Giovanna Trabasso / 02/15/2021
How to Start a Farming Business in Just 3 Steps
When starting a farm as a business, not only as a means of providing for your household, there’s more to consider than you might think. While homesteads do often provide for themselves and have enough o sell as a business, it’s not always a sustainable business model. When starting a farming business, you must be more careful with your goals. To help you start your successful farm, we have created a list of the three most important things to consider. This is a list for those who are business-focused and want more out of their land.
This list is separated into three categories, but there’s more than meets the eye. Each category is an important takeaway that you could leave with while browsing through. But they are detailed and provide you with other resources that will help your business grow. There are a lot of resources that list ways in which a farming business can fail if not taking these necessary steps. With our concise 3 steps and your hard work, your farm will be booming in no time!
1. Think like a businessman, not a farmer
This is the most important step to being a successful farming business-owner. You’re running a farm, yes, but you are primarily running a business. You must go into it as a business, not a hobby. Make sure to have everything in writing in order to secure your business and property. Keep in mind that more than 50% of agricultural businesses are still open after 5 years. This can be a very profitable venture if you start with the appropriate mindset and goals.
Think of all of the important roles a successful business has. One of the most overlooked roles that small or new business owners forget is the accountant. You must be on top of all of your expenses in order to know how to make a profit. Even if starting out as your own accountant, know all of your costs. Know how much you’re spending and how much you should be charging. By determining your cost of production, you are able to set a fair price for your customers while also knowing the margins you can adjust in order to make more profit. This can also lead to sales that lead to customer loyalty.
It’s also very important to have the starting capital. Unfortunately, if you do not have the initial capital needed to start, this might not yet be the venture for you. But there are ways in which you can get there. This might mean making some sacrifices. You can start with a lease and farming the land that is not yet yours. Once you have made the capital needed, you can buy the land. It’s not an uncommon practice and can set you up with a better starting capital for other needs.
When thinking of capital, it’s important to apply the 80/20 rule. This is a very popular practice that goes beyond farming and many businesses use. The 80/20 rule means that 20% of your work should yield 80% of the results. With proper planning, your hard work will provide you with all the capital needed to keep your business sustainable. But of course, give yourself time to rest! Like any other business, you should always make sure you are taking care of yourself, not just your farm.
2. Find your niche
Finding your niche means finding the place in the market that will be all yours. In fact, you should find your nice before you even start farming. Know your area, who will be your customers, and what they need. Providing samples to potential customers can help you find your niche and create customer loyalty. Farmers Markets are a great place to start. You can start with a small sample of crops you would like to farm. By providing samples of what you can provide to your customers, you will know what they like best, need, and what will be the most profitable.
You might want to farm the greatest variety of crops you can in order to generate more crops. But don’t do this! Crops you could be spending your money on might already be another farm’s specialty. Customers will not change their loyalty to you. Find what works for you and become an expert in that. In addition to that, it’s important to not copy others in what they do. It’s always best to create your own way of running your business. Model after someone else if you’d like, but find your own tricks that are unique to your farm.
With that in mind, it’s important to not get lost in your own ideologies. Many new farmers want to affect their own change in the world and get frustrated if they don’t see it right away. Your local actions might take a while to show global impact. Don’t stop because you expected quick, visible results. Running businesses solely based on ideologies can also alienate you and your farm. Don’t miss opportunities, especially when just starting, to work with others just because they don’t subscribe to your beliefs.
Never forget to market your business! Marketing beyond word of mouth is very important and it goes further than just running campaigns. First and foremost, you must build a strong brand. A strong brand will bring brand recognition, the beginning of customer loyalty. This can also start before you start your business. Like finding your niche, you can use samples and Farmers Markets to get your name out there. Let your customers know you will soon be in their area. If your customers are expecting you, they will come as soon as you get the ground running.
As we have mentioned throughout this post, customer loyalty is key to a successful business. Be aware that it will take a while for you to understand your own marketing and for customers to trust you. A Community Supported Agriculture (CSA) model with subscription boxes might be your main goal. If so, you will most likely have to start somewhere else, build loyalty, and then move to that model. Remember, you can’t plan ahead of the customer without knowing their needs.
Above all, trust your business. You should always be your #1 customer! Marketing can be as easy as showing what’s good about your products. That strategy is always better than showing what’s bad about everyone else’s. A farming business seeks to join a community, not go against it in order to profit. Your products and business will speak for themselves. Share why you do it how you do it, most importantly, why you love it! Make it personable and make your customers love your farming business as much as you.
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