This guide is designed to help entrepreneurs through the stages of value-added business development. This resource guide is divided into sections that correspond with the phases of business development.
Phase 1: Exploration and assessment
Starting an agricultural business is challenging and exciting. Business startup involves surrounding yourself with hard-working producers and resource providers to develop your vision or idea. Some of the steps you need to take include:
- Form a steering committee
- Identify a shared purpose, vision, mission and values
- Formulate and develop your business idea
- Conduct an initial assessment of market opportunities
- Identify resource providers such as facilitators, information specialists and consultants to assist in business startup
- Prepare a budget for estimated startup expenses and develop a financing plan for paying for these expenses
- Incorporate your business under appropriate state statutes and regulations
Phase 2: Feasibility
Feasibility is an important step in deciding whether to proceed with your business idea or reevaluate the project. Research and investigate thoroughly before moving on to “business planning.” Key points and questions that help determine business feasibility are included in this section.
- Conduct initial market research to narrow options for potential business ideas.
- Prepare a market feasibility study to analyze business potential.
- Make sure the feasibility study answers all of the questions necessary to make a good decision whether or not to pursue the project.
A feasibility study should be conducted either by the entrepreneur or an out-sourced consulting group. If you choose to conduct your own feasibility study, it is important to maintain objectivity.
Consider the following before starting a feasibility study and/or hiring a consulting firm:
Criteria of a good feasibility study consultant:
- Previous experience conducting studies
- Experience with the industry to be studied
- Understands cooperatives
- Willingness to listen to the groups’ ideas
- Works closely with designated contact members of the group
- Accepts reasonable study revisions
- Accomplishes the study within an agreed deadline
- Works within the group’s designated budget
- Provides clear, useful information in the completed study
From USDA Cooperative Feasibility Study Guide
The business development specialists at the Missouri Small Business Development & Technology Development Centers can help with feasibility and other stages of business startup and growth.
Phase 3: Planning
A crucial piece of business is planning. During this phase, an entrepreneur develops a business plan including market analysis, legal structure, financial analysis and regulatory requirements.
The following section outlines points to help you begin developing your business plan.
- Review your legal organizational structure.
- Determine regulatory requirements, taxes, insurance and personal strengths and weaknesses of individuals involved in the business.
- Identify potential customers and competitors for your product.
Once you review the key points listed above, you should begin writing your business plan. Follow the steps below to complete a thorough business plan.
- Describe your business in detail.
- Describe your organizational structure
- Identify management and/or key people to be involved with the business
- Determine products or services to be provided
- Create an operating plan
- Select a site for your operations
- Determine plant and equipment needs
- Determine layout of facilities
- Determine purchasing, inventory and distribution policies
- Determine whether producers will need to make any changes in production practices to meet necessary quality requirements
- Analyze your industry
- Describe industry trends
- Describe industry competition
- Determine industry growth and sales projections
- Analyze your market
- Identify a target market
- Describe market competition
- Forecast sales of your product or service
- Prepare a financial plan
- Determine how business will be financed
- Determine financial goals
- Project financials for three years
Smaller projects may not involve the steps on building a production site, but the rest of the steps are applicable. Several of the steps may require working with outside professionals. When beginning business planning, be sure to consult with an attorney or accountant. These professionals can assist in structuring the business to optimize potential. Before hiring any outside professionals, research the firms or individuals to determine if they have the background and skills needed to work with your business.
Phase 4: Implementation
Obtaining financing is the key component to implementing any business idea. Meetings often are held to secure sufficient funding.
Below are steps to consider when beginning the implementation phase:
- Meet with lenders to share your business plan and discuss potential debt-financing options.
- Prepare a prospectus, offering circular or other investment documents, if required.
- Secure equity capital through producer-members, if required.
- Secure equity capital through non-producer investments, if required.
- Secure debt or financing with lender.
- Begin construction or remodeling of facilities, if required.
- Hire management and additional staff members. Develop a system for selecting, retaining and training employees, if required.
- Begin operating your business and marketing your products.
Phase 5: Operations
The last phase of startup business development is the operations phase which deals with the day-to-day operations of the business.
Entrepreneurs should consider the following steps to enhance business success during this phase:
- Communicate regularly with your stakeholders.
- Establish a system for monitoring business performance, which includes management, human resources, operations and other business functions.
- Develop a strategic plan to guide your organization after startup, such as growth or exit strategies.
General retail operations do not have special licensing at the state level; however, they must comply with local regulations (check with the City Clerk). Retail stores are required to collect and remit Sales Tax to the Missouri Department of Revenue (see below).
The sale of some products will require licensure or complying with regulations. Examples include:
- Live plants: Missouri Department of Agriculture 573-751-5505 or mda.mo.gov
- Prepared food products (e.g., sandwiches): Missouri Department of Health and Senior Services, 866-628-9891 or health.mo.gov/safety/foodsafety
- Liquor: Missouri Division of Alcohol and Tobacco Control 573-751-2333 or atc.dps.mo.gov
- Tobacco products: Missouri Department of Revenue 573-751-7163 or dor.mo.gov/business/tobacco and dor.mo.gov/faq/business/tobacco.php
- Lottery tickets: Missouri Lottery
- Certain sporting goods (e.g., guns, archery equipment, knives): ATF 314-539-2251 or atf.gov/firearms
- Fireworks: Missouri Division of Fire Safety, Fireworks Unit 573-751-2930 or dfs.dps.mo.gov/programs/fireworks
- Fertilizer and pesticides (plants and pests): Missouri Department of Agriculture 573-751-5504 or mda.mo.gov/plants
- Feed and seed: Missouri Department of Agriculture 573-751-4310 or mda.mo.gov/plants/feed
- Meat and poultry (animals and livestock): Missouri Department of Agriculture mda.mo.gov/animals/markets
- Eggs: Missouri Department of Agriculture mda.mo.gov/weights/device/egglic.php
- Missouri State Milk Board (dairy products): Missouri Department of Agriculture mda.mo.gov/animals/milk
- Frozen desserts: Missouri Department of Health 573-751-6090 or 866-628-9891 or health.mo.gov/safety/foodsafety/frozendessert.php
If your business will be using scanners or scales to weigh items being sold, the Missouri Weights and Measures Division at the Missouri Dept. of Agriculture must inspect and approve your equipment. For more information, contact Weights, Measures and Consumer Protection Division at 573-751-5639.
Anyone conducting business in the State of Missouri under a name other than their own legal name (e.g., John Doe), must register the business name with the Missouri Secretary of State. Missouri law allows businesses to operate under four forms or organization:
- Sole proprietorship
- Partnership – general and limited
- Corporation – C-Corp; S-Corp; Professional, Not-for-Profit; Foreign Corporation
- Limited Liability Company – LLC
Each structure has its own advantages and disadvantages and there are many modifications and variations within these forms. The key to selection revolves around the concept of liability and taxation. You must decide which of these structures best suits your business. In choosing your business structure, consult with a qualified accountant and/or attorney who are familiar with your resources and objectives.
A description of the forms of organization and some of the advantages and disadvantages are discussed in Legal structures and Starting a New Business in Missouri. Choosing a particular structure does not necessarily determine how the business will be taxed.
The Licenses and registration checklist is a guide to help you with the licensing and registration requirements for starting your new business.
You can download forms on the Web at s1.sos.mo.gov/business%5Ccorporations%5Cforms.asp or contact the Secretary of State’s Office at 573-751-4936.
Understanding the taxes that apply to your business and how to meet the legal requirements of those taxes is critical. Consultation with an accountant or attorney is advisable.
Tax considerations are essential during the formation of a new business and during its entire life. When a business is just starting out, it may have little or no income or assets and the choice of structure may not seriously affect its tax liability. However, as the business grows, the tax implications become more significant.
Doing Business in Missouri: Legal Formation identifies the state and federal forms that must be filed for different business structures and compares the tax liabilities for the most common business structures.
For more information on taxes and access to printable copies of the required forms visit: Doing Business in Missouri: Taxes.
Obtain a copy of Employer’s Tax Guide (PDF) from irs.gov or call 800-829-3676. This guide (“Circular E”) explains federal tax withholding and Social Security tax requirements for employers as well as containing current withholding tables for you to use to determine how much federal income tax and Social Security tax is to be withheld from each employee’s paycheck.
For a complete discussion on hiring employees, your responsibilities, and access to the required forms, refer to: Doing Business in Missouri: Hiring Employees.
Business resources and guides
You may also find the following information helpful as you begin your business:
- Starting a New Business in Missouri is an excellent publication on the process of starting and operating a business in Missouri.
- Evaluating Your Business Idea is a simple questionnaire-formatted document that helps you think through the elemental considerations in starting a business.
- Guide to Writing a Business Plan provides a short, but thorough introduction to the process of writing a business plan and provides a simple outline of the contents of a standard plan.
- MissouriBusiness.net is a network of key business resource providers in Missouri. The website contains a vast array of helpful documents, links and information on starting and operating your small business as well as a calendar of upcoming training and educational events throughout Missouri. Find a business counselor near you.
- Contact your local (county, city, township) government offices early in the planning stages of your business. The requirement for local licenses and permits vary by county and city. Most cities, and some counties, require businesses to be licensed. Check with the city business/merchant license office and/or the county collector’s office for the requirements in your area. Be sure to check with the local city and/or county planning/zoning department to make sure that the site you have selected for your business is zoned to accommodate the activities of your business. These offices can be found in your local phone directory.
- Missouri Lawyer Referral Service (mobar.org/LawyerSearch.aspx)
- Missouri Society of Accountants 800-959-4276 or missouri-accountants.com
- The Missouri Society of CPAs 800-264-7966 or mocpa.org