An entrepreneur interested in starting a fertilizer business has a number of options in terms of the business model and types of fertilizers sold. Typical business models include retailing, wholesaling, distributorship or franchising, co-operatives, and manufacturing. The fertilizer business plan may describe a company that sells food crop fertilizers to farmers or organic fertilizers to garden shops for resale to consumers, for example.
Requirements to Fertilizer Business Plan
Whether a B2B operation or a direct seller to the marketplace, professional business planning needs to carefully define the mission of the business and ensure that strategic business plan development keeps the mission in mind at all times. There are many facets to running a fertilizer business, starting with the level of experience the business owner has in the industry. An enormous variety of fertilizers are sold for agricultural purposes, gardens, lawns, soil enrichment, and indoor or outdoor planted landscapes. Plants, and thus plant fertilizers, are further broken down into weeds, fruits and vegetables, trees and shrubs, and flowers. Following are some of the points to cover when writing a fertilizer business plan:
- Will the company develop a unique, branded fertilizer line or become a reseller?
- Is this a specialty fertilizer, such as compost, organic or biotech?
- Will the product be sold by the bag or in bulk? What type of delivery equipment is needed for safe product transport?
- Will the business sell only fertilizer, fertilizer and related items like soil enhancers and pesticides, or fertilizers and fertilizer equipment for product application, like spreaders?
- Federal, state and local licensing requirements are strict, and the business will need more than one license based on the planned activities. The license to distribute is different from the license needed to transport, handle and apply fertilizer. There are also strict regulations concerning the storage of fertilizer, the inclusion of metals and chemicals in products, and product labeling. In most states, the Department of Agriculture is the starting point for determining the type of license required and the product limitations.
- The marketing plan is critical for success. A company selling bulk fertilizer to agricultural operations will require a very different marketing approach than one selling to households. The bulk products can be sold directly to end-users, to intermediary co-ops, and to businesses that have private label branding. On the other hand, the entrepreneur may decide to open a store front and sell solid and liquid fertilizers by the unit. Any business can include online and offline marketing.
- Fertilizer businesses almost always need staff. Is there an organizational chart indicating the various business functions or units and the type of positions required?
- What type of facilities and equipment are needed? Facilities may include a manufacturing plant, storefront, mixing and production stations, and so on. Equipment is everything from packaging equipment and vehicles to office computer equipment.
Thinking through the business in an organized manner is important to financial success. The fertilizer industry can be volatile because of chemical shortages, changing government laws and regulations, and even the weather. Potential investors are well aware of the risks of doing business in this industry and will look for reasonable and objective pro-forma financial statements and an in-depth analysis of the competition. The scale of production is a major determinant of the money needed for business startup and to keep it operating until profitable.
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