How to Start a Small Farming Business

Surprisingly, growing is not the first step in farming.  And those who are new to this business need to learn everything they can about it before going into the field. Of course, it has to be reasonable, and the learning will continue on the job. Luckily, modern precision farming tools seem to be of great help, at least judging by farmer’s feedback on crop monitoring systems.

And although there will inevitably be trial and error that will cost time and money, there are some ways to help agronomists lower the possibility and frequency of this happening. In this article, we will guide novice farmers through the main steps they shouldn’t neglect if they want to put a small but successful farming business on track.

Farming Business: More than a Hobby

Before we move on to the actual steps in starting a farming business, let’s cover a critical issue of how a farmer perceives own activity. This perception differs depending on how one got into farming. Some are lucky enough to come from families that have done farming for decades and received land as an inheritance. For those people, farming is in their blood. They know this business is not a weekend hobby and requires a huge amount of time and effort. But some get into agriculture to completely change a career path by starting their own farm.

Of course, for those to whom farming is a new activity, the road to launching a farm will be different. The biggest mistake farming novices make is ignore the development of a business plan and a marketing strategy. It’s critical both to plan your farm’s development and to market it to attract customers. Let’s see how to do so.

Defining a Farm and Putting a Business Plan Together

The starting point in planning a farming business is to decide on what it will be. It could be a farm where you grow crops, an animal farm, or a combination of both. And with the growing popularity of ecotourism, it could be an ecotourism farm for people to come see and even take part in farming activities.

No matter what type of farm you choose, you will need a business plan. And here are the main points your business plan should cover:

  • Market supply and demand analysis
  • Farm management structure planning
  • Financial analysis

A business plan is ultimately a stage where you brainstorm your ideas and plan how to translate them into reality.

Marketing Your Products

While you are developing your business plan, it’s necessary to get to know your local market and define the marketing channel you will use to sell your products.

Such marketing channels could be:

  • Farmers markets
  • Wholesale distribution
  • Retail Sales
  • Home delivery
  • Community Supported Agriculture (CSA)
  • On-farm sales
  • Restaurant sales

You can choose either one or several channels out of those to boost your sales. Besides, one marketing method may naturally lead to another. For instance, if you start out with a place at the farmer’s market, you may gain recognition among customers, which will allow for adding home delivery, online sales, and other opportunities to your marketing strategy.

It’s also important to understand that you can start building your marketing campaign even before you launch your farm. Go online and get to know your local farmers, join farm communities, and make useful connections. You can even start your own blog or website to build a name for yourself by discussing your passion and sharing your farming path.

Setting up and Financing

Now that you have your business plan and marketing strategy, you will have to face the legal side of starting a farming business. Here are the main steps this process implies:

  • Defining your business’ form of ownership. This includes choosing the form of ownership that suits you best. It could be sole proprietorship, LLC, corporation, nonprofit, or cooperative, etc.
  • Registering your business’ name. This impliescontactingyour state government for registering the business name you came up with.
  • Getting a tax identification number. This implies obtaining your tax identification number from your state revenue agency and the IRS.
  • Registering for state and local taxes. This means registering with your state for obtaining your tax identification number.
  • Getting business licenses and permits. This step implies obtaining a list of federal, state, and local licenses and permits necessary for your business.
  • Learning legal employer responsibilities. Find out which legal steps you’ll be required to take to hire or fire your workers.

Now, you will need finances to invest in your business operations, buy land and equipment, etc. There are different potential sources of funding, including financial programs tailored specifically to the needs of small farmers. There is also an option of loaning, but it’s critical to access all of the risks before borrowing money.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.