Advice for Starting a Small Farm Business

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Photo by Fotolia/Boggy

Rebecca Thistlethwaite introduces readers to some of the country’s most innovative farmers in Farms With a Future (Chelsea Green Publishing, 2012), a must-read for anyone aspiring to get into small-to-midscale market farming or to make their existing farm more dynamic, profitable and sustainable. Thistlethwaite addresses farm business management with a goal of long-term economic, social and ecological sustainability through marketing, careful planning and nontraditional funding. The following excerpt is from Chapter 1, “For the Beginner.”

You can purchase this book from the MOTHER EARTH NEWS store: Farms With a Future.

For the Beginner: Starting a Small Farm Business

I don’t care if you are 18 or 58, an urbanite or a country gal, you all have one thing in common: You have a desire to be a farmer but limited years of experience doing it—you’re what some might refer to as a “greenhorn.” You need resources and support, as well as mentors, friends, and family you can draw on for inspiration and know-how, or perhaps for startup capital and good old-fashioned extra hands. I have been a beginning farmer myself (and might even still be classified as one under USDA definitions), as well as worked alongside and conversed with hundreds of beginning farmers across the country to get ideas for this book. Here, in a nutshell, is what I have concluded from their collective wisdom:

1. Dabbling in farming is fine when you start—in fact, it is encouraged. But don’t go too long without creating a plan.

2. Writing a formal business plan is a good mental exercise and will be instrumental if you want to apply for financing later on in your business evolution, but when starting a new business you can expect a lot of change in those first few years. Unless you intend to draft new editions of the plan with every twist and turn, your business plan may become obsolete immediately. Shoot for having a fairly ironed-out plan by year three. Make sure you include all members of your family in the planning process if they have a role or stake in the business or intend to in the future. More than likely, you will not be doing this alone. Communicate with all the likely stakeholders.

3. New businesses rarely make money in the first few years and often lose money while they are gearing up production and working out the kinks. Have a survival plan for those first few years of loss, and try not to borrow against your future profits because, if you do, you may never get to profitability when your cash flow is too tied up servicing debt. If you are continuing to lose money into your second or third year, you should do a thorough analysis of your business model to understand how you can turn that around. Actually, do an end-of-the-year analysis every year until you start to turn a profit.

4.A farm is a business. If you don’t want to run a business, consider gardening or homesteading instead. You will have to understand such things as profit and loss, assets and liabilities, and supply and demand and do basic bookkeeping. If these things scare you, that’s okay, but be willing to learn about them.

5.A farmer need not be poor. It is reasonable that you should be paid for your time and effort and that you make enough money to put away for a rainy day or retirement. You are your farm’s greatest asset—make sure you protect that asset! So plan for profit right from the beginning.

6. Start with the market in mind. Spend time researching potential customers, market channels, food fads, and so on. Look for gaps in the local food market that you might fill. Begin thinking about how your products will be different, superior, and so forth.

7. A garden or homestead is one of the best places to test your farming ideas. So is working for other farmers. Start small, build your skills, learn what grows best in your soils and climate, and figure out what you actually enjoy. If you can’t stand the behavior of a couple of sheep, you may not want to become a sheep farmer. If you hate bending over all day, you may not want to become a strawberry farmer. If baling and putting up hay turns you into an allergic mess of snot, you may not want to make hay for a living. Figure out what you like and excel at, and begin with those enterprises. You can always add or even delete enterprises later, but make sure you develop your farm around activities that bring you some joy or satisfaction.

8. If you wanted to open up a new restaurant, you would want to have some capital to do so. If you sought to build a new widget factory, you would want to have some capital to do so. If you want to start a farm, you might want some capital to do so. This may be hard if you are young and have a limited number of years working and saving money, or you are older and just barely getting by. However, you can start farming part-time while you work an off-farm job (indeed, 70% of American farmers do this), earning income that will support your basic living expenses and provide some capital for startup costs. Unlike many other businesses, you can also use the power of social capital to start your farm: any people enjoy helping farmers by lending money, sharing equipment, or even providing volunteer labor.

9. Start thinking about the scale of your business right when you start. A great exercise to get you thinking about scale is to project how much income you would like to make in years 5 and 10 of your business. Work backward from there to understand how much total revenue you need to make in those years to earn you that income. Then begin planning budgets from year 1 to year 10 to understand how you will have to scale the business to get to those numbers. A rudimentary example is charted in the slideshow, which assumes that your goal is to make $45,000 in net profit by your tenth year of business.

What is a typical beginning farmer narrative? There is so much diversity in terms of age, gender, ethnicity, and geographical origins of today’s beginning farmer that no beginning farmer is “typical.” Many aren’t even coming from agricultural backgrounds or a historical family farm anymore. However, I think the two things that unite all beginning farmers are their enthusiasm and their fresh ideas. Here is an eager farmer getting started in the Green Mountain State of Vermont to get you thinking and hopefully inspired.

From Virtual to Reality: Relly Bub Farm, Wilmington, Vermont

Riding your bike across the country for five months shows a lot of tenacity, endurance, and patience. These are precisely the characteristics that a new farmer should possess. Nathan Winters came to the realization that he wanted to be a farmer while visiting farms of all shapes and sizes via his bicycle over the summer of 2009. His goals as a new food producer? To encourage people to break free of the industrial food model, enjoy and restore the art and value of cooking, share meals together, and buy food that is in line with their values and that is grown with compassion for animals, enhances our soils, keeps the interest of our future generations at heart, and provides optimal nutrition.

After Nathan returned from his big trip, he jumped into working on a diversified organic farm in Northern Vermont called Applecheek Farm. There he learned how to care for animals, dabbled in vegetable production, and got a closer look at the business side of running a farm. He also helped the farm’s owners home in on their social media marketing, since he brought a background in software development and social media from his previous career. This skill has proven to be a major asset to the Relly Bub marketing plan as Nathan gains attention in the local community and actively promotes his farm foods in advance of his first commercial season.

Starting the Farm…

Nathan found his farmland in Wilmington, Vermont, a small town situated halfway between the bigger towns of Bennington and Brattleboro, through a humble Craigslist wanted ad. In a short paragraph he explained that he was looking for a house with a small amount of land to farm. Immediately, a family with a gorgeous estate of hundreds of acres contacted him about a small cottage they had for rent. Eager to get started, Nathan decided to rent the place using a casual month-to-month agreement to begin with. “We keep the lines of communication open” is how Nathan described the new relationship with his landlord, a family that shares the same values as Nathan of ecological stewardship and organic gardening. In fact, his landlord Frieda’s food garden was one of the most stunning, abundant, and healthy gardens I have ever seen, right out of a Better Homes & Gardens spread. That probably bodes well and suggests a landlord that will understand food production and support these new farmers. As Nathan grows and becomes more serious about his commercial farming endeavors, he will probably ask for a secured lease—a smart move for any new farmer.

Vermonters take care of each other, something that was evident when the brother of Nathan’s new landlord came out with his tractor and immediately began tilling up nearly an acre of fallow land for Nathan. Frieda also brings Nathan large bags of grass clippings that he uses both in his compost bin and as mulch in the garden, and she also provided Nathan with many of the vegetable starts he needed in his first season. A large homestead garden is what Nathan essentially planted his first year, experimenting with a large diversity of vegetables and culinary herbs to see what grows well in the short but hot Vermont summer. Nathan also tilled up an equally large patch that will host next year’s garden and planted it to buckwheat and oats for a cover crop and for his pastured broiler chickens to fertilize.

Raising 30 Freedom Ranger broilers in the first year gives Nathan a chance to hone his skills, and figure out how often to move the birds and the proper shelter/feeding/watering arrangement, but it is also not too daunting a number that he can’t butcher the birds himself. He will have a chance to run the numbers, feel for demand in the community, and create the ideal scale next season. The same decision was made for the laying hen flock: Start small, experiment with building some low-cost shelters made from found materials, and figure out if eggs make economic sense before going hog wild (or chicken wild!). Nathan is also excited to add pastured pigs in the future, which was his favorite animal to raise on Applecheek Farm, but in year one he is focused on building his skills with organic vegetables, broilers, and layer chickens.

Future plans include building a self-serve roadside stand (Nathan lives on a well-trafficked road with an endless amount of tourists passing through), perhaps even with a “take what you need, pay what you can” philosophy. For Nathan it is important that everybody, regardless of income, has access to good, organic food. In addition to the farmstand, Nathan may attend the small summer farmers’ market in Wilmington, which could surely use more fresh vegetables, and potentially partner with other farmstands in the region that might be looking for more local produce.

…and Starting the Farm Business

Luckily for Nathan, even though there is certainly the interest and income to support more local farmers, there are actually very few around the area where he lives, at least those that direct-market. There are also numerous restaurants and even ski areas that are likely looking for fresh, local ingredients. Nathan is particularly enamored with the CSA model to secure guaranteed support early on during the season as well as build transparency with his customers: He is already working to get that off the ground next year.

However Nathan decides to scale up, he insists that he doesn’t want to have the kind of farm that consumes him and takes away his joy for living. Nathan wants to have time for himself and friends, his dog Chaya, his writing, and maybe even travel during the winter dormant season.

Eventually, Nathan would like to see the majority of his income derived from farming and enjoy a supplemental income through his writing during the winter. Nathan is nearing the completion of his book, in which he shares stories from his farm-to-farm journey across America along with his personal transformation into agriculture. At some point Nathan wants to settle down, have a family, and own his own piece of land. Thus far, the right partner has not come Nathan’s way, and he believes Relly Bub Farm will serve as the perfect place and opportunity to meet someone who has a desire to live a life of simplicity.

To those ends Nathan is spending this year in deep-observation mode, soliciting advice, experimenting with different crops, varieties, irrigation methods, mulching and weed control, and cooking as much as he can from the garden. (He wants to provide cooking tips and recipes to his customers through his farm blog, so he better darned well know how to cook the stuff himself!) Luckily for Nathan, he is a very competent home cook, regularly churning out homemade pizzas, breads, quiches, canned goods and more.

Making Time for Fun, Too

So what about the cute name “Relly Bub Farm”? Well, Nathan loves his dog Chaya, and while working at Applecheek Farm last year, he would always be amused when Forrest, one of the young farm kids, would lay his head down on Nathan’s dog and say, “Chaya, do you want a relly bub?” (instead of “belly rub”). Those words stuck in his head until it came time for him to think of a farm name. Not only does the farm name bring a smile to your face, it is memorable.

Nathan is a strong believer in using the Internet for networking, learning from others, marketing products, and building community. Despite barely having anything to sell to people yet, Relly Bub Farm has its own website, blog, Twitter feed, Facebook fan page, and Flickr photo album. It’s not only about building customer anticipation, it’s about transparency, says Nathan. He wants to share with people how he is creating his farm, show photos of the great things he’s growing, and build enthusiasm in the community.

Creating a farm that is not only light on the earth but is actually restorative of the soil, biodiversity, and the soul is important to Nathan. As Nathan remarked, “We need to move past sustaining—why would we sustain the status quo? We need to take a more restorative approach to everything.”

Nathan’s advice for other new farmers?

• Don’t be afraid to admit you don’t know something/don’t be afraid to ask questions.
• Be humble.
• Reach out to other farmers for advice, inspiration, borrowing equipment, etc.
• Take it slow, be patient, don’t be in a rush.
• Be clear about your goals and vision.
• Don’t work yourself too hard (it’s not cool to work 90 hours a week; don’t lose your balance in life).

More from Farms With a Future:

Marketing and Farm Business Management

Nathan Winters went on to operate Hill Hollow Farm with his wife, Eliza, raising pastured chickens, hogs, and cattle as well as a wide variety of organic vegetables. Tragically, he passed away early in 2014 following a machinery accident on the farm, but his enthusiasm for real food and restorative agriculture continues to inspire beginning farmers to find creative ways to achieve their dreams. Grit editor Hank Will remembers Nathan Winters as a farmer, husband and father, and eclectic philosopher; The Nathan Winters Memorial Fund has been set up to provide capital to finish some of the projects that were begun, cover expenses, and help keep the Winters family’s dreams alive.

Reprinted with permission from Farms With a Future: Creating and Growing a Sustainable Farm Business by Rebecca Thistlethwaite and published by Chelsea Green Publishers, 2012. Buy this book from our store: Farms With a Future.