Looking for a feed and farm supply business plan? You're in the right place.
A farm store ties up cash in feed, stock and slow-paying accounts before it earns anything. A lender will ask how much stock the store must carry, how long farm customers take to pay, whether one truck can serve the route, and when the business turns a profit. A blank template won't show you what a sensible answer looks like.
In this article we'll walk through a complete sample business plan for a feed and farm supply store in Iowa, section by section, so you can see what good looks like and write your own with confidence. We'll cover the executive summary, the SWOT analysis and, in particular, all of the financials.
Here's what you'll take away:
- The executive summary: see how to put the funding ask, the opening date and the first three years on one page
- The SWOT analysis: learn how to name a thin team and a thin margin without putting a reader off
- The start-up budget: find out how much of a raise goes into the truck, the mixer and the opening stock, and how much must sit as reserve
- Stock, credit and the delivery route: check your own stock turns, farm credit terms and truck capacity against a worked example
- The five-year profit, cash flow and balance sheet: understand why a store whose main product earns a 22% margin can still turn a profit
- The downside case: have an answer ready for the "what if sales are 20% short?" question, along with the steps the owner takes in response
If you're setting up a feed or farm supply store, read this before you write your own. The business is fictional, so take what fits yours and change the rest.
In this plan
If you need a feed and farm supply business plan template for your own plan, start it in the Toolkit.
The Business in Brief
Harrison Feed and Farm Supply opens on January 1, 2027 in a former implement dealership on a state highway at the edge of a small town in north-central Iowa. It sells bagged and bulk feed, animal health and fencing supplies, spring chicks and seed, and runs one bulk delivery truck and a one-ton blending mixer for custom orders. Sam Harrison holds about 52% of the capital and his brother Charles about 48%.
The store needs $940,000: $420,000 of owner capital ($220,000 from Sam, $200,000 from Charles) and a $520,000 bank term loan. Of that, $527,000 is a cash reserve for opening stock and farm receivables, $370,000 buys the truck, plant and fit-out, and $43,000 pays for legal work, licenses and the launch.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $2,693,000 | $3,705,000 | $4,435,000 |
| Net income after start-up costs | ($111,877) | $59,874 | $107,932 |
| Closing cash | $246,048 | $215,320 | $255,138 |
Year 1 is a loss because the store carries seven people and a truck before the account base has grown to pay for them. Operating profit before depreciation and interest is negative in January to March, turns positive in April and is close to zero in July. Year 2 is the first profitable year, and margins stay thin throughout: net income is 2.4% of revenue in Year 3.
The case for a new store is local and specific. Sam spent twelve years selling feed for a regional manufacturer and managing a cooperative's farm store, and about 22 of the first 60 bulk accounts are people he has served before. A case with sales 20% lower in every year is modeled in full, and the store stays cash-positive in it with a thin margin.
About the Store
Legal name: Harrison Feed and Farm Supply, LLC, an Iowa limited liability company. Owners: Sam Harrison, about 52% of capital paid in; Charles Harrison, about 48%. Charles is an investor and a customer, not an employee. Premises: a leased 12,000-square-foot building on about three acres, with a truck scale and space for bulk bins. Opening: January 1, 2027, ahead of the spring chick and seed trade.
What the store sells
| Product group | How it earns | Year 1 share of revenue |
|---|---|---|
| Bagged and bulk feed for cattle, hogs, poultry, horses and small flocks | Margin on finished feed bought from regional mills | 61% |
| Animal health, fencing and farm supplies | Retail margin on wormers, mineral, waterers, fence and tools | 28% |
| Spring chicks, garden seed and wild-bird products | Seasonal, March to June | 8% |
| Custom blending and delivery fees | Priced per batch and per stop | 3% |
Targets through 2029
- About 80 bulk delivery accounts by the end of 2029, up from 60 at the end of the first year.
- A profit after tax every year from 2028, with the bank loan repaid on schedule.
- A third counter associate by mid-2028 and an assistant manager by mid-2029.
- Owner distributions only from 2030, once cash has held above $100,000 at two year ends.
The Iowa Feed Trade
Who is farming in Iowa
The USDA's 2022 Census of Agriculture counted 86,911 farms and ranches in Iowa on 30.0 million acres, with an average farm of 345 acres; 93% were family-owned and operated (NASS, February 2024 release). Most of those operations are not livestock feeders, so the store's market is the smaller group that keeps cattle, hogs, poultry or horses, plus the acreage owners who keep a few animals.
What a store like this earns
Feed is a high-volume, low-margin product. The plan prices bulk feed at about a 14% gross margin, bagged feed at about 29%, and the whole mix at 28%. These are planning figures and not industry statistics; bulk margins are the thinnest and ingredient prices can move them in either direction. Net margins of 2% to 4% follow, and the stock and credit that feed demands is why the reserve is large.
What the store competes with
| Alternative | What it offers | Why a customer picks it | Where this store differs by design |
|---|---|---|---|
| Farmer cooperatives | Feed, grain services and inputs under one roof | Existing member relationships and patronage payments | Smaller accounts get a named person; custom blends in one-ton lots |
| National farm-and-ranch retail chains | Wide hours and a broad range of bagged feed | Convenience and price on standard products | Bulk delivery, tailored blends and feed advice |
| Independent feed mills selling direct | Finished feed from the manufacturer | Direct pricing for large buyers | Several brands and products from one stop |
| Online suppliers | Supplements and equipment delivered | Price comparison | Same-day pickup and delivery on heavy goods |
The table describes what each category offers, not a ranking. The store does not name competitors in this plan and prices change often.
SWOT
| Strengths | Weaknesses |
|---|---|
| A founder known to about 22 of the first 60 bulk accounts | One buyer: when Sam is away, ordering stalls |
| Bulk delivery with a scale on site | No brand yet beyond the town |
| Custom blending in one-ton lots | Year 1 loses money and draws on the reserve |
| Opportunities | Threats |
|---|---|
| Acreage owners and horse keepers who want advice | Grain and ingredient prices that swing feed prices |
| Farmers who want a named contact and delivery windows | A chain or cooperative opening a nearby depot |
| Spring chick and garden trade as a draw | Disease outbreaks that close livestock buying |
Who Buys, and How
Bulk accounts
About 60 livestock operations buy by the load by the end of the first year, averaging roughly $18,000 a year. They order in advance, want a delivery window, and expect 30 days to pay. Bulk accounts are the most stable buyers and the slowest to win, because a feeder switches suppliers only after a trial.
Retail buyers
About 1,300 retail customers average around $690 a year. They are acreage owners, horse keepers, 4-H families and people with a small flock. They buy bagged feed every few weeks, buy chicks in spring, and are likelier to come back for advice than for a lower price.
What triggers a switch
A late delivery, a feed formula that changed without notice, a closed depot, or a nutrition question nobody at the counter could answer.
Who pays late
Farm accounts are billed on 30-day terms and many settle at month end. About half of all sales are cash or card, so receivables average 18 days of total revenue. The bad-debt allowance is 0.5% of revenue, and accounts that go past 60 days stop receiving credit.
Winning Farm Accounts
The first 60 bulk accounts
| Source | Bulk accounts | Share |
|---|---|---|
| Sam's earlier customers and contacts | 22 | 37% |
| Calls and visits by the livestock accounts representative from month 4 | 20 | 33% |
| Referrals from veterinarians and neighbors | 10 | 17% |
| Trial loads for feeders who switch | 8 | 13% |
Each prospect gets a feed-cost comparison, one trial load and a delivery schedule. The trial program costs $8,000 in Year 1, and 38 of the 60 accounts are won in the year.
Retail
Retail buyers come from the highway sign, the spring chick days and word of mouth. The store expects about 1,300 of them in 2027, building through the spring.
Pricing
Feed is priced from cost plus a posted margin and reviewed each month against ingredient prices. Bulk accounts get a per-ton price and a fuel adjustment; the delivery fee is separate. Prices for supplies follow a posted list.
Growing the base
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Feed revenue | $1,650,000 | $2,300,000 | $2,740,000 |
Growth slows after Year 2 because one truck and one route set a ceiling, and the plan does not buy a second truck.
Getting Known in the County
What the budget buys
Year 1 marketing is $57,000: $25,000 of launch spend from start-up capital and $32,000 of running costs. That is 2.1% of Year 1 revenue, falling to 0.8% by Year 3. After $8,000 of trial loads, $49,000 reaches about 1,300 retail buyers, or about $38 each. Bulk accounts cost more: the trial loads plus about $55,000 of the representative's loaded pay over 38 won accounts is about $1,700 each, against roughly $2,500 of gross profit a year on an $18,000 account at a 14% margin.
| Channel | Year 1 spend | What it is meant to do |
|---|---|---|
| Signage, website and open house (launch) | $21,000 | A visible highway sign, a site with a delivery request form, and a day when farmers can walk the yard |
| Farm show booth (launch) | $4,000 | Introductions to feeders |
| County fair and farm show sponsorships | $8,000 | Presence where livestock owners gather |
| Local radio and county paper | $7,000 | Opening news, spring chick days and delivery announcements |
| Feed trial program | $8,000 | Trial loads for bulk prospects |
| Search and social ads | $4,000 | "Feed store near me" searches and chick-day posts |
| Text and mail reminders | $5,000 | Order reminders and seasonal days |
Milestones
- January 2027: store open, 22 bulk accounts transferred.
- April 2027: representative in the field, chick days under way.
- December 2027: 60 bulk accounts and operating profit before depreciation and interest of about $11,000 a month.
Running the Yard and the Route
The building and yard
12,000 square feet on about three acres at $66,000 a year ($5.50 a square foot), with a truck scale, bulk bins and a loading dock. The lease runs ten years with two five-year options, matching the loan term, because the truck scale and fit-out are built on leased land.
Where the feed comes from
Finished feed is bought from regional mills on 21-day terms, and the store blends custom lots of one ton on its own mixer. Stock turns 8.3 times a year, or about every 44 days, and $231,605 is on the shelves and in the bins at the end of Year 1. The store buys under a dealer agreement with two mills on 21-day terms from the first order.
The route
One truck and one CDL driver, at 12 tons a load: about three loads a week in 2027 and five to six in Year 3, against a capacity of eight to ten. A part-time relief driver covers sickness and hours limits from month 14.
Licenses and rules
- Iowa Code section 198.4 requires a commercial feed license for distributors that are not exempt; the Department of Agriculture and Land Stewardship publishes the application, and tonnage reports are filed twice a year. The store confirms its status and the current fees before opening.
- Live chicks, garden and wild-bird seed, and any pesticide or fertilizer sold have separate rules. The store confirms each with the Department before stocking it.
- Medicated feed that needs a veterinary feed directive is handled only with a directive from a licensed veterinarian. The store confirms its obligations with the FDA and the state before it stocks any.
- The store checks whether the mixing area is covered by FDA's animal food facility rules.
- CDL, DOT registration and truck insurance for the delivery route.
Insurance and safety
General and product liability, stock and spoilage, truck and property, $42,000 in Year 1, with workers' compensation inside the payroll cost.
Who Runs It
Sam Harrison, founder and general manager
Sam has twelve years in the feed trade: seven as a territory sales representative for a regional feed manufacturer and five managing a cooperative's farm store. He knows feed buyers, mills and ingredient pricing. His $220,000 is most of his savings.
Charles Harrison, investor
Charles raises cattle and row crops on his own farm and puts in $150,000. He sits on a monthly review with Sam, has no day-to-day role and is one of the store's customers.
Where the team is thin
Sam has not owned stock and carried farm credit himself, and has not run a delivery route. The plan covers these gaps with a CDL driver hired in month 2, credit limits with a 60-day hold, and a part-time accounts clerk from month 3.
The 22 transferred accounts
The 22 accounts that move with Sam are customers who contacted him after he left his last job. His employment terms, including any non-solicitation clause, have been reviewed by a lawyer, and the plan would lose those accounts and their revenue if the review found a restriction.
If Sam is out
Sam is the only buyer for the first 27 months, so the store carries life and disability cover on him. The assistant manager hired in month 28 shares the buying, and until then a retired mill buyer is on call.
Outside help
A local accountant reviews the numbers each quarter, and the bank receives quarterly accounts under the loan terms. The owners also plan to ask the bank for a seasonal operating line to cover the spring stock build.
The Numbers Behind Harrison Feed
A single five-year model sits behind every table: month by month for 2027, one figure per year after that. Funding and the inputs that drive each product group come first, then the statements, then a weaker case.
Paying for the truck, the stock and the first spring
| Use of funds | Amount |
|---|---|
| Used bulk feed truck with auger and scale, plus on-site bulk bins | $150,000 |
| One-ton mixer, bagging line, forklift and pallet racking | $95,000 |
| Truck scale and scale house | $55,000 |
| Store fit-out, point-of-sale and dock repairs | $70,000 |
| Feed dealer license, county and fire permits, CDL and DOT registration | $4,000 |
| Legal: entity, lease review, loan documents | $14,000 |
| Launch: signage, website, open house and farm-show booth | $25,000 |
| Cash reserve for opening stock and slow-paying farm accounts | $527,000 |
| Total uses | $940,000 |
| Source of funds | Amount |
|---|---|
| Sam Harrison's savings | $220,000 |
| Charles Harrison's investment | $200,000 |
| Bank term loan | $520,000 |
| Total sources | $940,000 |
Sam Harrison puts in $220,000 of savings and his brother Charles $200,000, so the owners supply $420,000 (45%) and a bank term loan supplies $520,000 (55%). On capital paid in, Sam holds about 52% and Charles about 48%. The loan runs ten years at 10.5%, interest-only for the first 12 months; the rate is a planning figure, not a lender quote. The bank takes liens on the truck, plant, stock and receivables, plus a personal guarantee from Sam. The $527,000 reserve is the largest single use, and it is sized to what a feed store ties up: by December 2027, stock ($231,605) and farm receivables ($132,805), less what suppliers are owed ($111,043), hold about $253,000 of cash, and Year 1 also loses $68,877 before start-up costs. A seasonal operating line from the bank is expected on top of this; it is not drawn or modeled here.
Inputs the forecast is built on
- Feed is the core line: $1,650,000 in 2027. Bulk delivery accounts grow from 22 in January to 60 in December, about 41 on average at roughly $18,000 a year each, which is about $0.75 million, or about 1,875 tons at a planning price of $400 a ton. About 1,300 retail buyers (acreage owners, horse keepers, small flocks, 4-H families) average about $690 a year, or about $0.9 million. Bulk feed earns a gross margin of about 14% and bagged feed about 29%; at the Year 1 mix of 45% bulk, feed blends to 22%, and the model holds 22% in every year as the bulk and bagged shares move toward half and half.
- Animal health, fencing and farm supplies earn a 33% margin and spring chicks, garden seed and wild-bird products 36%. The supplies line is $750,000 in 2027, about 28% of revenue, and reaches $1,200,000 in Year 3. March to June carries 66% of the chick and seed line's Year 1 sales. Custom blending and the delivery fee earn a 90% margin because the cost sits in payroll and fuel.
- Blended gross margin is 28% in every year. That is a mix result: feed is 61% of Year 1 revenue and 62% of Year 5.
- One truck and one driver carry the route, with a part-time relief driver from month 14 for sickness, breakdowns and hours-of-service limits. At 12 tons a load, 1,875 bulk tons is about 156 loads in 2027, or three a week. Year 3 bulk tonnage of about 3,400 means about 285 loads, or between five and six a week, against a route capacity of eight to ten. A second truck is not bought in these five years, and it is the first purchase that would be needed if bulk accounts grew faster than planned.
- About half of sales are cash or card at the counter; farm accounts are billed on 30-day terms, so receivables average 18 days of total revenue. Suppliers are paid in 21 days. Stock is held at 12% of annual cost of goods sold, about 44 days, which is 8.3 turns a year in every year. The bad-debt allowance is 0.5% of revenue, card fees about 1.4% and shrink and spoilage 0.4%.
- Payroll on-costs are 30% for yard and driving roles, where workers' compensation rates run higher, 27% for the manager and sales roles, 20% for the spring crew and relief driver and 15% for the part-time clerk. Pay raises of 3% a year are charged as a separate line from Year 2.
- Rent is $66,000 a year for 12,000 square feet of building on about three acres, which is $5.50 a square foot, with 3% yearly increases, on a ten-year lease with two five-year options. Insurance of $42,000 covers general and product liability, stock and spoilage, the truck and property.
- Income tax uses the federal rate of 21% and Iowa's top corporate rate of 7.1% for 2026, which may change; the Year 1 and Year 2 losses are carried forward. An S corporation election would move this tax to the owners' personal returns, and the corporate rates are a cautious placeholder.
- Distributions of $60,000 in Year 4 and $90,000 in Year 5 are paid only after cash has stayed above $200,000 for two year ends. The loan is repaid on schedule.
Sales by product group
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Bagged and bulk feed | $1,650,000 | $2,300,000 | $2,740,000 | $3,030,000 | $3,280,000 |
| Animal health, fencing and farm supplies | $750,000 | $1,000,000 | $1,200,000 | $1,320,000 | $1,420,000 |
| Spring chicks, garden seed and wild bird | $206,000 | $270,000 | $320,000 | $350,000 | $375,000 |
| Custom blending and delivery fees | $87,000 | $135,000 | $175,000 | $200,000 | $215,000 |
| Total revenue | $2,693,000 | $3,705,000 | $4,435,000 | $4,900,000 | $5,290,000 |
| Growth on prior year | – | 38% | 20% | 10% | 8% |
Feed supplies 61% of Year 1 revenue and sets the pace for the rest, because a customer who buys feed every few weeks also buys wormer, fence clips and a bag of chicks. Supplies are 28% of sales. Spring chicks, seed and wild-bird products are 8% and swing the most by month. Custom blending and delivery fees are the smallest line, 3%, and the one with the best margin.
The 2027 calendar, month by month
| Month | Bagged and bulk feed | Animal health, fencing and farm supplies | Spring chicks, garden seed and wild bird | Custom blending and delivery fees | Total revenue | EBITDA |
|---|---|---|---|---|---|---|
| Jan 2027 | $80,000 | $42,000 | $4,000 | $3,000 | $129,000 | ($24,781) |
| Feb 2027 | $92,000 | $44,000 | $6,000 | $4,000 | $146,000 | ($19,965) |
| Mar 2027 | $108,000 | $62,000 | $30,000 | $5,000 | $205,000 | ($3,250) |
| Apr 2027 | $125,000 | $85,000 | $48,000 | $6,000 | $264,000 | $13,466 |
| May 2027 | $138,000 | $88,000 | $40,000 | $7,000 | $273,000 | $16,016 |
| Jun 2027 | $142,000 | $70,000 | $18,000 | $7,000 | $237,000 | $5,816 |
| Jul 2027 | $142,000 | $58,000 | $8,000 | $8,000 | $216,000 | ($133) |
| Aug 2027 | $146,000 | $55,000 | $8,000 | $8,000 | $217,000 | $150 |
| Sep 2027 | $155,000 | $62,000 | $12,000 | $9,000 | $238,000 | $6,100 |
| Oct 2027 | $167,000 | $66,000 | $16,000 | $10,000 | $259,000 | $12,049 |
| Nov 2027 | $175,000 | $58,000 | $10,000 | $10,000 | $253,000 | $10,349 |
| Dec 2027 | $180,000 | $60,000 | $6,000 | $10,000 | $256,000 | $11,199 |
January and February are the weak months, before the spring trade starts and while new accounts are still being won. EBITDA is negative in January, February, March and July, and positive in the other eight months. The monthly view shows operating results; stock buying ahead of chick and seed season is not timed month by month, so the spring cash trough is larger than the year-end balances suggest, and the seasonal operating line is meant for that gap.
Store, yard and truck payroll
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and general manager | $80,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Counter and yard associate (first) | $38,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Counter and yard associate (second) | $38,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Counter and yard associate (third) | $38,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Bulk delivery driver (CDL) | $54,000 | Month 2 | 1 | 1 | 1 | 1 | 1 |
| Office and accounts clerk (part time) | $30,000 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Livestock accounts representative | $58,000 | Month 4 | 1 | 1 | 1 | 1 | 1 |
| Spring crew, March to June (2 people) | $36,000 | Month 3 | – | – | – | – | – |
| Warehouse and loading lead | $44,000 | Month 17 | – | 1 | 1 | 1 | 1 |
| Relief delivery driver (part time) | $24,000 | Month 14 | – | 0.5 | 0.5 | 0.5 | 0.5 |
| Assistant store manager | $52,000 | Month 28 | – | – | 1 | 1 | 1 |
| Total payroll incl. on-costs | $426,945 | $521,493 | $592,490 | $609,000 | $609,000 |
Sam and three counter and yard associates open the store, and a two-person spring crew works March to June every year. The bulk driver starts in month 2, the part-time clerk in month 3 and the livestock accounts representative in month 4, once the truck is running and there are accounts to call on. A part-time relief driver follows in month 14, a warehouse and loading lead in month 17, and an assistant store manager in month 28 so Sam can be off site. Sam's $80,000 salary is in the costs from month one, so profit is what is left after he is paid. The part-time clerk and relief driver are each counted as half a person.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $2,693,000 | $3,705,000 | $4,435,000 | $4,900,000 | $5,290,000 |
| Cost of goods sold (feed, supplies, seed and chicks) | ($1,930,040) | ($2,655,328) | ($3,178,510) | ($3,511,770) | ($3,791,278) |
| Gross profit | $762,960 | $1,049,672 | $1,256,490 | $1,388,230 | $1,498,722 |
| Payroll incl. on-costs | ($426,945) | ($521,493) | ($592,490) | ($609,000) | ($609,000) |
| Rent | ($66,000) | ($68,000) | ($70,000) | ($72,100) | ($74,300) |
| Utilities | ($36,000) | ($37,500) | ($39,000) | ($40,500) | ($42,000) |
| Marketing | ($32,000) | ($34,000) | ($36,000) | ($38,000) | ($40,000) |
| Insurance | ($42,000) | ($45,000) | ($48,000) | ($51,000) | ($54,000) |
| Professional fees | ($9,000) | ($9,000) | ($9,500) | ($10,000) | ($10,500) |
| Software subscriptions | ($14,000) | ($15,000) | ($16,000) | ($17,000) | ($18,000) |
| Truck fuel, tires and repairs | ($36,000) | ($44,000) | ($50,000) | ($54,000) | ($58,000) |
| Card and bank fees | ($38,000) | ($52,000) | ($62,000) | ($69,000) | ($74,000) |
| Bad debt allowance on farm accounts | ($14,000) | ($19,000) | ($22,000) | ($25,000) | ($26,000) |
| Shrink, spoilage and damaged stock | ($11,000) | ($15,000) | ($18,000) | ($20,000) | ($21,000) |
| Licenses, tonnage reports and training | ($3,000) | ($3,000) | ($3,500) | ($3,500) | ($4,000) |
| Equipment replacement | $0 | ($8,000) | ($10,000) | ($12,000) | ($12,000) |
| Phones, supplies and sundries | ($8,000) | ($9,000) | ($10,000) | ($10,500) | ($11,000) |
| Annual pay raises (3% a year) | $0 | ($15,645) | ($36,083) | ($56,471) | ($76,435) |
| EBITDA | $27,015 | $154,034 | $233,917 | $300,159 | $368,487 |
| Depreciation | ($41,292) | ($41,292) | ($41,292) | ($41,292) | ($41,292) |
| Interest | ($54,600) | ($52,868) | ($48,826) | ($44,338) | ($39,355) |
| Income tax | $0 | $0 | ($35,868) | ($57,084) | ($76,591) |
| Net income before start-up costs | ($68,877) | $59,874 | $107,932 | $157,446 | $211,249 |
| Start-up costs expensed at opening (legal, licensing, launch marketing) | ($43,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($111,877) | $59,874 | $107,932 | $157,446 | $211,249 |
Year 1 earns $27,015 at EBITDA, which does not cover $41,292 of depreciation and $54,600 of interest, so the net loss is $68,877 before start-up costs and $111,877 after them. Year 2 is the first profitable year, with a net income of $59,874. Margins stay thin, which is normal for a trade where feed is about 61% of sales: net margin before start-up costs reaches 2.4% in Year 3 and 4.0% in Year 5.
Cash in and out
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($323,952) | $5,953 | $80,542 | $154,988 | $215,848 |
| Truck, plant and fit-out | ($370,000) | $0 | $0 | $0 | $0 |
| Funding received | $940,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | $0 | ($36,681) | ($40,724) | ($45,212) | ($50,194) |
| Owner distributions | $0 | $0 | $0 | ($60,000) | ($90,000) |
| Net change in cash | $246,048 | ($30,728) | $39,819 | $49,777 | $75,654 |
| Closing cash | $246,048 | $215,320 | $255,138 | $304,915 | $380,569 |
The year-end balance is positive in every year and lowest in Year 2, at $215,320, when receivables and stock grow faster than profit. Distributions start in Year 4. Cash from operations is negative in Year 1 because about $253,000 goes into stock and receivables net of supplier credit, on top of the loss.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $246,048 | $215,320 | $255,138 | $304,915 | $380,569 |
| Accounts receivable | $132,805 | $182,712 | $218,712 | $241,644 | $260,877 |
| Stock on hand (feed and supplies) | $231,605 | $318,639 | $381,421 | $421,412 | $454,953 |
| Truck, plant and fit-out (net) | $328,708 | $287,417 | $246,125 | $204,833 | $163,542 |
| Total assets | $939,167 | $1,004,088 | $1,101,397 | $1,172,805 | $1,259,941 |
| Accounts payable (suppliers) | $111,043 | $152,772 | $182,873 | $202,047 | $218,128 |
| Bank term loan | $520,000 | $483,319 | $442,595 | $397,383 | $347,189 |
| Paid-in capital | $420,000 | $420,000 | $420,000 | $420,000 | $420,000 |
| Retained earnings | ($111,877) | ($52,003) | $55,929 | $153,375 | $274,623 |
| Total liabilities and equity | $939,167 | $1,004,088 | $1,101,397 | $1,172,805 | $1,259,941 |
Stock turns, margins and break-even
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | 1.0% | 4.2% | 5.3% | 6.1% | 7.0% |
| Net margin (before start-up costs) | -2.6% | 1.6% | 2.4% | 3.2% | 4.0% |
| Payroll incl. pay raises as share of revenue | 16% | 14% | 14% | 14% | 13% |
| Revenue per full-time equivalent at year end | $414,308 | $463,125 | $492,778 | $544,444 | $587,778 |
| Average monthly revenue | $224,417 | $308,750 | $369,583 | $408,333 | $440,833 |
| Monthly revenue needed to cover operating costs | $216,470 | $263,443 | $300,779 | $320,045 | $332,447 |
| Debt service cover (EBITDA / interest + principal) | 0.5x | 1.7x | 2.6x | 3.4x | 4.1x |
Year 1 averages $224,417 of monthly revenue against $216,470 needed to cover operating costs, a margin of under 4%. By Year 3 the gap is $369,583 against $300,779. Debt service cover is 0.5x in Year 1, because the loan is still interest-only and the store is barely profitable at EBITDA, and 1.7x or better from Year 2; a lender would likely ask for more headroom in Year 1, which is why the reserve is large. Revenue per full-time equivalent is high ($414,308 in Year 1) because feed is a low-margin, high-volume product; gross profit per full-time equivalent is the better yardstick, at about $117,000 in Year 1. Stock turns are 8.3 a year, set by the 12% stock-to-cost input.
Sales 20% below plan in every year
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $2,154,400 | $2,964,000 | $3,548,000 | $3,920,000 | $4,232,000 |
| Net income before start-up costs | ($183,149) | ($54,430) | $48,159 | $115,664 | $145,583 |
| Net income after start-up costs | ($226,149) | ($54,430) | $48,159 | $115,664 | $145,583 |
| Closing cash | $181,213 | $54,759 | $48,205 | $124,737 | $231,884 |
Every revenue line is cut by 20% in every year, feed margin slips 1.5 points because ingredient costs are not fully passed on, and bad debt is held at plan. The response: the warehouse lead and assistant manager are not hired, the relief driver starts six months later, the spring crew drops to one person, Sam takes a 20% pay cut, marketing is cut by 20%, equipment replacement is halved, fuel, card fees and shrink fall 20% with volume, and no distributions are paid. On those terms the store loses money in Years 1 and 2, returns to profit in Year 3 and ends every year with cash in the bank, at no less than $48,205. That minimum is about five days of sales, and it arrives with debt service cover below 1x in Years 1 and 2 on a weaker margin, so the owners would draw the seasonal operating line and talk to the bank early. Equity ends Year 1 at $193,851.
Sources
- USDA National Agricultural Statistics Service, 2022 Census of Agriculture, Iowa (86,911 farms; 345 acres average).
- Iowa Code, section 198.4, commercial feed licenses.
- Iowa Department of Agriculture and Land Stewardship, Animal Food Requirements Guide; fees and due dates change, so confirm on the Department's site.
- FDA, Veterinary Feed Directive; the page points to separate guidance for distributors.
- Iowa Department of Revenue, corporate income tax rates for tax year 2026 (top rate 7.1%; the rate may change).
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