skills, start-up capital and family or personal lifestyle, in particular.

The best ways to get to grips with the maté farm's business model are to:

• Talk to maté farm owners with experience
• Work a few months in a maté farm already in operation
• Take a training course

Talk to maté farm owners with experience

Experienced maté farm owners have valuable insights and can provide practical advice based on their firsthand experiences. 

They've likely encountered and overcome challenges that a newcomer might not anticipate. Learning from other’s mistakes can save you both time and money and potentially increase your venture’s chances of succeeding.

Work a few months in a maté farm already in operation

Obtaining work experience in the industry can be a crucial factor in confirming whether you truly want to start a maté farm, as it provides insight into the day-to-day activities.

For instance, if the working hours are longer than expected or if other business requirements don't align with your personal lifestyle or preferences, you might reconsider your entrepreneurial goals.

Even if you've decided that this business idea is a good fit for you, gaining work experience will still be valuable. It helps you better understand your target market and customer needs, which is likely to be beneficial when launching your own maté farm.

Take a training course

Obtaining training within your chosen industry is another way to get a feel for how a maté farm works before deciding to pursue a new venture.

Whatever approach you choose to familiarise yourself with the business, before going any further with your plans to open a maté farm, make sure you understand:

• What skills are required to run the business (compare this with your own skills)
• What a typical week in the business is like (compare this with your personal or family life)
• What is the potential turnover of a maté farm and the long-term growth prospects (compare this with your level of ambition)
• Your options once you decide to sell the business or retire (it's never too early to consider your exit)

What is the ideal founding team for my maté farm?

The next step to opening your maté farm, is to decide whether to assemble an ideal team or venture solo.

The failure rate for business start-ups is high: almost half don't make it past the five-year mark, and setting up a maté farm is no exception.

Starting with a group of co-founders helps reduce this risk as each of you brings complementary skills and enables the financial risk to be spread on multiple shoulders.

However, managing a business with multiple partners comes with its own set of challenges. Disagreements among co-founders are quite prevalent, and they can pose risks to the business. That's why it's essential to carefully weigh all aspects before launching a business.

To help you think things through, we recommend that you ask yourself the following questions:

• Do you need more co-founders for this venture?
• Do you share the same vision and ambition as your potential partners for this project?
• What is your plan B?

Let's look at these issues in more detail.

Do you need more co-founders for this venture?

To answer this question you will need to consider the following:

• Are there any key skills missing for which you would rather have a business partner than recruit an employee?
• Do we have enough equity? Would the company benefit from more capital at the outset?
• Will the proposed number of founders make it easy to make decisions (an odd number of partners, or a majority partner, is generally recommended to avoid deadlock)?

In simple terms, co-founders bring skills, money, or both to the table. Having more partners is beneficial when there's a lack of either of these resources.

Do you share the same vision and ambition as your potential partners for this project?

One of the main sources of conflict between co-founders comes from a lack of alignment on the long-term vision.

To avoid any risk of disagreement, it is advisable to agree on ambitions from the outset and to provide an exit mechanism for one of the partners in the event of disagreement.

What is your plan B?

We hope your maté farm takes off and thrives, but it's smart to have a "plan B" just in case things don't go as expected.

How you tackle potential failure can vary broadly depending on the type of co-founders (close friend, spouse, ex-colleague, etc.) and the personal circumstances of each of them. 

For example, launching a family business with your spouse might seem exciting, but if it fails, you risk losing all of your household income at once, which might be stressful.

Likewise, starting a business with a friend might strain the friendship if things go wrong or if tough decisions need to be made.

Before diving in, make sure to thoroughly think about your choices. This way, you'll be ready for whatever might come your way when starting up.

Undertake market research for a maté farm

The next step to start your maté farm is to use market research to check that there is indeed an opportunity to be seized. Let's take a look at what this involves.

The objectives of market research

In a nutshell, doing market research enables you to verify that there is a business opportunity for your company to seize, and to size the opportunity precisely. 

First of all, market research enables you to assess whether the market you're targeting is large enough to withstand the arrival of a new competitor: your maté farm.

The market analysis will also help you define the product and service offering of your maté farm, and transcribe it into a market positioning and concept that will strike a chord with your target customers.

Finally, your market research will provide you with the data you need to draw up your sales and marketing plan and estimate the revenue potential of your maté farm.

Analyse key trends in the industry

Market research for a maté farm must always begin with a thorough investigation of consumer habits and current industry trends.

Normally, maté farm market research begins with a sectorial analysis which will provide you with a better understanding of how the industry is organized, who the major players are, and what are the current market trends.

Assess the demand

A demand analysis enables you to accurately assess the expectations of your maté farm's future customers.

Your analysis will focus on the following questions:

• How many potential customers are present in the geographical areas served by your company?
• What are their expectations and purchasing behaviors?
• How much are they willing to spend?
• Are there different customer segments with distinct characteristics?
• How to communicate and where to promote your business to reach your target market?

The main goal of your demand analysis is to identify potential customer segments that your maté farm could target and what products or services would meet these customers' expectations.

For example, your target market might include health food stores and cafes known for offering wellness products. Health food stores often attract consumers who are conscious about natural and organic products, making them ideal for distributing your maté. Cafes that emphasize a unique and healthy menu could also benefit from incorporating maté, appealing to customers looking for alternative, energizing beverages. These segments value quality, health benefits, and unique offerings, aligning perfectly with what your maté farm provides.

Supply side

Supply-side analysis looks at the products and services offered by your competitors on the market.

You should focus here on the following questions:

• Who will your competitors be?
• Are they any good?
• Where are they located?
• Who do they target?
• What range of products and services do they offer?
• Are they small independent players?
• What prices do they charge?
• How do they sell their products and services?
• Do their concepts appeal to customers?

One of the aims of your supply-side analysis will be to gather the elements that will enable you to define a market positioning that will set you apart from what is already being done on the market, so as to avoid direct confrontation with competitors already established (more on that below).

Regulations

Market research is also an opportunity to look at the regulations and conditions required to do business.

You should ask yourself the following questions:

• Does it take a specific degree to open a maté farm?
• Do you need specific licences or business permits?
• What are the main regulations applicable to your future business?

Given that your project is still in its early stages, your analysis of the regulation can be carried out at a high level for the time being. You just want to identify the main laws applicable and check that you meet the conditions for running this type of business before going any further.

Once your project is more advanced, you can come back to the regulation in greater detail with your lawyer.

Concluding your market research

Your market research should lead you to draw a clear conclusion about your chances of commercial success of your business idea:

• Either the market is saturated, and you'd better look into another business idea.
• Or there's an opportunity to be seized in the geographical area you're considering, and you can go ahead with your project to open a maté farm.

Choosing the right concept and positioning for your maté farm

Once your market research is completed, it's time to consider the type of maté farm you want to open and define precisely your company's market positioning in order to capitalise on the opportunity you identified during your market research.

Market positioning refers to the place your product and service offering occupies in customers' minds and how they differ from competing products and services. Being perceived as the premium solution, for example.

There are four questions you need to consider: 

• How will you compete with and differentiate yourself from competitors already on the market?
• Is it better to start or buy a maté farm already in operation?
• How will you validate your concept and market positioning?

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

How will you compete with and differentiate yourself from competitors already on the market?

When you choose to start up a maté farm, you are at a disadvantage compared to your rivals who have an established presence on the market. 

Your competitors have a reputation, a loyal customer base and a solid team already in place, whereas you're starting from scratch...

Entering the market and taking market share from your competitors won't happen automatically, so it's important to carefully consider how you plan to establish your presence.

There are four questions to consider here: 

• Can you avoid direct competition by targeting a customer segment that is currently poorly served by other players in the market?
• Can you offer something unique or complementary to what is already available on the market?
• How will you build a sustainable competitive advantage for your maté farm? 
• Do you have the resources to compete with well-established competitors on your own, or would it be wiser to explore alternative options?

Also, think about how your competitors will react to your arrival on their market.

Is it better to start or buy a maté farm already in operation?

An alternative to opening a new business is to take over a maté farm already trading. 

Purchasing an existing maté farm means you get a loyal customer base and an efficient team. It also avoids disrupting the equilibrium in the market by introducing a new player.

A takeover hugely reduces the risk of the business failing compared to starting a new business, whilst giving you the freedom to change the market positioning of the business taken over if you wish.

This makes buying an existing maté farm a solid alternative to opening your own.

However, buying a business requires more capital compared to starting a maté farm from scratch, as you will need to purchase the business from its current owner.

How will you validate your concept and market positioning?

Regardless of how you choose to establish your business, it's crucial to make sure that the way you position your company aligns with the expectations of your target market.

To achieve this, you'll have to meet with your potential customers to showcase your products or services and get their feedback.

Deciding where to base your maté farm

The next step to opening a maté farm is deciding where you want to set up your business.

Choosing the right location for your business is like finding the perfect stage for a play. Without it, your business may lack the spotlight it deserves.

Whilst there is no “perfect” location for your maté farm, one that meets as many of the following factors as possible could be ideal:

• Climate and soil quality: Essential for the growth of high-quality maté plants, which thrive in specific environmental conditions.
• Adequate infrastructure: Necessary for irrigation, processing, and transporting harvested maté.
• Availability of skilled labor: Important for cultivating, harvesting, and processing maté, ensuring efficient and effective farm operations.
• Efficient logistics: Critical for transporting maté to various distribution points, maintaining freshness and quality.

This list is obviously not exhaustive and will have to be adapted to the particularities of your project. 

Once you’ve considered the factors above, it’s important to think about the budget that your startup has at its disposal. You’ll need to find a location that meets your business requirements but is affordable enough, especially short-term.

If you opt for renting instead of buying your premises, make sure to take into account the terms of the lease, including aspects such as the duration, rent increase, renewal, and so on.

The lease contractual terms vary greatly from country to country, so be sure to check the terms applicable to your situation and have your lease reviewed by your lawyer before signing.

Choosing your maté farm's legal form

The next step to open a maté farm is to choose the legal form of your business.

The legal form of a business simply means the legal structure it operates under. This structure outlines how the business is set up and defines its legal obligations and responsibilities.

Choosing the legal form for your maté farm is an important decision because this will affect your tax obligations, your personal exposure to risk, how decisions are made within the business, the sources of financing available to you, and the amount of paperwork and legal formalities, amongst other things.

The way you set up your business legally will impact your taxes and social contributions, both at a personal level (how much your income is taxed) and at the business level (how much the business's profits are taxed).

Your personal exposure to risk as a business owner also varies based on the legal form of your business. Certain legal forms have a legal personality (also called corporate personality), which means that the business obtains a legal entity which is separate from the owners and the people running it. To put it simply, if something goes wrong with a customer or competitor, for example, with a corporate personality the business gets sued, whereas without it is the entrepreneur personally.

Similarly, some legal forms benefit from limited liability. With limited liability, the maximum you can lose if the business fails is what you invested. Your personal assets are not at risk. However, not all structures protect you in such a way - some structures may expose your personal assets (for example, your creditors might try to go after your house if the business incurs debts and then goes under without being able to repay what it owed).

How decisions are made within the business is also influenced by the legal form of your maté farm, and so is the amount of paperwork and legal formalities: do you need to hold general assemblies, to produce annual accounts, to get the accounts audited, etc.

The legal form also influences what sources of financing are available to you. Raising capital from investors requires having a company set up, and they will expect limited liability and corporate personality.

It's important to note that the actual legal structures for businesses vary slightly from country to country. But deciding on the legal structure is usually quite straightforward once you know how many co-founders you'll have, whether you'll have employees, and the expected revenues for the business.

Also note that a good business idea will be viable whatever the legal form you choose. How businesses are taxed changes every year, therefore one cannot rely on specific tax benefits tied to a particular structure when deciding to go into business.

One easy way to proceed is to take note of the legal structures used by your top five competitors, and assume you're going with the most commonly chosen option. Once your idea is mature and you're prepared to formally register the business, you can validate this assumption with a lawyer and an accountant.

Calculating the budget to open a maté farm

The next step to opening a maté farm involves thinking about the equipment and staff needed to launch and run your business on a day-to-day basis.

Each project has its own characteristics, which means that it is not possible to estimate the budget for opening a maté farm without building a complete financial forecast.

So be careful when you see estimates circulating on the Internet. As with all figures, ask yourself these questions:

• Is my project similar (location, concept, size, etc.)?
• How recent is the information?
• Is it from a trustworthy source?

Startup costs and investments to open a maté farm

For a maté farm, the initial working capital requirements and investments may include the following elements:

• Land acquisition: acquiring suitable land with the right climate and soil for growing maté.
• Irrigation systems: installing efficient irrigation systems to ensure consistent water supply for the crops.
• Greenhouses: constructing greenhouses for controlled growth environments, especially for young maté plants.
• Processing equipment: purchasing equipment for drying, grinding, and packaging maté leaves.
• Storage facilities: building storage facilities to keep harvested maté leaves in optimal conditions before processing and distribution.

Of course, you will need to adapt this list to your company's specific needs.

Staffing plan to operate a maté farm

To establish an accurate financial forecast for your maté farm, you will also need to assess your staffing requirements.

The extent to which you need to recruit will of course depend on your ambitions for the company's growth, but you might consider recruiting for the following positions:

For example, you could recruit an agricultural manager to oversee the cultivation and harvesting processes, ensuring optimal growth conditions for your maté plants. Additionally, you might hire a processing technician to handle the drying, grinding, and packaging of the maté leaves, maintaining product quality and consistency. To streamline your administrative tasks, you could also bring on an office administrator to manage paperwork, scheduling, and communication with suppliers and buyers.

Once again, this list is only indicative and will need to be adjusted according to the specifics of your maté farm.

Other operating expenses required to run a maté farm

You also need to consider operating expenses to run the business:

• Staff salaries: wages for farm workers, supervisors, and administrative staff.
• Accountancy fees: payments for accounting and bookkeeping services.
• Insurance costs: premiums for crop insurance, liability insurance, and health insurance for staff.
• Software licenses: costs for farm management software and other necessary digital tools.
• Banking fees: charges for banking services and transactions.
• Seeds and seedlings: purchasing seeds and young plants for cultivation.
• Fertilizers: buying fertilizers to maintain soil fertility and promote plant growth.
• Pest control: expenses for pesticides and other pest management solutions.
• Utilities: payments for water, electricity, and other essential utilities.
• Fuel: costs for fuel to operate machinery and transport vehicles.
• Maintenance and repairs: ongoing maintenance and repair costs for equipment and infrastructure.
• Harvesting costs: expenses associated with harvesting maté leaves, including labor and equipment.
• Packaging materials: purchasing materials for packaging processed maté.
• Transportation costs: expenses for transporting maté from the farm to processing facilities or distribution centers.
• Marketing and advertising: costs for promoting your maté products to potential buyers.

This list will need to be adapted to the specifics of your maté farm but should be a good starting point for your budget.

Creating a sales & marketing plan for your maté farm

The next step to start a maté farm is to think about how you are going to attract and retain customers.

You need to ask yourself the following questions: 

• What actions can be leveraged to attract as many customers as possible?
• How will you then retain customers?
• What resources do you need to allocate for each initiative (human and financial)?
• How many sales and what turnover can you expect to generate in return?

How you will attract and retain customers depends on your ambition, the size of your startup and the nature of your exact concept, but you could consider the following initiatives.

For example, your maté farm might establish partnerships with health food stores and cafes to supply them with your premium maté products. You will showcase the health benefits and unique qualities of your maté through in-store tastings and informational sessions, creating direct engagement with potential customers. Additionally, you might attend trade shows and wellness expos to network with potential buyers, presenting your farm’s story, sustainable practices, and product samples to build relationships and secure new sales channels.

Your sales forecast may also be influenced by seasonality related to your business type, such as fluctuations during busy holiday periods, and your competitive environment.

Build your maté farm's financial forecast

The next step to start your maté farm: putting your financial projections together.

What is the financial forecast for a maté farm?

A forecast is a quantified decision-making document that shows the initial investment required to open a maté farm and the company's potential profitability and cash flow generation over the next 3 to 5 years.

As you think about your maté farm idea, the main role of financial projections will be to help you decide whether it makes sense to create the company.

Building a financial forecast helps determine the amount of initial financing required to start your maté farm.

In fact, creating financial projections is the only way to assess the amount of initial financing you'll need to open your maté farm, and to make sure your project makes economic and financial sense.

Keep in mind that very few business ideas are financially viable. At The Business Plan Shop, we've seen nearly a million business start-up ideas, and we estimate that less than one in four is economically viable.

Your forecast will therefore require your full attention and constant revision, as your project matures. It's also a good idea to simulate different scenarios to anticipate several possibilities (what happens if your sales take longer than expected to ramp up, for example), so you're ready for all eventualities.

When seeking financing, your forecast will be incorporated into your business plan, which is the document you will use to present your business idea to financial partners. We'll come back to the business plan in more detail later in this guide.

Creating and updating your maté farm's forecast is an ongoing process. Indeed, having up-to-date financial projections is the only way to maintain visibility over your company's future cash flow and cash position.

Forecasting is, therefore, the financial management tool that will be with you throughout the life of your company. Once you've started trading, you'll need to regularly compare the difference between your actual accounts and your forecasts, and then adjust them to maintain visibility over your future cash flows.

What does a financial projection look like?

The following financial tables will be used to present your maté farm's financial forecast.

The projected P&L statement

Your maté farm's forecasted P&L statement will enable you to visualise your maté farm's expected growth and profitability over the next three to five years.

The projected balance sheet of your maté farm

The projected balance sheet gives an overview of your maté farm's financial structure at the end of the financial year.

The cash flow projection

A cash flow forecast for a maté farm shows the projected inflows and outflows of cash over a specific period, providing insights into liquidity and financial health.

What is the best financial forecasting tool for starting your maté farm?

The simplest and easiest way to create your maté farm's projections is to use professional online financial forecasting software such as the one we offer at The Business Plan Shop.

There are several advantages to using specialised software:

• You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
• You have access to complete financial forecast templates
• You get a complete financial forecast ready to be sent to your bank or investors
• The software helps you identify and correct any inconsistencies in your figures
• You can create scenarios to stress-test your forecast's main assumptions to stress-test the robustness of your business model
• After you start trading, you can easily track your actual financial performance against your financial forecast, and recalibrate your forecast to maintain visibility on your future cash flows
• You have a friendly support team on standby to assist you when you are stuck

If you are interested in this type of solution, you can try our forecasting software for free by signing up here.

Finding a name and registering your maté farm

The next step in starting a maté farm is to decide on a name for your entity. 

For starters, you cannot take a name similar to a name already registered by a competitor or protected by a trademark without inevitably risking getting sued. So you’ll need to find a name available, and reserve it before others can.

In addition, you will probably want to use the same name for:

• Your company’s legal name - Example LTD or Example Inc
• Your trading name - Example
• A trademark - Example ® 
• Your company’s domain name - Example.com

The issue is that you’ll need to register your name in three different places almost simultaneously, but with each place having its own timeframes:

• Registering a domain name is instantaneous
• Registering a trademark takes at least 3 months (if your application is accepted)
• Registering a company depends on the country, but it's generally fairly quick

You will therefore be faced with the choice of either registering everything at once in the hope that your name will be accepted everywhere, or proceeding step by step in order to minimise costs, but taking the risk that someone else will register one of the names you wanted in the meantime.

Our advice is to discuss the strategy with your legal counsel (see further down in this guide) and to give priority to your domain names and your registered trademark. You'll always have the option of using a trading name that's different from your company's legal name, and that's not a big deal.  

To check that the name you want is not already in use, you should consult:

• Your country's business register
• The register of trademarks where you wish to obtain protection
• Your preferred search engine
• A domain name reservation company (such as GoDaddy)

If the name you want is available, you can go ahead and register it.

Deciding upon the corporate identity of your maté farm

The next step in opening a maté farm is to look at your company's visual identity. 

Your company's “visual identity” plays a crucial role in shaping your brand image. It helps you to be recognizable and to stand out from your competitors. 

Although you can define your visual identity yourself, it is generally advisable to call on the services of a designer or marketing agency to achieve a professional result.

At a minimum, you will need to define the following elements: 

• Logo 
• Brand guidelines
• Business cards
• Website theme

Logo

Your maté farm's logo allows others to quickly identify your company. It will be used on all your communication media (website, social networks, business cards, etc.) and official documents (invoices, contracts, etc.).

In addition to its design, it's important that your logo is available in a variety of colors, so that it can be seen on all media (white, dark background, etc.).

Brand guidelines

Having brand guidelines enables you to maintain consistency in formatting across all your communications media and official documents. 

Brand guidelines define the font (family and size), design and colours used by your brand. 

In terms of fonts, for example, you may use Roboto in size 20 for your titles and Lato in size 14 for your texts. 

The colours used to represent your brand should generally be limited to five: 

• The main colour, 
• A secondary colour (the accent),
• A dark background colour (blue or black),
• A grey background colour (to vary from white),
• Possibly another secondary colour.

Business cards

Designing business cards for your maté farm is a must, as they will allow you to communicate your contact details to your customers, suppliers, partners, potential recruits, etc. 

In principle, they will include your logo and the brand guidelines that we mentioned above.

Website theme

In the same way, the theme of your maté farm website will be based on your logo and the brand guidelines we mentioned above.

This involves defining the look and feel of your site's main graphic elements:

• Buttons,
• Menus,
• Forms,
• Banners,
• Etc. 

Understanding the legal and regulatory steps involved in opening a maté farm

The next step in opening a maté farm is to take the necessary legal and regulatory steps. 

We recommend that you be accompanied by a law firm for all of the steps outlined below.

Registering a trademark and protecting the intellectual property of your maté farm

The first step is to protect your company's intellectual property. 

As mentioned earlier in this guide, you have the option to register a trademark. Your lawyer can assist you with a thorough search to ensure your chosen trademark is unique and doesn't conflict with existing ones and help select the classes (economic activities) and jurisdictions in which to register your trademark. 

Your lawyer will also be able to advise you on other steps you could take to protect your company's other intellectual property assets.

Drafting the contractual documents for your maté farm

Your maté farm will rely on a set of contracts and legal documents for day-to-day operations. 

Once again, we strongly recommend that you have these documents drawn up by a lawyer. 

Your exact needs will depend on the country in which you are launching your maté farm and the size of the company you are planning. 

However, you may wish to consider the following documents at a minimum: 

• Employment contracts 
• General terms and conditions of sale
• General terms and conditions of use for your website
• Privacy Policy for your website
• Cookie Policy for your website
• Invoices
• Etc.

Applying for licences and permits and registering for various taxes

The licenses and permits needed for your business will depend on the country where you are establishing it. Your lawyer can guide you on the regulations relevant to your activity.

Similarly, your chartered accountant will be able to help you register for taxes and take the necessary steps to comply with the tax authorities.

Writing a business plan for your maté farm

The next step in opening a maté farm is to draw up your business plan.

What is a maté farm's business plan?

A business plan serves as a comprehensive roadmap outlining the objectives, strategies, and key components of your venture. 

There are two essential parts to a business plan:

• A numerical part, the financial forecast we mentioned earlier in this guide, which highlights the amount of initial financing needed to launch the business and its potential profitability over the next 3 to 5 years,
• A written part, which presents in detail the project of creating a maté farm and provides the necessary context to enable the reader of the business plan to judge the relevance and coherence of the figures included in the forecast.

Your business plan helps guide decision-making by showcasing your vision and financial potential in a coherent manner.

Your business plan will also be essential when you're looking for financing, as your financial partners will ask you for it when deciding whether or not to finance your project to open a maté farm. So it's best to produce a professional, reliable, and error-free business plan.

In essence, your business plan is the blueprint to turn your idea into a successful reality. 

What tool should you use to create your maté farm business plan?

If you want to write a convincing business plan quickly and efficiently, a good solution is to use an online business plan software for business start-ups like the one we offer at The Business Plan Shop.

Using The Business Plan Shop to create a business plan for a maté farm has several advantages :

• 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 startup 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 create scenarios to stress test your forecast's main assumptions
• You can easily track your actual financial performance against your financial forecast by importing accounting data
• 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 our solution, you can try The Business Plan Shop for free by signing up here.

Raise the financing needed to launch your maté farm

With your business plan in hand, you can tackle one of the final steps to open a maté farm  business: the search for financing.

Raising the capital needed to launch your business will probably require a combination of equity and debt, which are the two types of financing available to companies.

Equity funding

Equity is the sum of money invested in a maté farm by both founders and investors.

Equity is a key factor in business start-ups. Should the project fail, the sums invested in equity are likely to be lost; these sums therefore enable the founders to send a strong signal to their commercial and financial partners as to their conviction in the project's chances of success.

In terms of return on investment, equity investors can either receive dividends from the company (provided it is profitable) or realize capital gains by selling their shares (provided a buyer is interested in the company).

Equity providers are therefore in a very risky position. They can lose everything in the event of bankruptcy, and will only see a return on their investment if the company is profitable or resold. On the other hand, they can generate a very high return if the project is a success.

Given their position, equity investors look for start-up projects with sufficient growth and profitability potential to offset their risk.

From a technical standpoint, equity includes:

• Share capital and premiums: which represent the amount invested by the shareholders. This capital is considered permanent as it is non-refundable. In return for their investment, shareholders receive shares that entitle them to information, decision-making power (voting in general assembly), and the potential to receive a portion of any dividends distributed by the company.
• Director loans: these are examples of non-permanent capital advanced to the company by the shareholders. This is a more flexible way of injecting some liquidity into your company as you can repay director loans at any time.
• Reserves: these represent the share of profits set aside to strengthen the company's equity. Allocating a percentage of your profits to the reserves can be mandatory in certain cases (legal or statutory requirement depending on the legal form of your company). Once allocated in reserves, these profits can no longer be distributed as dividends.
• Investment grants: which represent any non-refundable amounts received by the company to help it invest in long-term assets.
• Other equity: which includes the equity items which don't fit in the other categories. Mostly convertible or derivative instruments. For a small business, it is likely that you won't have any other equity items.

The main sources of equity are as follows:

• Contributions made by the owners.
• Private investors: business angels, friends and family.
• Crowdfunding: raising funds by involving a group of people through campaigns where they contribute money or make donations, often getting something in return for their support.
• Start-up aid, e.g. government loans to help founders build up their start-up capital.

Debt financing

Debt is the other way of financing companies. Unlike equity, debt offers lenders a limited, contractually guaranteed return on their investment.

Your maté farm undertakes to pay lenders' interest and repay the capital borrowed according to a pre-agreed schedule. Lenders are therefore making money whether or not your company makes a profit.

As a result, the only risk lenders take is that of your maté farm going bankrupt, so they're extremely conservative and will want to see prudent, hands-on management of the company's finances.

From the point of view of the company and all its stakeholders (workforce, customers, suppliers, etc.), the company's contractual obligation to repay lenders increases the risk for all. As a result, there is a certain caution towards companies which are too heavily indebted.

Businesses can borrow debt in two main ways:

• Against assets: this is the most common way of borrowing. The bank funds a percentage of the price of an asset (a vehicle or a building, for example) and takes the asset as collateral. If the business cannot repay the loan, the bank takes the asset and sells it to reduce losses.
• Against cash flows: the bank looks at how much profit and cash flow the business expects to make in the future. Based on these projections, it assigns a credit risk to the business and decides how much the business can borrow and under what terms (amount, interest rate, and duration of the loan).

It's difficult to borrow against future cash flows when you're starting a maté farm, because the business doesn't yet have historical data to reassure about the credibility of cash flow forecast.

Borrowing to finance a portion of equipment purchases is therefore often the only option available to founders. The assets that can be financed with this option must also be easy to resell, in the unfortunate event that the bank is forced to seize them, which could limit your options even further.

As far as possible sources of borrowing are concerned, the main ones here are banks and credit institutions. Bear in mind, however, that each institution is different, in terms of the risk it is prepared to accept, what it is willing to finance, and how the risk of your project will be perceived.

In some countries, it is also possible to borrow from private investors (directly or via crowdfunding platforms) or other companies, but not everywhere.

Key points about financing your maté farm

Multiple solutions are available to help you raise the initial financing you need to open your maté farm. A minimum amount of equity will be needed to give the project credibility, and bank financing can be sought to complete the financing.

Launching your maté farm and monitoring progress against your forecast

Once you’ve secured financing, you will finally be ready to launch your maté farm. Congratulations! 

Celebrate the launch of your business and acknowledge the hard work that brought you here, but remember, this is where the real work begins. 

As you know, 50% of business start-ups do not pass the five-year mark. Your priority will be to do everything to secure your business's future. 

To do this, it is key to keep an eye on your business plan to ensure that you are on track to achieve your goals.

No one can predict the future with certainty, so it’s likely that your maté farm's financial performance will differ from what you predicted in your forecast.

This is why it is recommended to make several forecasts: 

• A base case (most likely)
• An optimistic scenario
• And a pessimistic scenario to test the robustness of your financial model

If you follow this approach, your numbers will hopefully be better than your optimistic case and you can consider accelerating your expansion plans. That’s what we wish you anyway!

If, unfortunately, your figures are below your base case (or worse than your pessimistic case), you will need to quickly put in place corrective actions, or consider stopping the activity. 

The key, in terms of decision-making, is to regularly compare your real accounting data to your maté farm's forecast to: 

• Measure the discrepancies and promptly identify where the variances with your base case come from
• Adjust your financial forecast as the year progresses to maintain visibility on future cash flow and cash position

There is nothing worse than waiting for your accountant to prepare your year-end accounts, which can take several months after the end of your financial year (up to nine months in the UK for example), to realise that the performance over the past year was well below the your base case and that your maté farm will not have enough cash to keep running over the next twelve months.

This is why using a financial forecasting solution that integrates with accounting software and offers actuals vs. forecast tracking out of the box, like the financial dashboards we offer at The Business Plan Shop, greatly facilitates the task and significantly reduces the risk associated with starting a business.

Key takeaways

• This guide outlines the 15 key steps to open a maté farm.
• The financial forecast is the tool that will enable you to validate the financial viability of your business idea.
• The business plan is the document that will enable you to approach your financial and commercial partners to convince them of the strengths of your project and secure the financing you need to launch your business.
• The real work begins once you've launched your business, and the only way to maintain visibility of your company's future cash flow is to keep your forecast up to date.
• Using a financial planning and analysis platform that combines forecasting, business planning and actual vs. forecast tracking and monitoring, such as The Business Plan Shop, makes the process easier and reduces the risks involved in starting a business.

We hope this guide has helped you understand how to start a maté farm. Please don't hesitate to contact us if you have any questions.

Also on The Business Plan Shop

• Business plan samples for start-ups

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