If you plan to raise sheep for profit or at least try to break even while raising sheep, one of the most important steps you can take to set yourself up for success is to develop a business plan for sheep farming. A well-considered business plan is an essential part of operating any business, and sheep production is no different.
Your sheep farm plan should include a clear set of goals, a firm grasp of flock management fundamentals, and the marketplace in which you plan to sell your breeding stock, meat, wool, and (if applicable) dairy products.
In this article we’ll cover the basics to help you develop a successful business plan for sheep farming.
Sheep Farm Business Plan Preparation
Putting together a business plan for your sheep farming operation isn’t so different from putting together a plan to launch any other business.
A business plan can help, even if you already have sheep on your property. Even if you have been raising stock for a few years. If you want to start running your farm like a business, creating an organized and informed plan can help. Not only can you get your farm out of the red, making a plan will also help you focus on your primary goals.
The basic components of a business plan for sheep farming may include the following 6 items:
Your cover sheet will include the name of your business, your farm’s contact information, and the date the plan was prepared. Even if you don’t plan to apply for a business loan, this is a good way to organize your sheep farm plan and help you take your efforts more seriously.
This is a top-level summary of your sheep farm business plan, including a short description of your business, your mission statement and the goals you hope to achieve as you execute your business plan.
Your business description should be a simple and accurate description of the main components of your business. This includes a short business overview, details about your business location and facilities, ownership of your business, and a short history of your farm.
Your sheep farm production plan will document the products that you will produce, how you will produce those products, and how much you expect to produce. This section should also detail any permits and regulations which may impact your production plan.
The marketing plan for your sheep farm should include a short summary of recent market trends, any marketing alliances you have or wish to build, an overview of your primary and secondary marketing strategies, and any competitive advantage your business has.
Your sheep farm’s financial plan may be the most critical part of your overall business plan. Items you should plan to include in your financial plan are a balance sheet, an income statement, cash flow statement, and your overall farm enterprise budget.
Don’t be Overwhelmed, Find Support!
While it may seem overwhelming, most states and counties have a number of resources to assist you. Creating a well-executed sheep farm business plan doesn’t have to be a lonely endeavor.
Look for your local small business development center, farm service agency, or cooperative extension office for support.
Online Sheep Farming Business Plan Generators
We can also recommend the following online options if you need some assistance.
The University of Minnesota Center for Farm Financial Management has terrific online business planning software called AgPlan which is available for free!
Using this software allows you to not only view your business plan online, you can review examples of other people’s business plans created with AgPlan and also share your business plan with advisors to receive feedback and support.
Purdue University has an online business planner portal called INVenture, which uses a simple question and answer format to help you write a cohesive sheep farming business plan.
We feel that either the University of Minnesota platform, or Purdue’s platform can work if you’re having a hard time getting started on your own, or finding local support.
3 Things Which Can Make or Break Your Sheep Farm Plan
While there are many variables involved when planning and operating a business, some matter more than others. The 3 primary variables you should pay special attention to when creating and executing a sheep farming business plan are:
- feed costs,
- market prices, and the
- percent lamb crop.
Cost of Feeding Your Flock
As you probably know if you’re considering raising sheep for profit, the cost of feeding your flock will be your primary expense. This is particularly true for the cost of feeding your ewes.
While there are many strategies for determining your annual feed cost, including determining in advance how many sheep per acre your farmland can support, there is no one-size-fits-all solution when it comes to feeding a flock of sheep.
Early on you may have to estimate your annual feed costs. After a few years you will be able to average your historical spending to obtain an accurate cost projection.
Prevailing Market Prices
Market prices for your meat, wool, and dairy products can change annually, seasonally, and even week to week.
Higher market prices will increase your profitability, but it’s important to compare “net” market prices.
If you have to sell through a livestock auction there will be extra cost. These businesses often charge a flat fee or a percentage of the sale. So a higher price may not net you as much as if you sold direct to a consumer at a lower price.
In general, if you can sell direct from your farm to commercial buyers or consumers, you can net more per sale. Cutting out the middle man is usually good business.
It’s important to be aware of this when you develop the marketing plan for your sheep farm.
Percent Lamb Crop
Finally, the Percent Lamb Crop in any given year will have a major impact on your profitability. We define this data point as the number of lambs marketed (or retained for breeding) produced by each ewe exposed for breeding.
In general, producing more lambs will net you more profit, as it will typically cost the same amount of money (or close to it) to maintain a ewe, regardless of how many lambs she produces in a year.
A flock of prolific ewes that raise numerous healthy lambs will improve your percent lamb crop and can help make your sheep business more profitable.
For most shepherds, 200% is a realistic goal to set, and most sheep breeds can produce a 200% lamb crop each year if fed and managed properly.
A ewe’s age, weight, nutrition, and genetics can all impact her ability to deliver multiple lambs per year. Most ewes reach their peak productivity between 3 and 6 years of age; something to be aware of as you monitor the age of your flock.
Preparing a Business Plan for Sheep Farming (takeaways)
While raising sheep may not be the most glamorous or lucrative business opportunity, it can be one of the most rewarding, and if you can approach the endeavor from a practical business standpoint, with a thoughtful sheep farm plan, then you’ll have a better chance to succeed.
Raising sheep for profit can be realistic if you pay close attention to your production, financial, and marketing plans, and set a realistic budget. Most importantly – stick to the plan!