How to Start a Successful Small Farm Business

The majority of farms in the agricultural sector are small, family-run businesses. These small farms should be structured and operated like any other small business since they are ultimately still businesses. You'll be prepared to build up your farm and begin expanding when you spend some time educating yourself about the agricultural sector and the demands of the industry. 

1. Increase Your Resource Base

Market Research

You shouldn't assume that just because you have a brilliant concept, it will be successful. To determine what crops or livestock people are most likely to purchase, research the demand in your area.

Be sure to account for distribution. You might not be able to finance a distributor in your early years. Instead of focusing on the nationwide demand, consider the local or regional demand first.

Select your crops or livestock

Several factors, such as the farm's location and size, will determine whether you can cultivate particular crops:

• Check the local climate to see if it is generally suitable for growing the crops you've chosen.

• When you start looking at actual farmland, you should also consider the farm's growing history and the condition of the soil. For instance, don't think you can produce maize because it is growing on the farm across the street.

Collect information from local farming groups and agricultural institutes

For beginning farmers, there is often a wide range of advice and resources accessible through the agricultural extension of your local agricultural institution. You can also get help and contacts from regional farm organizations. There is a wealth of information on the websites of cooperative agricultural extensions. All of this can be beneficial as well.

Visit the farm services office in your area

Most governments have a department or agency for farm services. These offices can offer you technical support, guidance on financial and business planning, and important details about local and regional agricultural developments.

• Financial and legal services that normally would cost you a lot of money may be provided at no cost to you by the farm services office.

• Introduce yourself to the office employees and let them know that you intend to start a small farm business nearby.

Check local and state laws

Prior to making any commitments to purchase or lease land or agricultural equipment, it is important to understand the regulatory environment in the area where you wish to operate your farm.

• Pay close attention to the zoning regulations. Some farming practices could be illegal in certain places or might demand pricey licensing and inspection.

• You can find out what particular licenses or inspections you'll need to get started by contacting a local farm organization or agricultural services office.

• To include this in your overall business plan, find out how long it takes to process applications and how much the licensing fees cost.

Acquire adequate land

Look for suitable agricultural land in the general area where you wish to run your farm if you don't currently have land. Verify the zoning regulations to make sure you can cultivate the types of crops or animals you desire there.

• Make sure the land is effectively irrigated, has a sufficient quantity of water, and is either adjacent to a larger body of water.

• Make sure the environment and conditions are favorable for the crops or livestock you wish to cultivate by conducting soil quality testing.

Seek government assistance

You can qualify for government subsidies and loans depending on where your farm is located and what types of crops or livestock you want to grow. Grants are available in many places, especially for new organic farms.

• Non-profit environmental groups may also offer grants and other forms of support to farmers who are involved in sustainable farming practices.

• Find out what government and charity groups are active in your area by doing an online search. To learn about potential additional resources, you can also speak with nearby farmers.

2. Setting up your business

Prepare a formal business strategy

You might think a formal business plan for your small farm business is not necessary, especially if you are self-financing. A formal business plan, however, might help you in beginning to view your farm as a business and handle it as such.

Discuss your goals with an advisor

Once your business plan is complete, have a financial or start-up advisor review it and make suggestions for improvements. Choose someone that has a lot of expertise dealing with profitable small farm businesses.

Choose your small farm's business structure

You can choose to operate your small farm business as a sole proprietorship, an LLC, or a corporation when you first get started. Your business objectives and desired level of personal risk will determine the form you choose.

• Your farm is in no way separate from you and your personal finances if you set up your business as a single proprietorship. If you are only operating your farm as a side business while working a full-time job, this may be the simplest option.

• The most personal protection is provided by a corporation, which is also the most costly and time-consuming option. Wait until your farm starts making money before incorporating. You can do this at any time.

• A limited liability company, or LLC, offers all the advantages of a corporation and a sole proprietorship without any of its disadvantages. If your ultimate goal is to make a living from your farm, choose this form.

Get all required licenses and permits

The state or local government may demand regular inspections and licenses of your farm activities depending on the crops or livestock you're farming.

• For instance, you might want a license to certify that your storage facilities comply with local health code regulations if you're selling vegetables to the general public. You can learn what licenses are required by contacting your local town or county government office. You can also ask the local farmers what you'll need to know by speaking with them.

• Typically, the agricultural extension program at your state university provides the knowledge and tools you need to manage any local or state-level licenses or permits you may require.

3. Creating Your Farm

Create your management team

You most likely won't be beginning a farm by yourself. For the farm to run smoothly and efficiently, you usually need at least two or three individuals to help you set up procedures and policies.

• Discuss the progress of the farm and any funding or equipment gaps you still need while writing out job descriptions.

• Additionally, you should set farm safety procedures for both employees and potential guests. You might, for instance, require specific training prior to anyone operating heavy farm machinery and forbid anyone from operating farm machinery when intoxicated by alcohol or a specific drug or medication.

Get all required insurance

There are several risks associated with farming, which makes it a dangerous business. You could choose to purchase crop, revenue, and livestock insurance in addition to basic liability insurance.

• If a disaster damages your crops, crop insurance will protect you and your farm. In accordance with the number of acres you've planted, it also ensures a minimum income each year. To learn more about the many insurance options and the locations of the suppliers so you can compare prices, get in touch with your local farm services office.

• Having crop insurance can provide you access to extra financing choices if you still need funds. When you have crop insurance, your farm is a far more attractive investment since the lender is confident you will pay back the loan.

Secure any financing

You have a few options, including loans, if you don't have the money to start your farm. People starting small farms normally aren't eligible for grants from the government, but there are subsidies and other forms of support available.

• Whether your farm is a hobby farm or you want to make money off of it will affect how much money is available. Hobby farms are less likely to be eligible for loans, and many government incentives are only given to working farms.

Hire farm labor

You might require additional support when it comes time to harvest your crops for the season. If you plan to hire full-time employees, you may need to brush up on wage and hour standards for employees, as well as tax-withholding requirements.

• Generally, hiring day labor is less regulated than hiring full- or part-time workers, but you should still check with your state government to ensure you are in compliance with any applicable minimum wage requirements, as well as with child labor and other laws.

Create marketing and advertising channels

You should continue networking even if you're just getting started to find clients for your farm. Start by offering discounts to your first few clients at neighborhood restaurants. This will help your farm get going. 

• For example, you might provide a discount to a consumer who recommends your farm to a friend and they ultimately make a purchase from you. Better yet, give the new customer and the person who referred them a discount.

• Create accounts on social media so you can connect with users, engage in conversation, and share information about your farm.

• Additionally, you can also place ads on websites or in trade publications for the restaurant sector.