Evaluating, Financing, and Starting Your Farm

Over the past several years the United States has seen an increase in people’s interest in “back to the land” lifestyles and businesses. We see evidence of this in products boasting “green” or “eco-friendliness” for added value and tiny homes are the new design rage. As a result there are a variety of opportunities for entrepreneurs capture this niche market.

Starting a farm business is a great way to create a new source of income and live a particular style of life. Some of these farming entrepreneurs may be starting from nothing, while others may be transitioning to farming as another career choice. Those shifting careers may already own land and need help developing a plan that works with their property and goals. Those without land will have the added challenge of finding and purchasing (or leasing) land. Once land is found; determining what to grow and how to sell it are the next steps in starting and growing your farm.

The first step in evaluating your farming prospects is to identify personal and group goals. These goals can include knowing ones desired work schedule, is this a full time operation or a part time hobby. Another goal is determining how much money your farm needs to mark. As you are getting started with these goals and reasons for farming, take time to write them down, this will be the first draft of your business plan.

Once thought has been put into developing goals and reasons for a farming business, it is time to evaluate resources. Resources can include finances, experience, land, facilities, contacts and marketing techniques. These available resources may limit or even determine your enterprising opportunities. Make a list of these identified resources, how they can be obtained or provided, and possibly the importance or reliability level of specific resources. Keep this list with your draft of goals to continue building the business plan.

After defining goals and resources available, it is time to evaluate the market. Before choosing a market to focus on, one needs to consider location and types of products or resources the land can realistically provide. Keep in mind the farm should be the center of the business, but it will need to be structured in such to add value through other means. Research local farm tours, community supported agriculture programs, farmer’s markets, and local food distributors in order to better gauge market possibilities.

Now that goals, resources, and market research have been explored one can start to brainstorm what products and services can be offered. The Alternative Farming Information Center has a list of agricultural resources to consider, such as field crops, fruit and nuts, livestock, horticulture, farm and home services, and on-farm processing. Comparing the AFIC list to the business plan can help entrepreneurs choose where to get started and how to prepare for added value in the future. As one is looking at which fields to focus on, it is important to always evaluate the resources needed for the specific venture and the risk associated with them.

Marketing is another important factor to consider in the start-up stages and to define in a business plan. Marketing can take many forms and will be determined by the specific farm’s location, product, services, and personality. The Appalachian Sustainable Agriculture Program has marketing assessments available for farmers.

Financing is directly connected to setting goals, writing business plan, keeping records, access to land, equipment, seeds, and other materials. As one goes through developing goals, resources, and marketing options, finances must be constantly re evaluated. Even individuals who start with access to land and equipment rely on efficient financial management. Options for financing include traditional lenders, commercial banks, loans, state agricultural development programs, grants, personal savings, and friends or family. It is important to demonstrate good financial management, especially during the farms start up. Watching cost expenditures and minimizing financial risk is a continuous process through the farm’s business life cycle. Create a good plan that shows evidence of the farm cover expenses required, if needed, re-create your business plan before implementing actions that may be harmful in the business future.

Farming is a rewarding lifestyle and job occupation, however, like most entrepreneurial endeavors, come with inherent risks. When evaluating the decision to start a farm the first step is to identify your personal lifestyle goals and what is realistic to expect from the indented farmland. Second, research and develop the products and enterprise options that work with available resources. Documentation of these steps and processes will be the foundation for business plans and you will more familiar with tools, systems and processes with which one would need to be familiar in order start, operate, and grow a farm business.