There are just over 2 million farms in operation across the United States. Most of those farms are run by single families.
If the idea of living a rural lifestyle sounds good to you and you’re somebody that loves working with your hands, a life of farming might be a rewarding trajectory. Unfortunately, getting into farming takes a lot more than a passive interest in living the farm life.
Farming requires skill, planning, and financial support. In this post, we aim to add some clarity to the farming business by sharing tips on how you can find the most success when getting started.
1. Know What You’re Going to Produce
Your farm can’t be everything to everyone unless you’re planning on running a mega-farm which is more than most single-family operations can manage. To keep things feasible, you’ll want to focus on one or two core competencies that you’ll hang your farm’s hat on.
Are you going to be selling cash crops? If so, which kinds? Do you prefer to run a dairy or livestock farm? Which animals will you keep?
Identifying the kind of farm you’d have the most passion running will set the table for you to start doing targeted research on how best to get things rolling.
2. Become an Expert on Your Product
No matter what you choose to produce on your farm, chances are, there are thousands of other farmers you’ll be in direct competition with. Why should consumers choose you over their other options?
At the end of the day, quality products always have the best chance of rising to the top when farms go head to head. The best way to produce quality products is to know your product inside and out through practice and guidance from mentors.
The more you know, the higher your chances of success will be.
3. Identify Cash Streams
When you start a farm, you’re going to need cash in your pocket. That cash will cover your farm’s mortgage, livestock, seeds, hanging scales, and any other equipment you may need to be successful.
Where is that money going to come from in your case?
Whether you choose to pull from your savings, your friends, or from a bank, you’ll want to have a good idea of where you can withdraw cash before you get too excited about launching your farming business. In addition to startup cash, having a constant line of credit available in case you run into unforeseen expenses can be a lifesaver.
4. Make Sure Your Property Suits Your Ambitions
The property you’ll build your farming business on will make or break your success. For example, if you buy a farm with no barn but were planning on running a dairy farm, where would you store your cows? If you were planning on doing cash crops but your farm doesn’t have fertile fields, where will you grow your merchandise?
The best way to ensure your farm is suited to your needs is to consult an expert that can walk you through challenges you’re likely to run into with properties you’re considering.
5. Consider Points of Sale
A successful farming business will have a beat on who their customers are and will try to diversify those revenue streams as much as possible. Here are a few examples of potential farming customers:
Manufacturers
If you produce milk, you might be able to sell your product to a cheese manufacturer. Manufacturers typically do multi-year deals with local farms and can be among your most consistent customers.
Keeping with our cheese example, big names in the cheese space like Kraft likely have relationships with several farms.
Distributors
Mega product distributors like Proctor & Gamble put millions or products on grocery store shelves. By striking a deal with them, you could see your products get bought in bulk, fast.
The downside to working with distributors is that most expect severely reduced rates in exchange for their bulk buying practices.
Direct to Consumer
Some small farms prefer to relegate their sales to individuals and small grocery stores. This arrangement makes for a more personable and simple means of moving products.
It might not, however, generate enough income to keep your operation afloat.
6. Have a Contingency Plan
During down years where crops don’t grow well or a dairy cow dies, how will your business survive? You need to be able to answer those hard questions before adversity strikes, no when it strikes.
The more prepared you are to manage bad spells as a farmer (and there may be a lot) the more poised you’ll be to succeed far into the future.
7. Draft a Formal Business Plan
As you go through all of these questions and considerations, you’ll want to write down your answers in a formal business plan. Armed, with a business plan, you’ll always have a point of reference that will help you concisely approach obstacles as they arise.
Business plans also give you a means of communicating your intentions to lenders which may be integral when seeking loans.
A Well-Run Farming Business Is Unlike Anything Else
Running a farming business requires a lot of work and attention. While that might be off-putting to some, for those that take on the challenge and get their farm running well, the payoff is incredible.
There’s nothing quite like waking up early and living off the land each day, being close to family, and admiring the seasons as they change around you. If that imagery excites you, take your ambition and turn it into your next business venture!
Our team welcomes you to read more of the business content we have available on our blog if you’d like additional guidance.
