Making the decision to own and operate a small farm is no easy feat. When you account for equipment, crops, land, buildings and the many other expenses farmers have, the total cost to get started in farming is a little over $5 million. That’s a lot of money for a young entrepreneur, no matter what industry they’re trying to break into.
Nonetheless, small farms can still succeed without having to rely on major funding from government entities and other programs. Instead, it’s possible to be smart about how you invest your time and money in order to save on farming startup costs and start earning a profit faster.
Here are six tips to remember to help your small farm succeed without major funding.
1. Remember It’s a Business
For one reason or another — whether it’s because many farmers live on-site and have their families help out or because they see their livestock more like pets than business assets — it can be difficult for new farmers to remember that their small farm is a business, not a hobby or lifestyle. The beginning stages of any small business are indeed the most important to its success. Remind yourself of this truth frequently throughout the decision-making process of starting your small farm.
2. Start With Marketing
If you start farming before you start marketing, you’re more than likely going to end up with a bunch of leftover crops. Do some research to figure out what consumers in your area need, then use that data to decide what to produce and how much.
In this stage, you should also consider how you plan to sell your products. Farmers have the following options for distribution:
- On-farm sales or farm stands
- Farmers markets
- Community-supported agriculture (CSA)
- Delivering to groups of customers (MBCs)
- Selling to retailers and restaurants
- Selling wholesale to distributors
By understanding what farm customers in your area need and how they plan to purchase those goods, you can create a system that is profitable and experience minimal product waste.
3. Choose a Focus Area
If you try to juggle too many crops or animals at once, you’re going to be in way over your head. It’s like when you go to a restaurant and their menu is so huge that there’s no way they can make anything that well. As you conduct your market research, you should be deciding on just a few high-value crops that your small farm will produce. To make the most profitable choice, you’ll have to consider your land, personal preferences, distribution methods and financial factors.
4. Utilize Your Land’s Resources (But Still Produce What’s in Demand)
Many small farms will fail because they try to emulate another farm or copy their practices. Every farm and farmer is unique, so they likely will not find the same success simply by doing what another business has done. One of the major reasons for this comes down to the land and physical resources that already exist on a farm.
Whether you’ve inherited a plot of land or you’ve purchased farmland without knowing what you’re growing, you should consider these factors of your land when you choose what to produce:
- Soil quality
- Proximity to markets
- Water access
To operate the most successful small farm possible, consider all these land and physical resources before choosing what you want to produce. Then, make sure that particular good is in high enough demand in your area for you to be able to make sales. Your local agricultural extension should be able to provide you with data and information that will help you get started.
5. Know the Numbers
Going back to the first point, your farm is a business. So, you should know the numbers behind every decision you make. Evaluate the capital investments you make to ensure they will lead to profitability and a timely payback. Understand the relationship between the cash flow and profit margins of each crop you produce. Do everything you can to justify all your decisions from a financial standpoint before finalizing anything.
6. Consider Joining a Cooperative
Many recognizable farm brands in the U.S. are cooperatives that are designed to give small farms a better chance to market and sell their products. A co-op is similar to a corporation, but its owners are the members of the cooperative. New farmers can save a lot on startup costs by joining a co-op, as all profits are re-invested into the cooperative. Some large U.S. farming brands that are cooperatives include Blue Diamond, Ocean Spray and Land O’Lakes.
Reach out to your local farming extension to get information about the farming co-ops in your area.
Make Your Small Farm Your Career
When you make the decision to start your own farm business, you need to focus your attention completely on your business. Quit your day job and keep these six tips in mind, and you’ll be well on your way to small farming success.
Emily covers topics in conservation, sustainability and green technology. You can find her latest work on her site, Conservation Folks.