Business Plan for Small Inspected Meat Plant

Business Plan for a New Small USDA Inspected Meat Processing Plant to Serve Local Livestock Producers

May 2011. Prepared by Keith DeHaan, Food and Livestock Planning, and funded by USDA Rural Development, for the South Coast Meat Project. Includes financials.

Table of Contents

  1. Executive Summary
  2. Introduction
  3. Market Plan

    • Target Markets
    • Products and Services Offered
    •  Product Volume and Growth Expectations
    • Marketing Budget and Requirements
    • Storage and Distribution
    • Competitive Programs
  4. Meat Processing I: Processing Requirements

    • Byproducts and Waste Products
    • Disposal of Waste Materials
    • Treatment of specified Risk Materials
    • Effluent and Water Use
    • Permits and Certifications
    • Humane Handling and Stress on Animals
    • Dry Aging
  5. Meat Processing II: Meat Processing Plan

    • Plant Size and Scope
    • Estimated Plant, Property, and Equipment
    • Expected Manning and Labor Expense
    • Expected Processing Expense
    • Further Processing Yields, Costs and Product Prices
  6. Business Formation

    • Organizational Structure and Ownership
    • Governance and Management
    • Issuance of Shares
  7. Financial Plan

    • Development of Financial Models
    • Financial Statements
    • Financial Summary
  8. Barriers to Entry / Core Competencies
  9. Literature Cited / Credits

Tables and Figures

  • Species and number of animals processed per week
  • Room size estimates
  • Estimated equipment listing
  • Estimated plant and property capital costs
  • Manning and labor estimates
  • Processing costs
  • Further processing yields, costs and prices
  • Monthly income statement and cash flows for Year 1
  • Monthly income statement and cash flows for Year 2
  • Monthly income statement and cash flows for Year 3
  • Annual balance sheet
  • Annual financial summary
  • Financial ratios
  • Net margin by livestock category in year 3


Plan Summary

This is a business plan template for a small, USDA-inspected, multiple-species harvest and processing plant that provides fee-based meat processing services to livestock producers and manufactures processed meats for sale to wholesale or retail customers.

Size and Capacity:

  • ~25 to 32 beef cattle per week and a similar amount of hogs and lambs/goats;
  • One to three days of harvest with the latter part of the week dedicated to boning, grinding, portion cutting, curing, sausage manufacture, cooking, and packaging;
  •  7 to 11 full-time workers.

Location and Physical Details:

  • In a rural district
  • 6,200 sq. ft. building
  • A dug well for water, a commercial septic system for wastewater treatment
  • Compost station for decomposition of waste tissues from the plant.

(Note: the model can be adapted for plants in municipalities that can use city water and sewer services and will have rendering picked up routinely by a commercial rendering company.)

Cost and financing:

  • Total cost of building, infrastructure, equipment is estimated at $2.4 million;
  • If a term loan is used for 50 percent of the plant, property, and equipment, plus working capital, the company will have to raise approximately $1.9 million in equity capital;
  • Total income will come from a combination of sales of processing services, sales of processed beef and pork, and the sales of beef hides;
  • Due to short payment terms on most accounts receivables, the business should not need a line of credit to shore up the monthly cash position;
  • Income for processing services was estimated by adding a constant percent margin above operating costs. In year 3 of operation, the total cost of processing per species was predicted at:
    • Beef $279
    • Pork $99
    • Lamb $37
    • Cull cows $222

When a margin is added to processing costs, the following net margins for fee-based processing are predicted:

Net margins for fee-based processing
Species Annual #s Net Margins


Beef cattle



Cull cows












Plant owned processed beef

Plant owned processed pork




















The financial model predicts the following three-year results, which are comparable to a successful, well-managed food business.

  Year 1 Year 2 Year 3
Revenue, $000 508 942 1,188
EBITDA*, $000 -19 274 430
Net income, $000 -268 23 175
Return on Sales   2% 15%
Return on Equity   2% 12%

*Earnings before interest, taxes, depreciation, and amortization.


Maintaining margins is critical in this business and can be assured by:

  • Satisfying customers;
  • Producing good quality products;
  • Monitoring and managing yields;
  • Monitoring and managing expenses.


Click here to download the full plan as a pdf.




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