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Business Plan Samples | 27 October, 2020

Vertical Farm Business Plan

Are you interested in opening a business in one of North America’s fastest-growing sectors?

Vertical Farming has several environmental and logistical benefits which make it an ideal start-up for entrepreneurs.  Below is a sample business plan for anyone wanting to start a vertical farming company.

Vertical farming business that used a business plan

1 Executive Summary

2 Company Summary

3 Business Opportunity

4 Industry Analysis

5 Business Model

6 Sustainability

7 Marketing Strategy

8 Investment Proposal

9 Financial Projections

10 Management Team

11 References

 

1 Executive Summary

The Company Ltd. was incorporated in the province of British Columbia on January 1, 2018 by sole shareholder John Doe.

This hyper-local, sustainable provider of urban farming products is well-positioned to serve the growing North American population.  With its recent acquisition of “The Subsidiary Ltd.”, an established vertical-farm business; The Company Ltd. has gained over 10 years of intellectual property, a uniquely built soil mixture formula, and a well established, health-conscious customer base in Vancouver, BC.

As President of The Company Ltd., John Doe will leverage advancements in agricultural technology to reduce operational costs and develop a multi greenhouse farm located at 100 Smithe St. Vancouver, BC.  In securing a $250,000 investment in return for 25% of the company, The Company Ltd. will develop this 1.5 acre location, brand, market, and package products on site.

In response to a decline in available agricultural land and an increasing demand for food production, vertically integrated growing techniques are increasingly recognized as an inevitable leap in agriculture.  Vertical growing is becoming essential in maintaining an adequate food supply for an ever-growing population. Our sustainable vertical-growing techniques require minimal energy, water and land; yet, they offer higher yields and operate year-round.

The Company Ltd. is driven to serve a growing audience focused on supporting ethical, sustainable, local companies.  In support of this mission, The Company is dedicated to providing a safe and harmonious work environment and providing livable wages and professional development to all employees.  Additionally, as a member of the British Columbia Certified Organic Program, BCCOP, the company further solidifies its participation in the circular economy.

Industry profit in Canada’s vegetable farming sector is expected to remain high, as the consumption of organic products is likely to grow.  The Company’s list of microgreens includes: wheatgrass, sunflower shoots, pea shoots, radish, arugula, wasabi, rapini, mustard and more. Since each product is grown in a controlled environment, these crops are grown uninterrupted year-round, providing an attractive return on investment.

1.1 Mission Statement

Our mission is to offer local organics to every community, provide purposeful employment to our team, and inspire the world to spend consciously.

1.2 Vision Statement

Our vision is society connected, rooted in an understanding that by supporting ethical companies we join the solution to mitigating climate change.

1.3 Objectives

  • Google My Business account set-up
  • Website design/development based off the outlined marketing strategy”
  • Complete operational transition from The Subsidiary to The Company
  • Commence digital marketing campaign for our website
  • Develop additional greenhouses
  • Hire various positions

2 Company Summary

  • Company: The Company Ltd.
  • Structure: Incorporated (BC, Canada)
  • Address: 100 Smithe St. Vancouver, BC
  • President: John Doe
  • Industry: Vertical Farming
  • Accreditations: BC Certified Organic Program

2.1 Milestones

  1. Incorporation on January 1, 2018
  2. Acquired “The Subsidiary”
  3. Secured our production location in Vancouver

2.2 Critical Success Factors

  • Hiring of experienced growers, and reaching out to local horticulture programs to recruit academics and students that may be interested in our organization
  • Production of premium produce: Farmers that produce premium vegetables can find buyers in the fresh produce market where prices are highest when compared to the food processing market.
  • Ability to alter goods and services produced in favour of market conditions: The ability to alter the balance between different food crops in response to changes in market conditions is key to our viability. We must be able to change our production mix to meet consumer demand and maximize returns.
  • Marketing our products through our website and a fierce Google Ads, SEO, and social media campaign
  • Advancements in LED lighting have been one of the most important advancement for improving the economic viability of vertical growing.

Vertical farms business

3 Business Opportunity

The vertical-farming industry is in its early stages, and we have an opportunity to be a North American market leader.  We’re starting out in Vancouver, BC a metropolis of health and environmentally conscious individuals.

Through our cutting edge greenhouses, equipped with vertical-grow automations, our leafy greens and mushrooms will make our marketing team’s job simple.  Fresh, local, organic.  With a mix of franchises and corporate locations, The Company Ltd. will expand throughout North America.

What is vertical farming?

Vertical farming is the practice of producing food in a vertically stacked-layer such as a used warehouse, greenhouse, or shipping container. In doing so, vertical farms allow for increased yields, year-round production, consistency in product quality, and it requires less land and energy.

3.1 The Problem

With an increasing population, consistent overconsumption of goods, and growing urban sprawl in most urban areas in Canada, the need for a shift to local, resource-efficient food sources is becoming more important than ever. Further, minimizing agricultural land for commercial and residential development and unsustainable farming practices used to increase short-term production are further exacerbating Canadian food security concerns. The inadequacies of conventional farming can be categorized in four ways:

Nutrient Degradation occurs when fruits or vegetables are not consumed for a significant length of time following harvest, requiring the use of genetically modified crops designed to extend the life of a product but which reduce the taste and nutritional value.  Considering that most conventional farms are located in rural areas this poses a major challenge in providing urbanites with bountiful supplies of fresh produce.

Crop Exposure to the elements is a key downfall of conventional farming.  Wind, temperature, precipitation, and cloudiness affect the consistency of traditional farms, and increase the requirements for added water, soil, seeds and labour when damage occurs.

Soil Degradation is a result of increased demand for agricultural commodities which generates incentives to convert forests and grasslands to farms and pastures.  Over time the natural land is deprived of its organic matter from either a decline in soil fertility, adverse changes in salinity, the effects of toxic chemicals, pollutants or excessive flooding.

Vibration Damage is an outcome of long transport from rural areas to major cities where approximately 5-10 % of fruits and vegetables are deemed unsalable due to damage from cuts, punctures, impact, compression or, most commonly, vibration.

 3.2 The Solution

 Controlled-environment agriculture (CEA) is a technology-based approach to the production of fruits and vegetables.  CEA optimizes the use of resources such as water, energy, space, capital and labor.

Of the many growing options CEA hosts, vertical growing is the most viable.  Vertical farming has the ability to produce crops all year in a controlled environment, with the possibility of increased yield by adjusting the amount of carbon and nutrients the plants receive.  Our approach to vertical farming provides the following benefits over conventional farming:

Positive Employment means our localized urban farms provide a safe work environment and living wages to our team.  Our customers value receiving certified organic products that are grown in our communities by our neighbours.

Fresh Produce: Offering farm-to-table leafy greens separates us from our competition.  We grow a premium product by using vertical growing techniques and we deliver fresh, undisturbed produce to our customers.

A Lessened Carbon Footprint is realized from our urban farms.  The beauty of controlled, vertical growing is that our operation uses the space above us instead of around us.  The Company Ltd. is a leader in the development, implementation and execution of this technique to yield amazing fresh greens, and to protect our fragile planet.

4 Industry Analysis

 The global vertical farming market is valued at USD 3.89 billion in 2020. This is attributed to the growing demand for the environmentally friendly production of fruits and vegetables. The unprecedented growth of the global population has increased demand for urban agriculture.

Organic foods are perceived as healthier, nutritious, safer, and more environmentally friendly. A critical factor that influences the demand for organic food is the food purchasing behavior of consumers, which is essential for producers, policymakers, and suppliers to implement successful marketing strategies.

Obesity and heart disease are the most prevalent health-related issues among consumers. Furthermore, growing depletion of groundwater and changing climatic conditions have urged the traditional growers to adopt alternative farming methods. Rising concerns among consumers pertaining to health and the environment are likely to elevate the industry demand. However, high initial investments and limitations on the growth of various crops are some of the restraining factors in the market.

Unlike traditional cultivation, indoor cultivation can produce crops throughout the year, which results in increased productivity. Furthermore, indoor farming can protect crops from extreme weather conditions through using indoor facilities which use artificial environmental control, UV lighting, and fertigation to grow crops.

Increasing demand for high-quality food, independent agriculture techniques, and growing urbanization are some of the critical factors responsible for vertical farming’s market growth.

4.1 Market Growth Rate

The global vertical farming industry is expected to grow at a compounded annual growth rate of 21.3% from USD 3.89 billion in 2020 to USD 9.96 billion in 2025.

4.2 Key Competitors

Since vertical farming is a relatively new industry to North America, and specifically Canada, we must analyze the current players and those within the conventional farming industry to understand our competitive climate if those traditional farmers decide to pivot or diversify into our market.

Conventional Farming: The vegetable farming industry in Canada has a low market share concentration because the majority of industry farms are small, family-run enterprises. Farmers generally own and operate their farms, supplementing family labour with hired hands only during critical harvesting periods.

At the other end of the spectrum is the low number of commercial farms, which boast significantly higher industry revenue and hectarage. Even so, the production value is dispersed such that no single farm receives a large proportion of the industry’s total revenue since the operators focus on a fraction of all crops produced.

Farmers are price takers in many ways; their options for improving profit are limited to controlling costs or improving the quality of vegetables so that they can be sold to the fresh markets. To regain some of this diminished power, farmers commonly pool their resources to form cooperatives. These organizations act on behalf of their members to improve demand and returns, often through marketing and promotional activities.

Vertical-Farming: There are currently three players in the Canadian marketplace that we have identified as our key competitors.

GoodLeaf Farmshttps://www.goodleaffarms.com/

GoodLeaf greens are available year-round at numerous retail locations throughout Ontario and can be purchased for wholesale through its distribution partners. Founded in Halifax, NS in 2011, it’s GoodLeaf’s mission to keep Canadian families healthy while respecting the environment.

Good Leaf vertical farming logo

Sky Harvesthttps://skyharvest.ca/

Sky Harvest grows high-quality organic microgreens and specialty greens for restaurants and retailers in Vancouver.  Their Richmond based farm is Canada’s first Certified Organic urban farm, and their greens are delivered by bike to local customers.  Sky Harvest strives to be the most sustainable, efficient and innovative grower in urban North America.

Sky Harvest vertical farming logo

Eden Green Canadahttps://www.edengreenscanada.ca/

Eden Green describes themselves as your local source for fresh, sustainably grown microgreens that are nutrient dense and jam-packed with flavour. They serve Dawson Creek, Fort St. John, and the greater Peace Region of British Columbia.  Quality, organic seeds are planted in a specially-blended growing medium and placed in their growing facility fitted with specialty grow lights and watering systems.

Eden Green vertical farming logo

4.3 Target Audience

Health-conscious

Pomme Natural Market, Kin’s Farm Market, Langley Farm Market, Urban Farm Market, City Avenue Market, Stong’s Market, spud.ca

Foodies

Freshii, BeetBox Veg, Virtuous Pie, Chopped Leaf, Green Moustache, Buddhafull, The Juice Truck, Hunny Bee, Bovine, The Tuck Shoppe

Environmentalists

The health conscious who seek to support local, organic, ethical and sustainable food production.

 5 Business Model

Our business format franchise model will propagate The Company Ltd. into the Canadian market quicker than our competitors.  Using strict franchise guidelines that include requirements to employ experienced horticulturalists will allow us to expand faster than our competition.  Franchisees’ need for thorough and consistent training will be met by our corporate team.

5.1 Unique Selling Point

Our unique selling point is our minimization of environmental and social impacts in our process of farm-to-table solutions.

5.2 Revenue Streams

  • Farmer’s Markets
  • Restaurants
  • Online Orders – biggest margins
  • Produce Retailers
  • Organic Soil Sales
  • Consulting
  • Online Courses

5.3 Key Performance Indicators

  • Each greenhouse should produce $8,000 of revenue per week
  • Low staff turnover rate

5.4 Price Point

Organic farmers can charge higher prices for fresh produce but incur stricter regulations and higher labour costs.

5.5 Business Pipeline

2021: Develop our Vancouver Urban Farm into a multi-greenhouse location

2022: Offer consulting and online courses for organic growing

2023: Start producing oyster, shiitake and enoki mushrooms

2024: Begin offering franchises across Canada

2025: Health-product partnership for super greens powder

2026: Upon legalization produce psilocybin mushrooms

6 Sustainability

Sustainability is embedded in everything The Company does. With our focus on producing local, organic produce using minimal energy, efficient growing practices, and limited transportation requirements, we are able to dramatically minimize our carbon footprint over traditional farming.

Our local, efficient model, which can produce high yields with less land and resources, can be replicated to promote food security in vulnerable communities across the country. We also further support our local community by sourcing all of our seeds from within Canada.

We invest in our employees through paying living wages and providing opportunities for training and professional development. We are always looking for opportunities to launch programming that would better attract and support workers who face barriers to employment.

The Company is committed to continuous improvement in sustainability. We have implemented a 5-year plan with realistic goals that will be incorporated into our business model as we grow. Our long-term goal is to become a zero-waste business and carbon-neutral in under ten years. We also plan to become the go-to source for sustainable, affordable agriculture options in rural and remote communities across Canada.

 

5 Year Plan
TimelineGoal
Year 1–          Develop company wide sustainability policies outlining the responsibilities of The Company management and staff to minimize our impact and support our community

–          Become certified as a living wage employer

Year 2–          Assess The Company’s procurement practices and switch to local suppliers wherever possible

–          Begin accepting requests for sponsorships and in-kind donations for local charities

Year 3–          Switch to compostable packaging for all The Company products

–          Develop procedures for focusing on hiring workers with barriers to employment such as people with disabilities or ex-offenders

Year 4–          Reduce carbon footprint through transitioning vehicle fleet to electric engines or bicycles, and switch to renewable energy where feasible

–          Launch pilot project with remote partner communities to install greenhouses and employ local staff

Year 5–          Establish program to create paid employee volunteer opportunities

–          Begin educational campaign to advocate for urban farming and addressing food security issues

 7 Marketing Strategy

“The Company is a creative and innovative solution to the food supply chain, which benefits our bodies and the environment at the same time.”

  • John DoePresident, The Company Ltd.

7.1 SWOT Analysis

Strengths

 

●        Our business strategy

●        Securing our urban farm location

●        Our name and logo

●        Owning an established business: The Subsidiary

●        Being an early mover in urban vertical-growing

Weaknesses

 

●        Currently a minimal team

●        A need to onboard experienced growers, and horticulturists

●        Our lack of an active website, and social media footprint

●        Need for funding to execute on this business plan

Opportunities

 

●        Consulting, online courses

●        Producing common mushrooms

●        Offering Canadian franchises

●        Health product partnership for super greens powder

●        Upon legalization produce Psilocybin mushrooms

Threats

 

●        New players

●        Economic downturns that may put pressure on our price point

●        Potential supply shortages of seeds, or soil

●        Challenges in identifying future farm locations for franchisees

7.2 Key Channels

  • Google Search: newleaforganics.ca
  • Social Media: Facebook, Instagram
  • Farmers Markets
  • Community Events

7.3 Market Segmentation

Financial projections for vertical farms

8 Investment Proposal

“COVID-19 has forced many Canadian provinces to rethink the food supply chain.  For a country that already imports most of its produce, it’s time to rearrange our position in food production and dependence.

Sustainable vertical-farming taking place across our nation will offer us a plausible solution to food dependence and environmental degradation.  We have the foundation, and the strategy to make an agricultural revolution take place.

With your investment we’ll put our Vancouver location into production; a model for future franchises, and additional corporate locations that will span across the North American continent.”

  • John DoePresident, The Company Ltd.

The Company Ltd. is seeking a $250,000 investment in return for a 25% equity share in our company.

8.1 Capital Requirements

Investment Allocation
10 Greenhouses$80,000
Soil and Seeds$70,000
1 Year of Marketing$65,000
Harvesting Units$20,000
Website$5,000
Pre-Build Landscaping$10,000

9 Financial Projections

9.1 Income Statement

3 Year Income Statement202120222023
    
Number of Greenhouses2 6 10
Produce Retailers249,600998,4002,080,000
Restaurants332,800748,800832,000
Online Orders83,200374,400832,000
Farmers Markets166,400374,400416,000
Organic Soil Sales040,000120,000
Consulting0040,000
Online Courses0025,000
TOTAL ANNUAL REVENUE832,0002,536,0004,345,000
Cost of Goods Sold183,040557,920955,900
GROSS PROFIT648,9601,978,0803,389,100
EXPENSES
Employee Wages286,8001,181,0001,898,400
Property Rental18,00036,00048,000
Insurance1,5003,0005,000
Vehicle Allowance6,00056,00097,000
Utilities10,00030,00050,000
Garbage and Recycling150450750
Marketing65,000125,000250,000
Office Admin Supplies1,0001,5002,500
Phone and Internet2,0002,5003,000
Accounting Fees3,6004,2006,000
Bank Charges1,5003,0005,000
Merchant Services2,49011,23224,960
Certification Fees5,0005,5006,000
Greenhouse Development45,00090,00090,000
Farm Maintenance4,2006,00015,000
TOTAL EXPENSES452,2401,555,3822,501,610
Gross Earnings196,720422,698887,490
NET EARNINGS137,704295,887621,243

9.2 Opening Balance Sheet

Capital Requirements Met
Cash250,000.00
Inventory2,500.00
Equipment107,000.00
Total Asset359,500.00
Shareholder’s Loan109,500.00
Company Debt
Total Liability and Equity109,500.00

10 Management Team

John Doe

President

Being the pioneer of multiple start-ups, Mr. Doe has experience in taking businesses from concept to reality.  Like many great corporate leaders Mr. Doe is considered to be more of a visionary than a specialist.  As a people-first leader his efforts are as much about helping to improve the quality of his team’s life, as it is about growing the company’s market share.

Jane Tane

Director of Business Development

Jane’s broad interest in Business and Accounting led the way to years of Financial Management, Internal Audit and Compliance, Operations and Advisory roles.  She resided in Ontario while attending college and then managed two major companies:  one in the bottled water industry and another in on site mobile destruction.  Proceedingly, Mrs. Tane joined public practice and took a role with Law Firm LLP in Toronto, ON; which supported her decision to continue her studies.

10.1 Key Personnel

Operations Manager

  • Oversees all daily operations
  • Helps with training and hiring
  • Tracking employee hours and performance
  • Developing and implementing growth strategies
  • Managing budgets
  • Maintaining seed and soil stocks
  • Presenting and preparing necessary documents for accounting and marketing
  • Responsible for overseeing daily operations
  • Opening and closing site inspections
  • Site maintenance
  • Tracking seed and soil stocks
  • Filling orders
  • Dispatching deliveries
  • Training and hiring new staff

Principal Grower

  • Leads the grow team for their assigned section(s)
  • Responsible for picking, planting, packaging site maintenance, growth monitoring, crop inspections, and cleaning
  • Supervisory of shift management

Grower’s Assistant

  • Works under the supervision of a Principal Grower
  • Assist with picking, planting, packaging site maintenance, and cleaning

Delivery Driver

  • Making long-range deliveries via electric vehicle

Delivery Biker

  • Making short-range deliveries via electric bike

Sales Representative

  • Selling produce at farmers markets, door to door, to restaurants, grocery stores
  • Writing monthly content with defined keywords for our blog
  • Community engagement: being at the forefront of local events

 

10.2 Compensation Summary

Compensation Summary
Positions:202120222023
Operations Manager$60,000$61,800$63,600
Principal Grower$52,000$312,000 (6)$520,000 (10)
Sales Representative$50,000$100,000$150,000
Grower’s Assistant$41,600$499,200 (12)$832,000 (20)
Delivery Driver$41,600$124,800 (3)$208,000 (5)
Delivery Biker$41,600$83,200 (2)$124,800 (3)
Total Compensation:$286,800$1,181,000$1,898,400

11 References

Wikipedia: Farm-to-table

https://en.wikipedia.org/wiki/Farm-to-table

CEA: A Solution to Traditional Agriculture Problems

https://www.agritecture.com/blog/2018/7/12/cea-controlled-environment-agriculture-the-solution-to-traditional-agricultural-problems

Vertical Farming Market Analysis

https://www.grandviewresearch.com/industry-analysis/vertical-farming-market

Vegetable Farming in Canada

https://my.ibisworld.com/ca/en/industry/11120ca/industry-performance

 

We hope you enjoyed this sample vertical-farming business plan.  For a fully-customized business plan please reach out at [email protected].