Table of Content

    Do you want to start dairy farm business?

    Have you got some cash to invest and you are planning to start a dairy farm? Well, if that’s the case then you are going the right way.
    Dairy products are a compulsory ingredient of our food and there will not be a single home that does not consume dairy products. Another advantage is that people need dairy foods on a regular basis, nearly every day.

    The biggest advantage in starting this dairy farming business plan, which gives it an edge on other startups, is that it gives us the maximum rate of return on our relatively small investment group business plan as compared to other businesses. So, by investing in this dairy farming business plan you can make some serious cash on a daily basis.

    Despite having all these perks, this business also has a dark side which is its difficult planning at the initial stage. It has got more constraints as compared to the normal businesses out there, that is why before starting it, you need to have a well-structured dairy farming business plan covering even the tiniest bit of details.

    To help you avoid all the trouble of thinking about everything and making a plan yourself, we are providing a detailed dairy farming business plan of a startup “Milk&Milk” which is soon going to be launched.

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    Executive Summary

    2.1 The Business

    Milk&Milk will be a registered American dairy farming business plan based in Spring Valley, a village in the Rockland County of New York, at a 40-minute drive from the center of New York City. Nearly 80 acres of land in the outskirt of village has been selected and acquired as the farm site after detailed market analysis.

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    The dairy farming business plan will be owned and operated by Michael Benrick. Michael did his Bachelors in Agriculture Sciences from Cornell University and Masters in Business Administration from Harvard University. After his studies he worked in several dairy farms in USA ranging from small startups to multinational corporations and has been serving as the operational head of milk production unit in Nestle, USA for the last 10 years.
    Michael comes from a farming family and his father is a farmer himself, owning several acres land in the same village. It is partially due to his experience in dairy farm industry and partially due to his similar family business that Michael knows every tiniest bit of detail about how to start a dairy farm.

    2.2 Management

    Milk&Milk is primarily a milk producing company, involved in the breeding of milk-producing animals to produce large quantities of milk for commercial purposes but the company will also produce other dairy products.
    Being located in a village, the dairy farming business plan will have a continuous supply of all resources including the food for the animals. To manage the animals and resources efficiently, Michael has decided to hire a large workforce consisting of local inhabitants so as to ensure quality of their products.

    2.3 Customers

    The company aims to serve whole Rockland County along with a major portion of New York City’s residential zone.

    2.4 Target of the Company

    Michael’s target is to become one of the best natural dairy products producer of New York City.

    Company Summary

    3.1 Company Owner

    Milk&Milk is solely owned and operated by Michael Benrick who has more the 20 years’ experience of working in leading dairy farm companies, especially Nestle.

    3.2 Why the Business is being started

    Throughout his serving career, Michael did not feel happy about the mechanical procedures of production of dairy products which resulted in the loss of their natural characteristics. He had always thought to bring innovation in the traditional procedures of production while maintaining the nutrients and natural characteristics in the dairy products. It was last year, when he actually said ‘goodbye’ to Nestle and started working on his own dairy products farm.

    3.3 How the Business will be started

    Michael worked on his idea for about a year and developed a detailed dairy farming business plan covering everything, even the future forecasted demands. He took help from his friend, Anna, who is a financial expert in Nestle, and crafted a detailed map about the cost to start a dairy farm.

    Michael has forecasted following costs for expenses, assets, investment, and loans for the Start-up.

    How the Business will be started -dairy farming business plan

    The detailed start-up requirements, start-up funding, start-up expenses, total assets, total funding required, total liabilities, total planned investment, total capital and liabilities as forecasted by company’s analysts, is given below:

    Start-up Expenses  
    Legal $7,500
    Stationery etc. $6,250
    Brochures $6,875
    Consultants $0
    Insurance $3,750
    Rent $22,500
    Research and Development $3,750
    Expensed Equipment $63,750
    Signs $11,250
    Building Materials $27,500
    Building Labor $20,000
    Start-up Assets $0
    Cash Required $118,750
    Start-up Inventory $5,625
    Other Current Assets $22,500
    Long-term Assets $175,000
    TOTAL ASSETS $321,875
    Total Requirements $495,000
    START-UP FUNDING $173,125
    Start-up Expenses to Fund $321,875
    Start-up Assets to Fund $495,000
    Assets $203,125
    Non-cash Assets from Start-up $118,750
    Cash Requirements from Start-up $0
    Additional Cash Raised $118,750
    Cash Balance on Starting Date $321,875
    Liabilities and Capital $0
    Liabilities $0
    Current Borrowing $0
    Long-term Liabilities $0
    Accounts Payable (Outstanding Bills) $0
    Other Current Liabilities (interest-free) $0
    Capital $0
    Planned Investment $0
    Investor 1 $312,500
    Investor 2 $182,500
    Other $0
    Additional Investment Requirement $0
    Loss at Start-up (Start-up Expenses) $173,125
    TOTAL CAPITAL $321,875
    Total Funding $495,000

    Services for customers

    Milk&Milk will not only produce milk and other dairy products for commercial purposes but the company also aims to provide various cattle related products and services to its customers. The main services incorporated in its new dairy farm business plan are as follows:

    • Production of milk, butter, cheese, yogurt, cream, and other cultured dairy foods
    • Production of canned beef
    • Farrier and shearing services
    • Consultancy services

    Marketing Analysis of dairy farming business

    The most important and difficult part in developing a good dairy farm business plan is its marketing analysis that’s why Michael obtained the services of marketing experts to help him develop a good dairy farming business plan. He went through various dairy farming business plan samples before selecting the best dairy farm business plan template to work on.

    The success or failure a startup totally depends upon how they market themselves to target their specific customer groups. A successful marketing strategy can only be developed after knowing the target audience and potential customers. Michael has carried out at extensive research with marketing experts to know their target customers and focus their marketing strategy towards them.

    5.1 Marketing Segmentation

    Milk&Milk will target all customers ranging from individual buyers to multinational retail stores. The marketing experts have identified following type of target audience which can become the potential customers of the company.

    Marketing Segmentation - dairy farming business plan

    The detailed marketing segmentation comprising of the company’s target audience and sale of the dairy packages unit are as follows:

    5.1.1 Individual Buyers:

    Milk&Milk will open three small retail locations in its initial phase, in the first year of its startup. One retail location will be in Rockland County and the other two will be in New York City. Through these retail locations, the company will target individual buyers residing in these areas who will be needing our dairy products on a regular basis throughout the year.

    5.1.2 Departmental Stores:

    Milk&Milk will supply its dairy products to various other retail and grocery stores. These departmental stores will make up the bulk of company’s customers and more than half of our products will be sold to them. These stores will also be needing our products on a daily basis throughout the year.

    5.1.3 Restaurants and Hotels:

    Milk&Milk will also supply their dairy products and beef to various restaurants and hotels on a regular basis throughout the year. These restaurants will become our biggest consumer after the departmental stores.

    5.1.4 Companies and Businesses:

    Milk&Milk will also supply milk to various companies and businesses based in New York City. The companies need a continuous supply of milk for making tea for their crew on a daily basis. Michael had already been contacted by a few medium sized companies to provide their canned milk on weekly basis.

    5.1.5 Dairy Farm Owners:

    The company will also provide consultancy and advisory services like farrier and shearing to the various farm owners located in Rockland County.

    The detailed market analysis of our potential customers is given in the following table:

    Market Analysis
    Potential Customers Growth CAGR
    Individual Buyers 17% 7,232 8,432 9,456 9,985 10,546 10.00%
    Departmental Stores 46% 12,534 13,343 14,536 15,343 16,524 13.43%
    Restaurants and Hotels 27% 6,323 7,432 8,335 9,322 10,872 15.32%
    Companies and Businesses 9% 17,342 18,243 20,422 23,482 25,221 15.00%
    Dairy Farm Owners 1% 10 11 12 14 10.00%
    Total 13% 42,322 48,480 54,420 61,118 68,675 9.54%

    Milk&Milk aims to become the best dairy products company of New York within next 5 years of its launch and one of the leading dairy farm companies of America within next 10 years. We aim to provide highest quality dairy products to our consumers within affordable prices. We will keep all our dairy products as much original and natural as possible. We will only produce the required amount of products as forecasted by our analysts to reduce the use of preservatives and other artificial additives. Michael has already started planning for his goal of reviving natural dairy products.

    5.2 Business Target

    At our company, we will also provide a top-notch customer service. Our every employee and salesperson will treat our customers with utmost respect so as to build a long-lasting relationship with them. We will also provide highest quality consultancy and advisory services to the farmers located in the Rockland County.

    5.3 Product Pricing

    Setting the prices of products is the most difficult part of any dairy farming business plan, especially for a risky business like dairy farm. If the prices of our products are higher as compared to our competitors then people would not get attracted towards us, similarly if the prices are lower then it will be difficult to achieve our MARR (minimum attractive rate of return).

    Considering all restraints and aspects, Michael has priced some of the products, milk and flavored yogurt, slightly higher than competitor’s products so as to balance the cost needed to manufacture high quality natural products and to avoid financial problems in the dairy farm business management. While most of our products can be bought in nearly the same price as the similar products of other companies.


    Planning the sales strategy can be very complicated especially for a person with no prior knowledge. To make a small dairy farming business plan of your own business, you can take help from the sales strategy of this sample dairy farm business plan.

    The sales strategy of Milk&Milk developed by Michael and his friend Anna, a finance expert, is as follows:

    6.1 Competitive Analysis:

    Milk&Milk will have various competitors ranging from small dairy products manufacturers to multinational corporations. Our competitors may have established businesses and low product prices but no one will surpass us when it comes to the quality of products. Our competitive edge over other dairy farm businesses and dairy products manufacturers will be the ‘naturality’ of our products which is lacked by nearly all of our competitors. We are sure that people will prefer our slightly high-priced but natural products as compared to other dairy products available in market.

    6.2 Sales Strategy

    We will introduce our startup to our target customers and stake holders in the agriculture industry by sending brochures and introductory letters. We will attend all subsequent business fairs, food seminars and expos, and will carry out a large-scale social media campaign for our advertisement. We will send a free sample of our dairy products to several hotels and restaurants so that they can know the superior quality of our products. We will also offer discounts and gifts on our products present in several retail stores.

    6.3 Sales Forecast

    We believe that if people try our products, they will then use them for the rest of their lives thus the sales pattern will always increase with years. Our customers will be needing our products throughout the year. By analyzing our market segmentation strategy, our experts have forecasted the following sales on yearly basis which are summarized in the column charts.

    Sales Forecast - dairy farming business plan

    The detailed information about sales forecast, total unit sales, total sales is given in the following table:

    Sales Forecast      
    Unit Sales Year 1 Year 2 Year 3
    Milk containers 1,872,330 2,360,320 2,588,240
    Butter packages 1,435,320 1,250,430 1,762,450
    Cheese packages 539,320 770,230 1,002,310
    Yogurt packages 265,450 322,390 393,320
    Cream packages 802,370 815,430 823,540
    Canned Beef 134,240 394,340 842,230
    TOTAL UNIT SALES 5,049,030 5,913,140 7,412,090
    Unit Prices Year 1 Year 2 Year 3
    Milk containers $1.40 $1.50 $1.60
    Butter packages $6.00 $8.00 $10.00
    Cheese packages $7.00 $8.00 $9.00
    Yogurt packages $6.50 $7.50 $8.50
    Cream packages $14.00 $12.00 $10.00
    Canned Beef $11.50 $13.00 $14.50
    Milk containers $21,480 $27,400 $33,320
    Butter packages $12,050 $19,450 $26,850
    Cheese packages $5,011 $7,160 $9,309
    Yogurt packages $13,935 $19,460 $24,985
    Cream packages $6,235 $7,230 $8,225
    Canned Beef $22,950 $36,550 $50,150
    Direct Unit Costs Year 1 Year 2 Year 3
    Milk containers $0.70 $0.80 $0.90
    Butter packages $0.40 $0.45 $0.50
    Cheese packages $0.30 $0.35 $0.40
    Yogurt packages $3.00 $3.50 $4.00
    Cream packages $0.70 $0.75 $0.80
    Canned Beef $3.00 $3.50 $4.00
    Direct Cost of Sales
    Milk containers $9,830 $18,300 $26,770
    Butter packages $6,660 $11,990 $17,320
    Cheese packages $1,790 $3,500 $5,210
    Yogurt packages $1,940 $6,760 $11,580
    Cream packages $2,770 $6,920 $11,070
    Canned Beef $6,420 $22,470 $38,520
    Subtotal Direct Cost of Sales $29,410 $69,940 $110,470

    Personnel plan

    Michael acquired the services of a Human Resource Manager who instructed him how to write a business plan for a dairy farm incorporating the HR aspect. Michael, with the help of HR Manager and financial experts developed the following plan for the staff needed for the company along with their average salaries.

    7.1 Company Staff

    Michael will act as the Chief Operating Officer of the company. The company will initially hire following people:

    • 1 General Dairy Farm Manager to manage the overall operations in dairy farm and the production unit.
    • 2 Administrators / Accountants to maintain financial records.
    • 2 Engineers responsible for operating and maintaining packaging unit.
    • 4 Sales and Marketing Executives responsible for delivering products to retailers and discover new ventures.
    • 20 Farm / Field / Packaging Employees for operating the farm and production unit.
    • 4 Drivers to transport products to various retail locations, hotels and restaurants.
    • 1 Front Desk Officer to act as a receptionist in the company headquarters.

    To ensure the best quality service, all employees will be selected through vigorous testing and will be trained for a month before starting their jobs.

    7.2 Average Salary of Employees

    The following table shows the forecasted data about employees and their salaries for next three years.

     Personnel Plan      
    Year 1 Year 2 Year 3
    General Dairy Farm Manager $75,000 $85,000 $95,000
    Administrators / Accountants $43,000 $51,000 $59,000
    Engineers $54,400 $67,400 $87,400
    Sales and Marketing Executives $45,000 $52,000 $59,000
    Farm / Field / Packaging Employees $210,000 $240,000 $280,000
    Drivers $30,000 $33,000 $38,000
    Front Desk Officer $10,000 $12,000 $15,000
    Total Salaries $467,400 $540,400 $633,400

    Financial Plan

    Michael has developed the following financial plan with the help of Anna, which outlines the financial development of Milk&Milk over the next three years. The finance experts helped him to figure out <strong>how much does it cost to start a dairy farm<strong>.

    Michael had been planning this dairy farming business plan for years and thus had saved up for this venture. That’s why the company will be solely financed by him and he will also control the direction of business to make sure that it is expanding at the forecasted rate. No equity funding or outside loan will be required unless the company expands faster than forecasted.

    8.1 Important Assumptions

    The company’s financial projections are forecasted on the basis of following assumptions. These assumptions are quite conservative and are also expected to show deviation but to a limited level such that the company’s major financial strategy will not be affected.

    General Assumptions
    Year 1 Year 2 Year 3
    Plan Month 1 2 3
    Current Interest Rate 10.00% 11.00% 12.00%
    Long-term Interest Rate 10.00% 10.00% 10.00%
    Tax Rate 26.42% 27.76% 28.12%
    Other 0 0 0


    8.2 Brake-even Analysis

    The following graph shows the company’s Brake-even Analysis.

    2 Brake-even Analysis - dairy farming business plan

    The following table shows the company’s Brake-even Analysis.

     Brake-Even Analysis  
    Monthly Units Break-even 5530
    Monthly Revenue Break-even $15,974
    Average Per-Unit Revenue $26.87
    Average Per-Unit Variable Cost $0.89
    Estimated Monthly Fixed Cost $19,641

    8.3 Projected Profit and Losss

    The following charts show the company’s expected Profit and Loss situation on the monthly and yearly basis.

    8.3.1 Profit Monthly

    Profit Monthly - dairy farming business plan

    8.3.2 Profit Yearly

    Profit Yearly - dairy farming business plan

    8.3.3 Gross Margin Monthly

    Gross Margin Monthly - dairy farming business plan

    8.3.4 Gross Margin Yearly

    The following table shows detailed information about profit and loss, and total cost of sales.

    Gross Margin Yearly- dairy farming business plan

    8.4 Projected Cash Flow

    The following column diagram shows the projected cash flow.

    dairy farming business plan - cash flow

    The following table shows detailed data about pro forma cash flow, subtotal cash from operations, subtotal cash received, sub-total spent on operations, subtotal cash spent.

     Pro Forma Cash Flow      
    Cash Received Year 1 Year 2 Year 3
    Cash from Operations
    Cash Sales $401,024 $453,046 $505,068
    Cash from Receivables $70,923 $80,610 $90,297
    SUBTOTAL CASH FROM OPERATIONS $471,943 $533,651 $595,359
    Additional Cash Received
    Sales Tax, VAT, HST/GST Received $0 $0 $0
    New Current Borrowing $0 $0 $0
    New Other Liabilities (interest-free) $0 $0 $0
    New Long-term Liabilities $0 $0 $0
    Sales of Other Current Assets $0 $0 $0
    Sales of Long-term Assets $0 $0 $0
    New Investment Received $0 $0 $0
    SUBTOTAL CASH RECEIVED $471,943 $533,651 $595,359
    Expenditures Year 1 Year 2 Year 3
    Expenditures from Operations
    Cash Spending $216,457 $242,204 $267,951
    Bill Payments $135,939 $153,285 $170,631
    SUBTOTAL SPENT ON OPERATIONS $352,396 $395,489 $438,582
    Additional Cash Spent
    Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
    Principal Repayment of Current Borrowing $0 $0 $0
    Other Liabilities Principal Repayment $0 $0 $0
    Long-term Liabilities Principal Repayment $0 $0 $0
    Purchase Other Current Assets $0 $0 $0
    Purchase Long-term Assets $0 $0 $0
    Dividends $0 $0 $0
    SUBTOTAL CASH SPENT $352,396 $395,489 $438,582
    Net Cash Flow $119,551 $138,167 $156,783
    Cash Balance $218,523 $252,381 $286,239

    8.5 Projected Balance Sheet

    The following projected balance sheet shows data about total current assets, total long-term assets, total assets, subtotal current liabilities, total liabilities, total capital, total liabilities and capital.

     Pro Forma Balance Sheet      
    Assets Year 1 Year 2 Year 3
    Current Assets
    Cash $184,666 $218,525 $252,384
    Accounts Receivable $12,613 $14,493 $16,373
    Inventory $2,980 $3,450 $3,920
    Other Current Assets $1,000 $1,000 $1,000
    TOTAL CURRENT ASSETS $201,259 $237,468 $273,677
    Long-term Assets
    Long-term Assets $10,000 $10,000 $10,000
    Accumulated Depreciation $12,420 $14,490 $16,560
    TOTAL LONG-TERM ASSETS $980 $610 $240
    TOTAL ASSETS $198,839 $232,978 $267,117
    Liabilities and Capital Year 1 Year 2 Year 3
    Current Liabilities
    Accounts Payable $9,482 $10,792 $12,102
    Current Borrowing $0 $0 $0
    Other Current Liabilities $0 $0 $0
    SUBTOTAL CURRENT LIABILITIES $9,482 $10,792 $12,102
    Long-term Liabilities $0 $0 $0
    TOTAL LIABILITIES $9,482 $10,792 $12,102
    Paid-in Capital $30,000 $30,000 $30,000
    Retained Earnings $48,651 $72,636 $96,621
    Earnings $100,709 $119,555 $138,401
    TOTAL CAPITAL $189,360 $222,190 $255,020
    TOTAL LIABILITIES AND CAPITAL $198,839 $232,978 $267,117
    Net Worth $182,060 $226,240 $270,420

    8.6 Business Ratios

    The following table shows data about business ratios, ratio analysis, total assets, net worth.

     Ratio Analysis        
    Year 1 Year 2 Year 3 INDUSTRY PROFILE
    Sales Growth 4.35% 30.82% 63.29% 4.00%
    Percent of Total Assets
    Accounts Receivable 5.61% 4.71% 3.81% 9.70%
    Inventory 1.85% 1.82% 1.79% 9.80%
    Other Current Assets 1.75% 2.02% 2.29% 27.40%
    Total Current Assets 138.53% 150.99% 163.45% 54.60%
    Long-term Assets -9.47% -21.01% -32.55% 58.40%
    TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
    Current Liabilities 4.68% 3.04% 2.76% 27.30%
    Long-term Liabilities 0.00% 0.00% 0.00% 25.80%
    Total Liabilities 4.68% 3.04% 2.76% 54.10%
    NET WORTH 99.32% 101.04% 102.76% 44.90%
    Percent of Sales
    Sales 100.00% 100.00% 100.00% 100.00%
    Gross Margin 94.18% 93.85% 93.52% 0.00%
    Selling, General & Administrative Expenses 74.29% 71.83% 69.37% 65.20%
    Advertising Expenses 2.06% 1.11% 0.28% 1.40%
    Profit Before Interest and Taxes 26.47% 29.30% 32.13% 2.86%
    Main Ratios
    Current 25.86 29.39 32.92 1.63
    Quick 25.4 28.88 32.36 0.84
    Total Debt to Total Assets 2.68% 1.04% 0.76% 67.10%
    Pre-tax Return on Net Worth 66.83% 71.26% 75.69% 4.40%
    Pre-tax Return on Assets 64.88% 69.75% 74.62% 9.00%
    Additional Ratios Year 1 Year 2 Year 3
    Net Profit Margin 19.20% 21.16% 23.12% N.A.
    Return on Equity 47.79% 50.53% 53.27% N.A.
    Activity Ratios
    Accounts Receivable Turnover 4.56 4.56 4.56 N.A.
    Collection Days 92 99 106 N.A.
    Inventory Turnover 19.7 22.55 25.4 N.A.
    Accounts Payable Turnover 14.17 14.67 15.17 N.A.
    Payment Days 27 27 27 N.A.
    Total Asset Turnover 1.84 1.55 1.26 N.A.
    Debt Ratios
    Debt to Net Worth 0 -0.02 -0.04 N.A.
    Current Liab. to Liab. 1 1 1 N.A.
    Liquidity Ratios
    Net Working Capital $120,943 $140,664 $160,385 N.A.
    Interest Coverage 0 0 0 N.A.
    Additional Ratios
    Assets to Sales 0.45 0.48 0.51 N.A.
    Current Debt/Total Assets 4% 3% 2% N.A.
    Acid Test 23.66 27.01 30.36 N.A.
    Sales/Net Worth 1.68 1.29 0.9 N.A.
    Dividend Payout 0 0 0 N.A.

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