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The new BSE reality has led many producers to consider diversifying their businesses by investing in beef packing plants and other ventures. If this includes you, getting the support you seek with outside investors will require a business plan that goes well beyond, “I know in my gut this is the right thing to do!” Your business plan is an extension of your reputation, so make sure it is objective, professional and has been filtered through a phased process of discovery and confirmation. This process should include a business case, pre-feasibility study and a feasibility study.
Each phase serves a valuable filtering role by helping you determine whether it is worthwhile to proceed to the next step. If you complete all three phases successfully, you will focus your vision and save time and money. You will secure the building blocks to developing an effective business plan that is accepted by investors, banks, government and other supporters. And you will have a valuable strategy for launching a sustainable packing plant that will be profitable over the long term.
Phase 1: Business Case Review
A business case review is a 30,000-foot look at whether a project is commercially viable. Key factors to consider in this stage include access to cattle, markets, and competition. To ensure your review is as objective as possible, have an objective third-party advise you throughout this step. At the end of the review, you should be able to make an informed ‘go/no go’ decision regarding whether to continue.
Phase 2: Pre-Feasibility Study
If your business case is solid, your next step is a pre-feasibility study. This overview phase enables investors to assess the marketplace based on key factors including supply, demand, competition, finance, marketing, logistics, manpower and waste removal. Investors should establish preliminary operational parameters they believe their new operation will proceed with. In addition to providing the basis for a future feasibility study, the initial pre-feasibility parameters enable investors to establish a clear understanding of the opportunity and how it may be structured. At the end of the pre-feasibility study, you are in a better position to decide whether to move forward.
Phase 3: Feasibility Study
A feasibility study is the in-depth final step that helps determine whether to proceed with a business plan. Both the initial investors and a team of industry experts should complete this phase. The feasibility study will expand, focus and test the pre-feasibility parameters to determine whether you have a viable chance of succeeding in the existing and expected marketplace. The study should also evaluate key factors such as the ability to supply value-added products for specific markets while addressing competitive threats, facility design, labour availability, logistics, operational forecasts, and financial analysis. If, at the end of the study, the project still seems like a viable option, it is then time to proceed with a business plan.
Phase 4: Business Plan
Building on the feasibility study, you have established the foundation for an objective business plan. This is the detailed operational plan aimed at helping you secure investment for your project. The research you collected from the previous phases will be invaluable in moving ahead. Key information to be covered in the plan includes a detailed explanation of:
Following these steps will reduce your frustration, and save you time and money. Working with professional advisors who have expertise in all of these areas will ensure your plan is objective and answers the tough questions bankers, investors and government will want answered. The New BSE Reality requires the vision you have, and an effective business plan is the key to turning that vision into a sustainable operation that delivers the results you expect.
By Andrew Raphael, Director of Agri-food. Originally published in Alberta Beef (April 2005). For more information, please contact your local MNP advisor or Andrew at 604.685.8408.
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