A business plan is a useful tool to acquire loans, grants and partnerships. Photo by Jen Lakins.
There are many ways to operate a food business, but a business plan is a pathway to success. A good plan will not only serve as a guide for the business owner to grow and operate a farmers market business, it can also serve as a useful tool to acquire loans, grants and partnerships. This guide will provide a brief introduction to the different types of business plans, address a few quick and easy steps to create a business plan, and offer a list of useful resources to get started.*
Developing a Business Plan
Business plans provide a framework to design, develop and grow a farmers market business. Photo by Dylan Gillis.
A traditional or standard business plan is the most common type of plan. A standard plan is organized into sections that are highly details and several pages long. On the other hand, a lean start-up plan is a simpler version of the traditional business plan; it includes a summary of key points and can be as short as a single page. A lean start-up plan can provide a template to develop a more comprehensive standard plan later on, and it can serve as a useful handout to recruit partners or investors. The Business Model Canvas is an easy worksheet with prompts a through a nine-step process that is broken down to identify key partners, activities, value propositions, resources, relationships, costs, and income sources without the large time commitment of a standard business plan. Whether it is a standard or lean plan, most formats include the following categories:
This section provides a general overview of the business and why it will be successful. The executive summary should include a mission statement that explains the purpose of the products in the marketplace and the goals of the company. It should end with a description of the leadership team, general financial information and projected growth plans. Consider this section the sales pitch for the business as a whole. Since it provides an overview, it is best to write the executive summary last. For more ideas and examples of the Executive Summary section, visit Inc. and B Plans.
This section should describe the market potential, or where and why there is a demand for the products or services the business is going to offer. If there is a competitive product or service already in the market, it should describe how the new product or service offered by this business be different and better. A good way to approach this section is to present the absence of the product or service as a problem, and the business is going to solve the problem by offering the product or service as a solution. Providing information about successful examples from other areas of the food business may be useful, as well as data from consumer surveys or focus groups. This section should target the ways that this new product or service is unique and special when compared to what is currently available to consumers in existing markets and the sales volume or sales value that this new product can capture. The opportunity section should flow into the execution, which will describe strategies to create and capture sales opportunities. For more ideas and examples of the opportunity section, visit Entrepreneur.
Execution is a large part of the business plan, because it is the action part of the plan. It should answer a wide variety of questions regarding specific strategies to achieve specific goals. Execution is important because anyone can develop a great idea, but a clear path on how to implement the idea is the difficult part. This section should convince the reader that the proposal is not just a bunch of “hot air” ideas with no real strategy set in place or no resources to invest. The execution section should inspire a sense of confidence that the business is a well-planned effort with all bases covered. At the same time, the plan should also be flexible enough to modify or adapt in the likely event that something unexpected happens. Things to consider when writing about this step:
This section should describe how the company is structured and the key people who are in charge. It should include brief resumes (one to two sentences) of people who will play a role in the business to demonstrate why they are qualified to do so. Be sure to list any skills, talents, knowledge and abilities each member brings to the table as well as previous experience. If these people are in charge of food safety, list their relevant training and certificates. Use an Organization chart to outline the roles and responsibilities of each person and the work breakdown for each. Describe the legal structure of the business and any licenses, permits or special certifications already obtained. There will be an opportunity to attach full resumes in the appendix section of the plan.
This section should convince the reader that that the business has a solid financial plan with sufficient resources to support the business and maintain growth over the long term. It should include income statements, balance sheets, and cash flow statements if the business has been in operation and any collateral that can be used to secure a loan. Charts and graphs are particularly useful in the Financial Plan. Use patterns in the current financial history of the business to predict a financial outlook for the next five years by including predicted income statements, balance sheets, cash flow statements, and capital expenditure budgets. This section should clearly explain the most important questions about a new business: How and when will it make a profit? and How much of a profit will it make?Be realistic and believable in the predictions. Common questions a reader may have are:
The financial planning guide in this website provides a more detailed breakdown of information to include in this section.
The appendix can include additional information that either does not fit into the other categories or elaborates on information in previous categories. To view an example, visit BPlans. The appendix can include:
This page should include contact information for top personnel and decision-makers as well as the company website and social media.
Using a business plan for loans, grants, investors and partnerships
Business plans provide a pathway to grow a farmers market business. Photo by Allie Smith.
Investors, donors, banks, and partners will expect a solid business plan before making a decision to invest in, donate or lend to, or join up with a business. The financial section of a business plan should clearly explain how much money is needed to start up and/or operate the business over the next five years and includes a budget detailing and justifying each expense (equipment, employee salaries, rental space, etc). A separate section in the plan, generally toward the end, should outline a specific request for funding that defines the terms and conditions of the request: Will the investment will be considered debt paid back with interest or equity (a partnership or stake) in the business? What are the terms of the investment – most importantly the length of time for repayment, the agreed return on an investment, and/or the duration of the ownership stake in the business. The request should also include long-term strategies to continue growing and eventually selling the business.
It is important to note that most farmers market businesses do not need to accrue debt or take on partnerships, and many farmers market business owners prefer to grow on demand, a concept called ‘bootstrapping.’ Although bootstrapping a business can be difficult because it usually demands a long time commitment, avoiding unnecessary debt can make a business more resilient to the regular ebbs and flows of farmers market activities that have seasonal ups and downs. Bootstrapping in the beginning also allows the business owner to feel out the market, explore strategies, and take time to decide if the farmers market business is a good long-term idea. Bootstrapping by growing the business more slowly provides a means for calculated growth and offers opportunities for market experience and informed decision-making on if and when the time comes to recruit investors, partners or lenders.
Business Plans and your Farmers Market Business
Business plans provide a framework to design, develop and grow a farmers market business. Whether it is a standard multi-page format or a single-page lean start-up handout, the business plan should be considered a living document that is modified and adapted to changing circumstances as a farmers market business grows and encounters new circumstances. The business plan not only acts as a compass to help navigate business practices and procedures, but it can also serve as a promotional and recruitment tool to solicit partners, lenders, investors, and grant providers. There are a wide variety of resources available to business owners to help design and develop a business plan. To explore additional topics related to a business plan, visit the Financial Plan, Business Permits, or Cottage, Retail or Wholesale guides on this website.
References & Resources
*This guide is not intended to serve as a substitute for legal advice. For all individual questions and concerns please consult a licensed attorney and contact the relevant agencies concerning your specific legal and regulatory requirements.
This page was authored by Sarah Cervone with content contributed by Nadia Alcide and edited by Thomas Maple.
Published July 2019.
Reproducible for non-commercial use only courtesy of Florida Organic Growers, Florida Farmer’s Market Association and the United States Department of Agriculture.
Florida Certified Organic Growers and Consumers, Inc. (FOG) supports and promotes organic, regenerative, and sustainable agriculture.
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Gainesville, FL 32608
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Nearly every food operation legally permitted by a food safety regulatory agency in the State of Florida must prepare, process and store food in a state- permitted facility. Unlike a residential kitchen where food is prepared in the home, a permitted facility is used exclusively for the production and storage of food distributed and sold to the public, and it is constructed according to state- mandated food safety standards that help prevent the spread of food borne illnesses. Yet, leasing or owning a permitted facility can be costly for a new food entrepreneur, and to keep start-up costs down, many new food entrepreneurs enter into a ‘commissary agreement’ with an existing permitted facility in order to meet state guidelines and acquire a permit from a food safety regulatory agency in Florida. This guide will describe the types of food operations that need a permitted facility, introduce ways to access a permitted facility, suggest what to look for in a commissary agreement with a permitted facility, and provide tips for leasing or building a new permitted facility.
Nearly all state-permitted retail and wholesale food operations in Florida must have access to a state-inspected and permitted facility to prepare and store food that is for sale to the public. However, cottage food operations are exempt from regulatory guidelines as well as some small food operations selling specific products exempt from state permitting. For more information on the types of food business operations that require food safety inspections and permitting and those that are exempt, visit the Cottage, Retail or Wholesale? and Regulatory Agencies guides in this website.
A commercial kitchen is a state-permitted facility that has been approved for the preparation, storage and distribution of food to the general public. A commissary kitchen is a permitted facility made available to small food businesses that need to comply with state food safety guidelines in order to acquire a permit to operate.
There are several ways to enter into a commissary arrangement with a permitted facility. Some business owners rent time in a permitted commercial kitchen, such as a restaurant, during closed hours. Churches, private schools, and community organizations with permitted facilities may also allow entrepreneurs to operate in their facility for a fee. In recent years a growing number of incubator kitchens (shared permitted facilities) have emerged throughout Florida. In addition to providing access to a permitted facility, many incubator kitchens also provide specialized equipment, training in food safety and culinary skills, and mentoring for business operations and marketing. The type of arrangement to access a permitted facility depends on the needs of the food business operations, and it is important to explore different options and opportunities to determine the best fit for the business.
The terms of the commissary arrangement are often outlined in a legal document called a commissary agreement that details the specific costs, rules, rights and responsibilities of the person or business using the permitted facility and the obligations of the person or business operating the permitted facility. The links below provide a few examples of the different types of contractual arrangements in
a commissary agreement. (The links below are provided as examples only and are not specifically endorsed nor recommended by this website or any associated groups or individuals).
Ashe County Kitchen User Agreement Basic Commissary Letter
Moodys Commissary Contract
After selecting a permitted facility and entering into a commissary agreement, the food business will need to submit a separate commissary notification form to the regulatory agency during initial inspection which usually takes place at the designated facility. The form offi theircially identifies the permitted facility as the designated commissary for the food business, and the location where food is prepared, processed and stored. For more information about the specific forms for each agency, visit the links below.
FDACS Commissary Notification Form DPBR Commissary Notification Form
The commissary arrangement is one of the most important relationships for a beginning food entrepreneur because a breakdown in the commissary relationship can lead to a breakdown in the business. Once a food business is inspected and permitted in a specific facility as its commissary, it can be costly for the business to switch commissary locations before the annual permit expires because the change may require a new inspection and additional fees. Therefore, a little time spent investigating the permitted facility as a potential commissary can help avoid costly operational problems in the future.
A few things to consider in a commissary relationship;
food safety violations, and to review the severity of any previous violations, if any.
FDACS Inspection Report Database DPBR Inspection Report Database
Check for leaks, especially in the ceiling which can result in a food safety violation that may close the facility.
Since water source and waste disposal documentation is required for permitting, be sure the facility has current documentation available for inspectors to review.
Parking should be within a reasonable distance, and consider any large or heavy equipment going in and out of the facility.
Security surveillance and alarm systems enhance safety during off hours and emergencies.
Shared keys or alarm codes are less secure than an alarm system where users use a unique code that identifies who was in the facility, when they were in the facility, and for how long they were in the facility.
Indicate if the facility can accept deliveries from suppliers, if the facility has adequate storage space, and how the packages are received.
Ensure the current electric system meets the demands of any specialized equipment (i.e. 110, 220, etc.) without blowing fuses and disrupting operations.
Calculate transportation costs to and from the location, and consider the location in relation to sales venues.
Inspect the restroom and ensure it is properly maintained with soap, paper towels, toilet paper, hand sink and a wastebasket.
equipment and supplies available to users can vary.
Identify all equipment available for use and determine if the facility operator will replace or repair when needed.
Consider any special equipment needs, such as stove top cooking or frying that requires a ceiling hood for exhaust.
Indicate who is responsible for purchasing cleaning products, paper towels, sponges, brooms, mops, and other supplies required to maintain the facility.
Determine the amount of storage (dry, cold, frozen) available to kitchen users and if there are any additional storage costs.
Consider if the items in storage will be secure or if the space is also accessible by other facility users.
Calculate the amount of time needed to produce a certain number of items, and then calculate the amount of profit from the sale of those items. For example, if it takes three hours to produce thirty jars of organic salsa with $100 in ingredients, and the commissary rent is $30 per hour;
$30 x 3 hours = $90 Ingredients = $100
Production cost of salsa = 190 / 30 = $6.33 per jar plus labor. Determine how time is scheduled in the facility, and if anyone has priority.
Identify how far in advance time is reserved in the facility and the amount of flexibility for short notice or last minute scheduling or cancelling.
Determine if more than one user will access the facility at the same time, and if so, if there is a reduced rate for non-exclusive scheduling.
Determine if time spent prepping and cleaning is counted as use time for a fee or if time is granted before and after use without a fee.
While commissary kitchens provide a low-cost means for new and small businesses to meet food safety guidelines, commissary rental costs can become more expensive than operating a permitted facility if the business grows and increases production. This is often the case when commissary fees are based on time spent in the facility; increased production leads to more time in the facility and higher costs for facility rental. There may come a point when it makes more sense to rent or build a permitted facility for a fixed cost that stays the same and does not increase as the business grows. A financial plan that includes a budget, inventory and accounting system can help a business owner determine if building or leasing a permitted facility at a fixed cost is less expensive than renting time in a facility. For more information, visit the Financial Plan guide in this website.
In addition to fixing kitchen operation costs, building or leasing a permitted facility gives the added benefit of exclusive access and control over the facility. Florida State regulatory agencies provide simple and easy guidelines to establish a permitted facility and a ‘Plan Review’ process assists food business operators in the planning, design and construction of a new or existing facility. Building or leasing a permitted facility also creates opportunities for a business to generate additional revenue by providing commissary services to new and small businesses. There are a wide variety of resources available to assist in the planning and costs associated with creating a shared-use permitted facility.
Shared Kitchen Toolkit: A practical guide planning, launching and managing a shared-use commercial kitchen, Purdue University
USDA Grants & Financial Support
The agency links below provide more information about the Plan Review process and food safety construction criteria for permitted facilities in Florida.
DPBR Plan Review
DPBR Commercial Kitchen Guidelines
FDACS Minimum Construction Standards & Interagency Form DOH Hygiene Codes & Standards
DOH Plan Review
In lieu of building a permitted facility, many growing farmers market businesses opt to hire a third-party co-packer when they do not have the necessary packing capacity, machinery, or knowledge to package their product themselves. The co- packer will follow the instructions of the business owner to process, package and label food products according to the guidelines and specifications of detailed by the business owner. A good co-packer will provide benefits such as professional expertise, specialized resources, аnd knowledgeable staff. The additional costs of paying a co-packer can be offset by a reduction of production costs per unit (individual products) because it increases the bulk amount.
construction guidelines and plan reviews to help food business operators remodel, plan, design and/or construct a facility that will meet the criteria for state permitting. Developing a sanitation plan for food production can also help design a layout that best fits business operations. For more information on topics and issues related to permitted facilities, visit the Sanitation and Food Safety Permits guides in this website.
UF IFAS: Food Safety: Does Your Kitchen Pass the Test?
UF IFAS: Sanitary Design & Construction of Food Equipment
UF IFAS; Sanitary Design and Construction of Food Processing and Handling Facilities
Flip Program: Renting a Commercial or Commissary Kitchen DPBR: What is a Commissary?
Leopold: Shared Use Kitchen Planning Toolkit