What's the first step to starting a farm? Writing a business plan of course! Now a days it would serve you better to get a business degree than an Ag degree. Especially since main stream agriculture is usually funded by all the big names we love to hate. <cough, Monsanto, ADM, Cargill, Tyson, etc., cough> But, and I hate to admit this, they're successful mostly because they have a business plan and stick to it.
Hold on there! Having a business plan doesn't mean you're selling out nor does it mean you're lumped into the likes of those above. I'm a farmer first and foremost. Because I want to be a farmer for the rest of my life I also need to be a businessman. Here's where the labor of love comes in when people talk about farming. Growing the food and meeting new people at the farmer's market, that's the sexy part. Planting all that food and harvesting it, that's the strenuous part. Sitting down inside, when you'd rather be planting, doing the books, cutting costs, managing labor, working certifications, thinking about marketing, planning expansion, and a ton more, that's the hard part. Organic farmers sure do love farming.
I like to think of farms as the original small business. So let's talk business plan. At first it doesn't have to be a detailed masterpiece. However, it eventually HAS TO BE a detailed masterpiece. Just start out with what your core business is going to be.
When we first wrote down what we wanted Imagines Farm to be Mel and I filled the front and back of two sheets of yellow, legal paper. That is a great way to start and eventually all of those things will become part of Imagines Farm. The hard part was looking at which ones we could successfully start a farm with. Which ones could start paying the bills. Joel Salatin lists out a bunch of core businesses in his book "You Can Farm." I highly recommend it because there's an honest look at what it is going to take from you to farm. But I don't want to be as specific as him and suggest pastured chicken, pastured beef and such. Nor do I want to rehash what he said. I want to put down the criteria that Mel and I used to narrow down our core business. Also I think that a person's success is largely dependent on my number one criteria.
1. Be passionate about it. If a person isn't completely devoted to their core business all else will fall around it. Eventually it will fall to.
2. Is there a market for it? I am a firm believer in that you have to have a product to sell before you think about selling it. That said, start small. I am also a believer that someone who is passionate about their product can create a market. But that takes time and is good if we are talking about your hobby, not your sole source of income. So do the quick research (we'll hit the deep numbers way down the line) and see if people are buying.
3. Stay away from fads and the fringes. Fads come and go and so will your business. Stick with something that is going to be around and useful for awhile. The fringes can be exciting. You either make it or you don't. I've never been a good gambler so I stay where I can control my odds as much as possible.
4. Can it be scaled up and down easily? When times are booming can you increase production easily to keep up? Conversely, can you slow down easily to minimize your loss?
5. Can it be built upon? Multi-use everything. Will the equipment you build or buy be used elsewhere and thereby amortizing costs over several enterprises. Or will it all be single use? Another aspect to look at is can your product expand into new markets you didn't originally plan on? Having as many income streams from the same product is the name of the game.
6. Low cost of entry. Very important. Don't break the bank because you will need to have a reserve. One of the top reasons new businesses fail is under capitalization at the start. You should plan to start it out of pocket.
7. Low cost to maintain it. You will have to front the money till your first crop is sold. Then those sales carry your product forward. Don't get stuck with hidden costs.
8. Low cost to produce it. Again you will have to front the money. Plus with a small business you don't want to commit to an expensive harvesting operation right up front. The business might go away but the debt won't.
9. Can it be stored/transported cheaply? Often overlooked. No use doing all that work if you can't afford to get it to market and sell it.
10. Does it provide feedback? This is the other side of the coin of "can it be built upon?" How does it feedback into your farm? If the waste can be used for another enterprise then you are cutting costs. Cutting costs is the quickest way to give yourself a raise/increase profits.
The list can be much longer but things begin to over lap. Besides a lot of them will be answered as we build our business plan. So spend some time and create a list of everything you want to do or grow on your farm. Then start looking at each one and see how they stack up. In the end the goal is to have a farm that pays for itself and provides income for you and your family. You also want to enjoy the work!
Hold on there! Having a business plan doesn't mean you're selling out nor does it mean you're lumped into the likes of those above. I'm a farmer first and foremost. Because I want to be a farmer for the rest of my life I also need to be a businessman. Here's where the labor of love comes in when people talk about farming. Growing the food and meeting new people at the farmer's market, that's the sexy part. Planting all that food and harvesting it, that's the strenuous part. Sitting down inside, when you'd rather be planting, doing the books, cutting costs, managing labor, working certifications, thinking about marketing, planning expansion, and a ton more, that's the hard part. Organic farmers sure do love farming.
I like to think of farms as the original small business. So let's talk business plan. At first it doesn't have to be a detailed masterpiece. However, it eventually HAS TO BE a detailed masterpiece. Just start out with what your core business is going to be.
You need a strong core
When we first wrote down what we wanted Imagines Farm to be Mel and I filled the front and back of two sheets of yellow, legal paper. That is a great way to start and eventually all of those things will become part of Imagines Farm. The hard part was looking at which ones we could successfully start a farm with. Which ones could start paying the bills. Joel Salatin lists out a bunch of core businesses in his book "You Can Farm." I highly recommend it because there's an honest look at what it is going to take from you to farm. But I don't want to be as specific as him and suggest pastured chicken, pastured beef and such. Nor do I want to rehash what he said. I want to put down the criteria that Mel and I used to narrow down our core business. Also I think that a person's success is largely dependent on my number one criteria.
1. Be passionate about it. If a person isn't completely devoted to their core business all else will fall around it. Eventually it will fall to.
2. Is there a market for it? I am a firm believer in that you have to have a product to sell before you think about selling it. That said, start small. I am also a believer that someone who is passionate about their product can create a market. But that takes time and is good if we are talking about your hobby, not your sole source of income. So do the quick research (we'll hit the deep numbers way down the line) and see if people are buying.
3. Stay away from fads and the fringes. Fads come and go and so will your business. Stick with something that is going to be around and useful for awhile. The fringes can be exciting. You either make it or you don't. I've never been a good gambler so I stay where I can control my odds as much as possible.
4. Can it be scaled up and down easily? When times are booming can you increase production easily to keep up? Conversely, can you slow down easily to minimize your loss?
5. Can it be built upon? Multi-use everything. Will the equipment you build or buy be used elsewhere and thereby amortizing costs over several enterprises. Or will it all be single use? Another aspect to look at is can your product expand into new markets you didn't originally plan on? Having as many income streams from the same product is the name of the game.
6. Low cost of entry. Very important. Don't break the bank because you will need to have a reserve. One of the top reasons new businesses fail is under capitalization at the start. You should plan to start it out of pocket.
7. Low cost to maintain it. You will have to front the money till your first crop is sold. Then those sales carry your product forward. Don't get stuck with hidden costs.
8. Low cost to produce it. Again you will have to front the money. Plus with a small business you don't want to commit to an expensive harvesting operation right up front. The business might go away but the debt won't.
9. Can it be stored/transported cheaply? Often overlooked. No use doing all that work if you can't afford to get it to market and sell it.
10. Does it provide feedback? This is the other side of the coin of "can it be built upon?" How does it feedback into your farm? If the waste can be used for another enterprise then you are cutting costs. Cutting costs is the quickest way to give yourself a raise/increase profits.
The list can be much longer but things begin to over lap. Besides a lot of them will be answered as we build our business plan. So spend some time and create a list of everything you want to do or grow on your farm. Then start looking at each one and see how they stack up. In the end the goal is to have a farm that pays for itself and provides income for you and your family. You also want to enjoy the work!
No matter what kind of business you're handling, having a business plan is an essential long-term procedure that'll determine if you're in the right path. Having a lot of alternatives works too, especially if something's bound to be amiss.
ReplyDeleteSoren Duus
Soren,
ReplyDeleteYou are absolutely right. Yet it seems when talking about farming, those who want to do it tend to overlook the business aspect. Farming is romantic as hell. It's also hard as hell and very unforgiving. You screw up and the business side will hammer you.