By: Sophie Howard
Before the sun has even risen, you begin your day. You put on your rain gear and head out into the early cold air to feed the hens and calves. You feel nice being outside, feeling the frost crunch beneath your feet, and seeing the yard cat stretch and yawn lazily on a clear morning.
You’re already juggling a bunch of chores in your thoughts. Inquire with your accountant about what you may deduct as a business cost this year. Check with your neighbors to see if they’d want to use the extra acre of land at the bottom of your property. Make sure you get a couple of additional chicken scratch packs if you need them. Replace the fence. Talk to the neighboring farm about how they’re planning a future logging business on their mountainous, wooded area. It’s a lot, but it’s exhilarating to know that there are so many possibilities for the future amid all the duties.
Several things to think about before beginning a farm as a small company
Many of today’s farmers are descendants of families that have farmed the land for centuries. Much of the heavy work has already been completed for them. You, on the other hand, are beginning a farm from the ground up, which means you’ll have to make a lot of effort before you can start planting your family’s vegetable plot. Before you make your next step, think about these three things.
Climate and geography
Agriculture is a challenging job to do, no matter how good the environment is, but it’s made even more difficult if you choose to manage a farm in a place where the climate or terrain isn’t ideal. Still, an organic soybean farm would be a lot easier and less stressful. The Extension office at your locality should be able to assist you in better understanding what you can do with your land or the land you’re thinking about buying.
Products that you sell
It’s fantastic to know what’s possible, but you have to make a decision and go for it at some point. As a result of your farming, what things do you plan to produce? Do you need to store or handle them differently? Is there a way to use your property to make more than one product? It’s possible to exist in the farming world with only one product, but it’s considerably simpler to survive in the farming world with numerous items that are connected in some way. You may frequently overlap marketing or essential inputs when you pick similar goods, lowering your farm’s overall overhead. You may also use a portion of the milk to make soap. You now have a full line of goods derived from the same animals and require the same amount of feed and minimum extra inputs.
Describe your target audience
Where are you going to discharge all of your goods? Is your local market strong enough to handle what you have to offer, or do you need to expand your reach? Are you selling in such large quantities that you’d be better off selling to a company that can utilize your product in their manufacturing processes? Unless you’re okay sitting alone in a basement full of beets when harvest time comes, don’t imagine a product without thinking about the market you’ll sell it to. “King of the Beets,” on the other hand, has a lovely ring to it.
How to Start a Farm in Your Backyard
A farm is not a little venture, but you may make a lot of money if you know how to establish a farm company. The following six steps should help you get started:
Take a look at your legal framework.
Because a farm is still a company, you’ll want to write down your farm’s fundamental structure and ownership type before you go too far into it. If there will be more than one owner, this is doubly true. Even if other members of your family are engaged, it is necessary to have a very defined corporate structure from the start, both to preserve your investment and for tax concerns.
Make a list of your company’s values.
Business principles and ethics are important in farming, yet they are not generally mentioned. People will question if you’re organic or how you treat your meat animals, and you’ll need to be able to explain clearly and concisely. For the uninitiated, this isn’t a good idea. Whether you’re dealing with animals or veggies, many people are quite interested in where their food comes from and how it’s made. It’s also possible that you’re more of a pioneer than a traditionalist, and that’s a good thing. Be aware of the essence of your company before launching a product. You’ll be able to better advertise to the people who want what you’re selling, and you’ll be able to stand up and say, “No matter what those poor sheep say about it, my farm only produces the greatest in totally organic sheep wool.”
Make a budget for yourself.
You’re probably establishing a company with a limited budget. If you have a cheat code that unlocks all the money, you can skip this section. A budget will be critical for the rest of us to keep operations on track and the farm profitable.
Most companies don’t generate much money in their first few years, and farms are no exception. However, putting together a farm budget can show you where you are, where you should be, and when you’re going to run out of money. As soon as you’ve started making money, you’ll be able to examine how much it should cost to make your product against what you spend and then compare that to your profits.
The primary difference between most companies and farms regarding budgeting is that you’ll almost probably be living on the property. As a result, you’ll have two budgets: one for your company and one for your own family or families. Living on the farm as a perk of the company can be factored into the budget. Still, your accountant may have a different opinion, so talk to them before getting too serious about combining finances.
Reduce the number of metrics that your company uses
These are commonly referred to as KPIs (key performance indicators) by Fortune 500 companies, but there’s no need to get too sophisticated here. Your business metrics tell you a lot about your company’s overall performance, whether you’re hitting your production targets, how quickly you can make a product, and so on. The most difficult part is determining which KPIs are the most significant. You can’t only focus on money in vs. money out, or you’ll lose out on a lot of information.
Are you spending twice as much on feed this year as you did last year, yet your dairy goats are producing three times as much milk as they did last year? There’s a business metric that could be of interest to you. When it comes to tracking metrics, though, it’s easy to become bogged down in the details, so think about what you think you’ll need to know before you get started. You can change this later if you discover that you have additional questions regarding how your company works on a day-to-day basis.
Examine your belongings and make a list
You’ve probably inherited a lot of stuff if you’ve ever acquired land that was formerly a farm. Buildings, machinery in various states of repair, fences that have already been installed, fields that have been farmed, wells, waterers, economically viable plants, and so on might all be included in this category. Figure out what you have before you get started, so you don’t waste a lot of time and money-spinning the wheel. Use what you’ve got to build up fencing that’s adequate for your purposes. You shouldn’t cut out perennial crops if you can utilize them right once to start making money, as they may take years to pay off.
Wrapping it up!
It takes a lot of time to run a farm business, and it takes up a lot of weekends, holidays, vacations, nights, and early mornings. If you have partners in your business, decide now how you’ll split up the 24/7 task to keep up with the work. You’ll need to work out how to cover the labor needed during certain times if some of you have day jobs to assist finance the agricultural endeavor. Don’t get me wrong.
A farm might be a risky venture at times, but there’s always something you can prepare for. Even if it means bringing in outside help during heavy work seasons like harvesting, shearing, or milking, your labor pool will need to be ample to satisfy all of the demands of whatever you’re producing. This extra work should be factored into your budgets as well.
Then there’s the ongoing maintenance and construction, the need to keep up with the latest in land management, animal husbandry, crop rotation, farm equipment, and other rapidly changing science and technology issues, and a never-ending pile of waste to deal with once you’ve started the business.
Welcome to the farm! When cleaning out the barn, don’t forget to wear your boots.