Business
So you want to be a deer farmer - Part II
By Deerfarmer.com
Jul 25, 2003, 16:34

In Part I, I discussed some of the research that you need to do, and some of the questions you need to answer, prior to starting a deer or elk farm. Assuming that you have done this, and have decided you want to proceed, the next step is to prepare a business plan.

A business plan is especially important if you are going to be seeking money from investors or financial institutions. None of these will ever consider a funding application without a good business plan. There are other good reasons for preparing a business plan as well. These include:

1. It provides an analysis of the feasibility and potential profitability of a proposed venture. Often after doing a business plan, many an agricultural entrepreneur has decided that his or her idea is not so great, and likely would not make any (or enough) money.

2. It becomes your to-do list. Starting any business requires a number of steps and activities. Having these outlined beforehand allows you to plan better, be prepared and to anticipate (and deal with) any potential obstacles or problems. A well-written business plan provides milestones by which you can measure your progress.

3. It gives you a chance to learn more about the industry and its opportunities and risks. Being more knowledgeable will increase the likelihood of your success.

Before we look at what should be in your business plan, here are some general rules.

1. Make it neat. Appearance (and image) is critical. Sloppiness of any kind will reflect negatively on the way you do business.

2. Make it grammatically correct. Have someone read the draft and correct any spelling, typing or grammatical errors.

3. Make it honest. Do not lie or exaggerate. Tell it exactly like it is, not as you would like it to be. Financial sources are looking for integrity and honesty.

4. Write in plain English. Avoid technical jargon. Some 80% of all plans and proposals have too much jargon, which only someone in the field can understand.

5. Don't over-emphasize your product or service. Investors or bankers are not going to be interested in what you plan to feed your deer (Massive Rack vs. Antler King) or the details of production. They will be interested in how you plan to sell your deer to make lots of money to be able to pay them back!

6. Make it complete. A well-written business plan contains all the information necessary for the financing source to make a decision without talking to the entrepreneur.

A typical business plan is between 25 to 40 pages long. It usually takes 2 to 3 weeks of actual work to put it together.

So what should be in your deer/elk farming business plan? Let's look at each of the sections in detail.

Executive Summary 

The Executive Summary should be written last after the business plan is complete. It is the most important part of the whole plan as only 10% of business plans get read beyond the summary. Think of it as a commercial that needs to grab the reader's attention. It should be no longer than two or three pages. It should be brief and highlight key points.

The Executive Summary should include the following points:

1. A brief outline and description of the proposed company and venture 
2. Overall strategy and direction 
3. Objectives and how you propose to achieve them 
4. The market segment you are attempting to reach and how you plan to reach them 
5. The unique features of the product or service 
6. The people involved and their qualifications/experience 
7. Overall financial glimpse of projected operations 
8. How much money is required and for what it will be used 
9. How and when investors will benefit from their investment.

Introduction 

In this section, I like to include the following:

1. Concept - a short description of what you are planning to do in this venture. Describe the what, who, when, where and why.

2. Background - a short history of your farming operation or company if applicable. If you are farming already and want to expand into raising deer or elk, then describe when you started farming, how much land you own/rent, legal structure, ownership details, locations and geographic areas of operations, and any significant events relevant to this new initiative.

Direction and Environment 

In this section, you should describe what you want to achieve through this venture, and the environment in which you will be operating.

In terms of direction, you should describe:

1. Vision and mission - give the reader the big picture of where you are going. An example of a vision may be "To contribute to a sustainable and profitable white-tailed deer industry in the United States". A mission statement might be "To provide leadership to the deer farming industry by developing fallow deer with superior genetics, premium venison and outstanding growth performance."

2. Goals and objectives - these should be specific and measurable statements of what you want to achieve with your business plan. For example, a goal could be "To operate a profitable business that produces and sells superior white-tailed deer breeding stock, deer products and related services.

Examples of objectives could be:

• Develop white-tails with superior genetics and performance characteristics to sell as breeding stock and for semen sales
• Produce and market trophy bucks for the Canadian and American hunting ranch markets
• Create brand awareness and market acceptance of elk venison and associated meat products.

3. Areas of focus - investors like to see a company focus on doing one or two things really well, rather than trying to do many things and doing them poorly. As we explained in Part I, deer and elk farming have many options for products and services. Explain in what areas of deer farming you are going to become the best, and why.

4. Distinctive competencies - list as many factors as possible that will make your proposed deer/elk farming operation and its products unique or special. Be as specific as possible - remember that investors are looking for companies that have an edge on the competition. Distinctive competencies could be brand awareness, patents, trademarks, or people with unique skills and talents.

5. Opportunities and benefits - describe the opportunities and benefits of deer/elk farming that make you want to join this industry. Examples could include:

• Excellent prospects for industry growth in the short and medium term resulting in high demand and prices for breeding stock.

• Increasing worldwide demand for venison, a meat that is perceived as very healthy, i.e., low fat, low cholesterol, high in protein and chemical free.

• Research confirms that deer/elk velvet antler has health and performance benefits. This market is expected to explode, offering excellent returns to farmers producing this product.

• White-tailed deer have a high reproduction rate; twins and triplets are common. This provides a significant competitive advantage over some other deer species.

• White-tailed deer (elk, mule deer) are species native to North America, and thus very adaptable and hardy. They are low-maintenance animals with few disease problems.

• Deer farming is environmentally friendly and does not have the same problems or opposition typically associated with intensive livestock operations such as hog farms and cattle feedlots.

• Deer farming is much less labour intensive than other farming operations. Thus it is a great complementary business to my current farming operations (or for people that have full-time jobs).

• Deer farming can be done on marginal land that is not much good for other agricultural operations.

• Start-up costs are high due to costs of breeding stock, fencing and facilities. This creates significant "barriers to entry" and should keep prices and demand high.

• The return on investment over the next 10 years is expected to be quite attractive. (If you give this reason, you better be able to back it up with the financial projections in your business plan).

Remember, these are just examples. If you are using them, be sure to have some evidence to back them up.

6. Risks - no agricultural sector is free of risks. Your investor or banker will want to know the risks associated with your proposed venture. Here are some that we know of already:

• Regulatory environments - after the Montana ban described in the previous article, this has to be on the top of our list. Include in this category the fact that movement of cervids is strongly regulated by each state/province and country, and that these regulations can change, possibly restricting potential markets.

• Price stability - as one elk farmer put it to me: do the math! Elk numbers are increasing at 28% a year; white-tailed deer at about 45%. At some point in the foreseeable future, we will have more deer/elk than markets, and this will have a downward pressure on prices unless new markets are developed.

• Competition - comes from other deer/elk farmers, other species, other states/provinces and other countries, e.g., New Zealand.

• Public perceptions - may affect current and potential markets for deer/elk and related products. Risks in this category range from ballots to bans on game farming (as in Montana) to harassment and obstruction to refusing to buy/eat venison or velvet antler products.

• Natural disasters - these include such things as diseases, poaching, predators and escape. Lurking in the back of every deer and elk farmer's mind is Chronic Wasting Disease (CWD) and its potential devastating impact on the industry.

• Infra-structure - if venison is going to be a major market, then an infra-structure has yet to be developed. This includes having federally/ECC inspected facilities, finishing and grading standards and marketing/distribution systems.

In your business plan, you should describe how you plan to reduce these and other risks associated with your deer farming operation.

Next month in Part III, we will examine and discuss what the Market Analysis section of your business plan should look like.