Old MacDonald Wrote a Guide Called “How to Start a Farm”

Are you considering starting a farm business? Besides a love of the great outdoors, you’re going to need to bring your business and marketing skills if you want to succeed.

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Life on the farm is beautiful, it’s brutal, and it’s unlike anything you’ll ever do in your life. I know because I grew up in a place where you could tell spring had arrived by the way the smell of fresh clover mixed with the scent of cow manure.

The Waterworths have been farmers for generations, and I mean for many, many generations. All the way back to our roots in England, we were farmers. I grew up on a farm because that’s what we did. We farmed.

And although my grandfather’s Century Farm wasn’t one I built from scratch, I did take the knowledge I gained there and established my own goat dairy and fiber farm in Webster County, Missouri.

Life on the farm is relatively predictable, but it also takes a huge amount of planning to actually get on firm footing. Over the long term, though, a farm small business can provide your family with a substantial income and an experience unmatched by other business models.

Things to consider before starting a farm as your small business

Many people who own a farming business today are part of families that have worked the land for generations. For them, much of the difficult part has already been done. You, however, are starting a farm from scratch, which means there’s a lot of legwork to complete before you even break ground on your family’s garden patch. Here are three items that you need to ponder before making your next move.

1. The geography and climate

Farming is a difficult job, no matter how ideal the environment, but it’s made dramatically more difficult if you choose to run a farm that isn’t compatible with the local geography or climate. For example, if you want to establish a pineapple farm in Iowa, you could probably manage with a lot of greenhousing and environmental manipulation, but you might do better with an organic soybean farm and have a lot less headache.

Your local university Extension office should be able to help you better understand what’s possible with your land or the land you’re considering for purchase.

2. Your products

Knowing what’s possible is great, but at some point, you have to choose some things and just go for it. What products do you hope to create as the end result of your farming? Do they need special storage or handling? Is there a way to create more than one product on your land? Monoculture farms, meaning those with just one product, can work, but it’s far easier to survive in the farming world with multiple products that are related somehow.

When you choose products that are related, you can often overlap marketing or required inputs, reducing your overhead farm-wide. For example, if you have a goat dairy farm like I did, you can choose goats who produce cashmere and sell that as well. Or, you can take part of the milk and use it to produce soap. Suddenly you have a whole line of products coming from the same creatures and requiring the same feed and minimal additional inputs.

3. Your market

Just where will you unload all your products? Is your local market hearty enough to handle what you’ve got to sell, or do you need to get into a wider market? Are you dealing in so much bulk that you’d be better off to sell to another business that can use your product in their production processes?

Don’t imagine a product without imagining the market you’ll sell it to unless you’re OK sitting alone in a cellar full of beets come harvest time. (However, “King of the Beets” does have a nice ring to it.)

How you can start your own farm

A farm is not a small endeavor, but it can be a successful one if you understand how to start a farm business. These six steps should help guide you in the right direction:

1. Consider your legal structure

A farm business is still a business, so you’ll want to get your farm’s basic structure and ownership type on paper before you get too deep into your adventure. This goes double if there will be other owners. Even having other family members involved triggers the need for a very clear business structure from the beginning, both to protect your investment and for tax purposes. Many smaller farms are organized as sole proprietorships or partnerships, but you may benefit from incorporating into a more complex structure.

2. Determine your business values

It’s a topic not often discussed, but when it comes to farming, business values and ethics are vital. People won’t be shy about asking if you’re organic or how you handle your meat animals, and you’ll need to be able to give a clear and firm explanation. This is not for the faint of heart. A lot of consumers are extremely passionate about where their food comes from and how it’s produced, whether you’re handling animals or vegetables.

You also may find yourself more of a trailblazer than a traditionalist, and this matters, too. Know your business’s soul before you have a product. You will be better able to market to the audience that wants what you have to sell, and you can stand tall and declare, “My farm only produces the best in fully organic sheep wool, regardless of what those hapless layabout sheep have to say about it.”

3. Establish your budget

Presumably, you’re starting a business with a finite budget. If you’ve got a cheat code that unlocks all the money, feel free to skip this part. For the rest of us, a budget is going to be vital in keeping operations focused and the farm on the way to profitability.

Most businesses don’t make a fortune the first several years, and farms are no different, but creating a farm budget will let you know where you are in comparison to where you should be and when there’s a shortfall on the horizon. You’ll also be able to see what it should cost to produce your product compared to what you actually spend, and then compare that to your revenues once you start to bring in money.

When it comes to budgeting, the main difference between most businesses and a farm business is that you’ll almost certainly be living on the land itself. This creates a sort of dual set of budgets: one for the business and one for your personal household or households. Living on the farm can be figured into the budget as a perk of the business, but your accountant may feel differently, so consult with them before you get too serious about mingling budgets.

4. Narrow your business metrics

Fortune 500s will often refer to these as their KPIs (key performance indicators), but there’s no need to get overly fancy here. Your business metrics tell you how your business is doing overall, whether you’re meeting production goals, how quickly you’re able to produce a product, and a host of other things. The biggest trick is to figure out which metrics are the most important. You can’t simply look at money in versus money out, or you’ll be missing a huge part of the picture.

Are you buying twice as much feed this year, but your dairy goats are producing milk at a rate three times greater than last year? There’s a business metric that could be useful. It’s easy to get in too deep when tracking metrics, though, so before you get started, really think through what you believe will be useful to know. You can adjust this later as you find you have more questions about how your business is operating at the nuts and bolts level.

5. Do an inventory

If you’ve bought land that was a farm in the past, you likely inherited lots of stuff. This might include buildings, machinery in various states of repair, fences that are already in, fields that have been cultivated, wells, waterers, commercially viable plants, and so forth. Before you get started, figure out what you’ve got so you don’t waste a lot of time and money reinventing the wheel.

If you have a fence line that works — even if the fencing itself doesn’t — don’t waste a lot of time driving new posts. Use what you’ve got to put up appropriate fencing for your needs. If there are perennial crops that you can use to immediately start generating revenue, don’t rip them out for crops that may take years to begin to pay out.

6. Manage your time

Running a farm business is a time-consuming affair and one that will eat up weekends, holidays, vacations, nights, and early mornings. Decide now how you’re going to divide up the 24/7 job to keep up with the work, especially if you have partners in your venture. If some of you have day jobs to help support the farm effort, you’ll need to figure out how to cover the labor that may be needed during those windows.

Don’t misunderstand. A farm can occasionally be a highly unpredictable business, but there’s always something you can plan for. Your labor pool will need to be adequate to cover all the needs of whatever you’re producing, even if that means bringing in outside help during heavy labor periods, such as harvesting, shearing, or milking. This extra labor should also figure into your budgeting.

A farm business is like other businesses, but with some caveats

Although starting a farm business is a lot like starting any other sort of business — with legal, budgetary, product, marketing, and labor needs — there are going to be specific challenges that a farm brings that other kinds of businesses don’t.

Once you’ve actually started the business, there’s endless maintenance and construction; a need to keep up with the latest in land management, animal husbandry, crop rotation, farm equipment, and other rapidly-evolving science and technology issues; and a never-ending pile of waste to manage.

Welcome to farming! And remember to wear your boots when you’re cleaning out the barn.

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