Advice for Starting a Small Farm Business

Whether you own a homestead and are ready to expand or you are just getting into food production, these tips on starting a small farm business will help you prepare for the challenges you may encounter.

| February 2014

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.

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