Business Plan on "Business Plan for the Farmery"

Business Plan 15 pages (4066 words) Sources: 15

[EXCERPT] . . . .

Business Plan

Product Description

Market Analysis

Demographics

Regulatory Environment

Competition

Marketing Plan

Market Penetration Strategy

Advertising Media

Management Plan

Company Organization

Company Philosophy

Personnel Policies

Training

Record Keeping

Manufacturing Plan

Financial Pro-Formas

Risk Analysis

The Farmery is a startup venture in Raleigh, NC. It combines a small greenhouse and mushroom production operation with a retail outlet. The company is focused on the medium- to high-end of the highly competitive and fragmented retail market in the area. The company's main competitive advantage is its unique production and distribution set up, which is not only attractive for its uniqueness, but helps it to deliver fresh product to consumers, and do it at a much lower cost than other companies are able to deliver. The company believes that it will be able to earn healthy enough margins and generate enough traffic that it can be profitable almost immediately and grow from there into other cities in North Carolina. This business plan reflects both the launch phase and how the company will set itself for long-run growth.

1.0 Product Description

The Farmery is a unique agriculture/retail concept. The business website describes the operation as "a completely new approach to farming and food retailing, one that looks for symbiosis within the entire system rather than the optimization of individual components. it's a growing and retailing system designed to provide locally grown food in urban neighborhoods" (Greene, 2012). This description identifies what the company is and what it is not. It is a vertically-integrated retailer of farmed goods that combines production and retail on the same site. It is the urban equivalent to a farm store that one might find in an agricultural setting. The Farmery concept stands as a counter and response to the large agribusiness that governs vegetable retailing in the United States today.

The physical structure of the Farmery begins with used shipping containers, which are plentiful on the open market. The idea of repurposing used shipping containers as retail sites is a relatively new phenomenon but is picking up steam due to the flexibility of the business model and the cheap availability of used containers on the market (Inside Retail, 2011). Containers have been repurposed for everything from a Starbucks to housing projects (Falk, 2012). The prospective design of the Farmery is that it will consist of four containers. Each container will be retrofitted to include a mushroom growing system and growing panels on the outside walls where herbs, lettuces, greens, strawberries and other small crops can be grown (Greene, 2012).

These goods will be produced using conventional greenhouse technology. On the bottom floor of the central greenhouse there will be a market and the bottom two containers, where customers will be able to purchase the crops that have been produced. The product line will be supplemented with crops from local farmers and producers (Greene, 2012).

2. 0 Market Analysis

2. 1 Demographics

The Farmery concept is specifically geared to the urban audience. The target demographic can be described as young (under 40), urban and highly-educated. This demographic is likely to have medium or high earnings, and is likely to have at least one professional in the household. Creative professions are likely to be overrepresented among the target market as well. A large segment of this market is likely to have young children as well. The concept can be applied to a wide range of urban environments, due to the relatively small footprint of the Farmery. The first store is going to be located in Raleigh, North Carolina, and is expected to be popular with the local students and educated professionals. There are plans to expand the concept up and down the East Coast, expanding the geographically foot print of the target market.

2.2 Regulatory Environment

The Farmery is a combination of two distinct businesses, agricultural and retail. Thus, it will be subject to the regulatory environment of each. There are laws concerning everything from the use of farm labor to the use of pesticides and herbicides in farm production. The latter will be generally a non-event since the emphasis is going to be on organic production. However, all of the state statutes regarding agricultural production will need to be adhered to. There is also the possibility that special licensing will be required to have agriculture and retail on the same urban site. Two distinct business entities might need to be set up to accommodate the regulatory regime. Additionally because regulations are set up at the state level, it is expected that early expansions will be done within the state of North Carolina (Charlotte, Asheville, Wilmington, etc.).

Trade regulations also exist at the municipal level. The Farmery will need to work with local officials in Raleigh in order to ensure that the land on which the business sits is fully licensed to legally not only retail food but also to produce it. In addition, the Farmery is going to be subject to rules regarding food handling. The proprietors will work with officials at the federal, state, county and municipal levels to ensure that all of the applicable regulations are understood and that they will be adhered to.

2.3 Competition

The broad business is food retail, and the agricultural production is just a hook. The end customer is the retail consumer, not the wholesale market, so the Farmery is going to be considered as competing in grocery retail, not farm production. The grocery retail industry is massive. The Food Marketing Institute (2012) estimates that the U.S. grocery market is worth $584 billion. Given that the population of Raleigh is around 0.0013% of the U.S. population, the local grocery industry is worth around $780 million per year. The industry is highly competitive and highly-fragmented (Imlay, 2006). The largest company in the industry is Wal-Mart, and they compete with a cost leadership platform. Because the Farmery intends to compete as a differentiated player, its more direct competitors will be companies that have the same strategy. Perhaps the largest is Whole Foods, which features organic and natural foods as its staple offering, and appeals to the same demographic that the Farmery is targeting. There are two Whole Foods stores in Raleigh, as well as stores in nearby Chapel Hill, Cary and Durham.

The Florida-based chain Publix is expanding into the North Carolina market as well, and will be a formidable competitor taking the mid- to high-end of the market (Portillo, 2012). They will challenge stores like the Farmery and the same mid- to high-income segment as Harris Teeter. There are four Harris Teeter stores in Raleigh and several others in the immediate area. Another competitor is the large grocery chain Kroger. This store appeals to a mainstream audience, siphoning customers from both Wal-Mart and Harris Teeter. There are four Kroger stores in Raleigh and a further 12 within a 20-mile radius.

Perhaps the most direct competition lies with the different farmer's markets around town. There is a downtown farmer's market that operates seasonably on Wednesdays and another seasonal market at Midtown as well. Both of these offer consumers the opportunity to purchase farm-fresh products, and appeal to the same target market as the Farmery intends to target. The seasonal nature of these events and their limited hours are competitive disadvantages, but they have advantages in that they are more well-established, and have a broader range of goods for sale than the Farmery intends to have.

The Farmery is going to compete as a niche player, essentially a green grocer, and this segment of the market is highly fragmented. Competition in this niche is heavily dependent on location, so anything within a two mile radius of the eventual site would be a competitor. The Farmery is expected to be a magnate store, however, drawing customers from all of Raleigh, at least when it initially opens and the concept is novel. It is not expected that there will be strong competitive response. Smaller niche stores in organics or green grocers are not likely to have the capability to compete head-on with the grown-on-site hook that the Farmery offers. They may offer some minor competitive response but the most significant threat is expected to come from Whole Foods and Harris Teeter, as these compete directly against the Farmery for the same target market. Both of these stores are full service operations that offer a much broader range of products that the Farmery, including organic and fresh produce. They struggle, however, with a problem that the Farmery has identified, in that they cannot provide fresh local produce year-round, something with which the farmer's markets also struggle. This opens up a niche for a greenhouse specialist like the Farmery to offer fresher produce at lower prices.

3.0 Marketing Plan

3.1 Market Penetration Strategy

The basic organizational strategy that the Farmery intends to pursue is the differentiated strategy, where the company succeeds by making its product/service offering different and more attractive than those of the competition (MindTools, 2012). The marketing strategy therefore needs to reflect this approach to the business. Market penetration… READ MORE

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