How to choose the right type of business structure

1. Do you want to keep your personal and business finances separate?
2. What are your tax priorities?
3. Will there be more than one business owner?
4. Do you plan on hiring employees?
5. Are you starting a business to make a profit or help people?
6. Is your company meant to help the members achieve their goals by working together?

Do you want to keep your personal and business finances separate?

What are your tax priorities?

Is my business one that will qualify for tax-exempt status?

Do I want to pay my business taxes on my personal tax return? 

Are there any tax deductions or tax benefits that a business will qualify for that my personal income will not?

What tax code do the different entities follow? 

Will there be more than one business owner?

Do you plan on hiring employees?

Are you starting a business to make a profit or help people?

Is your company meant to help the members achieve their goals by working together?

What type of business structure is normally best?

1. You have high enough profit margins that you can benefit from the corporate tax structure.
2. Want to include your fringe benefits as tax-deductible. In that case, use a C-Corp.
3. Qualify as a Non-Profit.
4. Are trying to help benefit others without regard for getting most of the profit? In this scenario, Co-ops and B-Corps might make sense.

Types of businesses: Most common business structures

1. Sole Proprietorship
2. Partnership
3. Limited Liability Partnership (LLP)
4. Limited Liability Company 
5. Series Limited Liability Company 
6. C-Corporation 
7. S-Corporation 
8. Non-Profit Organization 
9. Benefit Corporation 
10. Low-Profit Limited Liability Company 
11. Cooperative (Co-op)

Business Type 1. What is a sole proprietorship?

What is a business entity?

• Business assets and personal assets
• Personal debt and business debt
• Business liability and personal liability.

Pros and cons of a sole proprietorship

• Unlimited personal liability for business decisions.
• Business assets could be taken in a personal lawsuit.

Sole Proprietors and the IRS

• Claim expenses that employees cannot, but not as many as a corporation.
• Own assets for the business. For instance, if you own a building and don't want to run the business anymore, you can close the business and rent the space to a new tenant.
• Have funds go directly into your personal bank accounts (this makes the next one much more difficult though).
• FIle the income with your personal tax returns. You will have to establish what is a business expense and personal expense. Check IRS Publication 334 for guidance on what you can claim and what you can't.
• Self-employment tax means that small business owners have to pay 15.3% of the first $137,700 in 2020, $142,800 in 2021, and $147,000 of income for 2022. This cap is adjusted every year based on inflation. The IRS is the definitive source for self-employment taxes. Make sure to read about them.

Types of Businesses 2. What are Partnerships?

Benefits of Partnerships

• Easy to create
• Pass-through taxation, meaning they have the same benefits as a sole proprietorship regarding taxes
• Partners fully control the business
• You can get investors

Disadvantages of Partnerships

• Unlimited liability for the business's debts
• Personally liable for the other peoples' actions

Business Type 3. What is a Limited Liability Partnership? 

What are the benefits of an LLP?

• Only liable for others' actions to the amount that you invested in the company (but still personally liable for your own actions)
• Independent legal entity
• Pass-through income
• 20% qualified basic income deduction. See IRS QBI page for more details.
• Easy to add partners

What are the disadvantages of an LLP

1. They are not offered for all industries in all states.
2. Some states may require a franchise fee on top of the standard limited partnership and limited liability formation fees.

Business Types 5. What is a Limited Liability Company?

What are the benefits of an LLC?

1. They separate personal and business liability.
2. They can have as many members as you want.
3. Anyone or any business entity can own an LLC.
4. The business determines whether to file taxes as either a pass-through entity or a corporation.

What are disadvantages of an LLC?

• Raising capital can't be done through selling shares.
• You can't jump back and forth between corporate taxes and pass-through taxes.
• LLCs are more complex to start than a sole proprietorship.
• You’ll have more costs associated with setting up and maintaining an LLC.

How to get an LLC

What is a Series Limited Liability Company (Series LLC) Business Type?

Who should use a Series LLC?

1. Serial entrepreneurs
2. People who own multiple franchises
3. Landlords

What are the benefits of a Series LLC?

• Lower cost than starting multiple LLCs
• Has the same benefits as an LLC, but can share costs
• Less complexity than conglomerates or thousands of non-series LLCs

What are the disadvantages of a Series LLC?

• More costly originally, but saves money the larger the series
• A larger series means more complexity. Only offered in the following locations: Alabama, Arkansas, Delaware, District of Columbia, Illinois, Indiana, Iowa, Kansas, Missouri, Montana, Nevada, North Dakota, Oklahoma, Puerto Rico, Tennessee, Texas, Utah, Virginia, Wyoming.
• Tax clarity due to series LLC being based on local laws

What types of businesses are C-Corporations? 

What are the advantages of a C-Corporation?

1. Able to sell stock
2. Able to pay dividends to the owner reducing the taxable consequences
3. Limited liability
4. Easier to get investors
5. Can offer yourself better benefits fully tax-deductible.
6. Unlimited owners

What are the disadvantages of a C-Corp?

• The corporate tax, which can be avoided through good estimating if you pay yourself enough
• Complexity due to filing and reporting requirements. Requirements can be found on the IRS website.
• Double taxation, need to pay taxes on corporate earnings and personal income

What types of businesses are S-Corporations? 

• No more than 100 stockholders in S-Corps.
• Only U.S. Citizens, resident aliens, some NPOs, and some trusts or estates can own S-Corps. Check with a lawyer if you are thinking about starting an S-Corp and investing in it with an NPO, trust, or estate.
• Earnings are pass-through income, but S-Corp business owners still have to pay themselves as employees. Meanwhile C-Corps are taxed on corporate and personal income.
• S-Corps can only have one class of stock, while C-Corps may have multiple stock classes.
• An S-Corp files under subsection S of the U.S. tax code, while a C-Corp files under class C.

What is a Non-Profit Organization (NPO)?

What are the benefits of running an NPO?

1. No corporate tax
2. Legally allowed to receive donations to raise money.
3. Profits on the sale of a property can go to help people.

What are the disadvantages of running an NPO?

• The states Approve whether you can raise money, but the federal government approves an NPO's tax-exempt status.
• There are lots of legal documents required to keep your tax exemption.
• If the business closes, you have to donate the assets.

What is a Benefit Corporation?

1. Apply for an S-Corp or C-Corp.
2. Mark the box that says, “I want to be a Benefit Corp.” 
3. Specify how the corporation intends to benefit the community.
4. Create and publish a report of how you improved the community every year.

What is a Low-Profit Limited Liability Company (L3C)

What is a Cooperative (Co-Op)?

Did you narrow down the types of businesses you want to start?

Do you love painted furniture and crafty furniture makeover videos you’ve seen on social media? If yes, you might enjoy furniture flipping.

Jennifer Beck burned out from being the number one seller in a corporation. She started Saved by Design to escape the rat race and turned her passion into a six-figure furniture flipping business—without taking on any debt.

In this article, you’ll learn about the most profitable furniture to flip and how to use the cool videos you’ve seen to refinish coffee tables, chairs, dressers, and other quality pieces people want to buy.

[su_note note_color="#dbeafc"] Jennifer shares how to start a furniture-flipping business, with information about:

• What is furniture flipping?
• What is the best furniture to flip?
• Is flipping furniture profitable?
• Where to find furniture to flip
• How to start a furniture flipping business
• How much can you make flipping furniture?
• When is the best time to buy furniture?
• What is the best way to find free furniture near me?
• Valuable resources for furniture flippers
• Start flipping furniture yourself[/su_note]

Read all her advice, or click on any of the links above to jump straight to the section that interests you most.

What is furniture flipping?

Flipping furniture is a process where you find old furniture, improve it by fixing any damage and adding new hardware, stain, paint, or fabric, and then resell it for a profit.

Jennifer told us:

[su_quote]I knew I loved DIY, fixing things, and design and saw people doing it, but not focusing on the sales aspect, so I knew I could do it better.[/su_quote]

What is the best furniture to flip?

The best furniture to flip depends on your skill set. A furniture flipper might focus on end tables, dressers, shelves, couches, and chairs. Jennifer shared the simple key to a worthwhile furniture makeover:

[su_quote]It needs to be what your customers want to see.[/su_quote]

Check out our interview with her below.

Is flipping furniture profitable?

According to business research firm IBIS World, the furniture restoration industry makes $1.8 billion per year. The firm estimates furniture restorers spend 42% of their revenue on wages, purchases, and rent; the other 58% of revenue could be comprised of marketing costs, tax payments, and profits.

According to Jennifer, Saved by Design was profitable immediately, and it has remained so every month for five years.

But how profitable is it?

[su_quote][We make] $12K in revenue [annually], and our gross profit margins are 80%. You’ll have to be frugal, and [remodeling the furniture] will take a little more time because you aren’t investing in crazy expensive tools.[/su_quote]

Where to find furniture to flip

Places to find used furniture include thrift stores, garage sales, auctions, yard sales, Craigslist, Facebook Marketplace, and friends and family. You can even grab unwanted furniture from the side of the road.

Be careful when grabbing furniture from the side of the road, though, because it could have bed bugs or other critters in it.

How to start a furniture flipping business

Starting a furniture flipping business can be a creative and profitable venture. Here are steps to help you get started:

1. Research the market.
2. Create your business.
3. Get furniture-flipping supplies.
4. Source furniture.
5. Do a furniture flip.
6. Establish the price.
7. Create a sales strategy.
8. Market your furniture flips.
9. Provide great customer service.
10. Keep detailed records of each furniture flip.
11. Reinvest in the business.

Get ready to learn all about flipping furniture for beginners.

Step #1. Research the market

Before you decide to flip furniture, you should research the market. You’ll want to:

1. Identify the type of furniture to flip.
2. Identify your target audience.
3. Perform competitor analysis.
4. Write a business plan (optional).

Identify the type of furniture to flip

Decide what type of furniture you want to focus on. You might narrow it down by the furniture piece or style.

We discussed standard furniture pieces earlier, but the style might be vintage, modern, Victorian, or custom.

Jennifer explained:

[su_quote]We have two main ways we make money: custom commission work [and] sourcing our pieces … We mainly focus on old pieces.[/su_quote]

Identify your target audience

You’ll want to identify your ideal customer to simplify selling furniture. If you don’t know who might like a piece of furniture, it may be harder to make extra cash on it.

Jennifer explained:

[su_quote]We focus on high-quality clients who value design quality, value the history [of the piece], and are willing to pay a price.[/su_quote]

Perform competitor analysis

Jennifer stressed the importance of paying attention to furniture flipping trends. She researches major retailers and listens to her customers’ demands.

Create a business plan (optional)

When you write a business plan, you’ll want to have at least the following sections:

1. Mission and vision statement
2. Budget and financials
3. Marketing plan
4. Operational plan

Mission and vision statement

Tell people why you do what you do and how you do it. Even though Jennifer never wrote a formal business plan, she still knows her mission clearly:

[su_quote]We provide quality pieces, customer service, and [honesty]. And if I can’t do something, I’ll tell you.[/su_quote]

Budget and financial projections

It helps to estimate your startup costs, ongoing expenses, and projected revenue.

For Jennifer, taking on debt was never a consideration:

[su_quote]I filed bankruptcy at 22 and committed to never taking on debt again. For my small business and lifestyle, taking on debt was never even considered.[/su_quote]

Marketing plan

Outline how you will market your business, including how you’ll create your online presence, use social media, and the software you’ll use to accomplish your goals.

We’ll talk more about marketing later, but Jennifer explained:

[su_quote]I will never downplay the word of mouth. Our very first customer was a coworker of a friend of ours.[/su_quote]

She also explained that much of today’s word of mouth occurs on social media.

Operations plan

You’ll want to detail the day-to-day operations, including sourcing furniture, refurbishing, and sales.

Jennifer had numerous furniture-flipping tips when it came to managing operations. First, you need to:

[su_quote]Educate yourself about everything you can about small business, and then let go and let people better at specific skills take over those.[/su_quote]

Jennifer stressed the importance of setting designated to work on your furniture flipping business—it’s important to have a life outside of your business.

How does she manage her furniture revamps?

[su_quote]Our workdays are Monday through Friday. 8 hours a day. We are doing physical work when we’re in the office. We do all our pickups and deliveries ourselves. We do all our filming ourselves, too.[/su_quote]

Next, you’ll want to create the business.

Step #2. Create your business

You aren’t required to report flipping furniture on your taxes until you make over $600, but if you’re trying to make substantial money reselling furniture, you should probably create a business.

That means you’ll need to:

1. Create a business structure.
2. Register your business.
3. Comply with tax laws.

Create a business structure

Decide whether you want to operate as a sole proprietorship, partnership, limited liability company (LLC), or corporation. Most small businesses opt for an LLC or S-Corp. You can learn more in our guide to business structures.

It’s helpful to consult a legal professional to choose the best option for your situation.

Register your business

You must register your business name and obtain any necessary permits or licenses. You may need state, county, or municipal registrations. Each state is different, so check your secretary of state’s business guide for what you’ll need when selling used furniture.

Comply with tax laws

You must understand tax obligations, including federal and state income, payroll, and sales taxes. There are over 13,000 tax jurisdictions in the U.S., so if you furniture flip in multiple jurisdictions, you might want to use the tax resource Avalara.

Once you’ve created your business, it’s time to flip furniture.

Step #3. Get furniture-flipping supplies

You’ll need tools and materials to perform a furniture makeover. Each piece of furniture is different, so you’ll need to research what is required.

You can choose power tools or hand tools. Hand tools require more elbow grease, and Jennifer doesn’t mind using a little elbow grease. She explained:

[su_quote]We are frugal about what we spend. Our first tools were old hand-me-downs we got from friends and family.[/su_quote]

[su_quote]Start with the basics. Research. Then, decide what you think works. Take $20 and go to a thrift shop. Don’t buy a bunch of expensive tools.[/su_quote]

At a minimum, you’ll probably want the following items for wood furniture:

• Sandpaper
• Paint
• Brushes
• Stain

As for acquiring a physical workspace, Jennifer told us:

[su_quote]My daughter and I work out of our garage, so the space for each furniture flip is free. Where we spend money is on the supplies.[/su_quote]

Step #4. Do a furniture flip

For each furniture flip, you’ll need to:

1. Acquire furniture.
2. Take before and after pictures.
3. Repair the furniture.
4. Find a buyer.

Find furniture

You’ll want to find quality furniture reasonably priced that you can flip. People commonly look for a coffee table, end table, chair, couch, shelving unit, or dresser.

Flippable furniture can often be found at a thrift store, garage sale, Craigslist, OfferUp, Facebook Marketplace, or on the side of the road.

You’ll want to look for relatively good-quality furniture, but you can repair it to create the perfect piece.

Take before and after pictures

Flipping old furniture usually requires some marketing to sell it. That means you need to take some before pictures of the piece to show what it looked like before you gave it new life.

After you finish, you’ll want to take some well-lit pictures that provide a perfect example of how someone might use the new furniture in their house.

You can also record a video of yourself sanding, applying paint, and performing other repairs.

Repair the furniture

You’ll want to develop a style or signature touch that separates your furniture. This could be a particular finish, color palette, or design element.

How to create painted furniture

One of the trends that a lot of people love is painted furniture. You just sand the original finish off the wood, add a little paint, and maybe change the hardware, and it’s ready for a resell.

How to flip a dresser

Dressers are one of the more challenging flips because they have drawers. If the drawers aren’t in working condition, your dresser flip will require replacing hardware, which will add to the cost of your dresser makeover.

Other than that, the procedure is the same as different furniture makeovers and flips.

How to flip couches

Flipping a couch is entirely different than most furniture makeovers. You will most likely be working with fabric or leather instead of (or in addition to) wood. That means you’ll need additional tools.

Most couch-flipping blogs focus on finding sellers, buying the couch cheap, and cleaning it up.

You might also consider reupholstering couches if you can get them for a steal. Check out Family Handyman’s reupholstering guide for couch-flipping tips.

Now that you know how to flip a couch, let's discuss finding a buyer.

Step #5. Establish the price

When you establish your asking price, you’ll want to consider your material costs, time you spent, and desired profit margin.

Jennifer prices her items based on market value, the time the flip takes, and the cost of the materials. Her profit margins tend to be higher when she sources the furniture herself.

She usually does 12 pieces per month, nine of which are her selections, while the other three are commissioned. She makes about $1,000 per piece.

Step #6. Create a sales strategy

Decide where you'll sell your refurbished furniture. Venues could include online marketplaces, your website, local consignment shops, or even your own showroom.

Jennifer mainly uses word of mouth to make money flipping furniture, but she includes social media in the “word of mouth” category. She explained that she didn’t know much about how to make money flipping furniture when she started:

[su_quote]I had no idea what I was doing. During the first year, I didn’t put much energy into it (selling on social media).[/su_quote]

Fortunately, you can learn from her mistakes before you start flipping furniture. Learn how she markets her business now.

Step #7. Market your furniture flips

There are many ways to market your work. Jennifer uses two main methods. To follow her path, you’ll want to develop an online presence and get referrals to sell your work.

Create an online presence

You’ll want to build a website and create profiles on social media platforms. Check out all of Saved by Design’s web assets.

Jennifer’s website uses a simple one-page design, but she also does a lot on social media. She told us:

[su_quote]We utilize Facebook, Instagram, TikTok, and YouTube. Instagram does best for us.[/su_quote]

[su_quote]For those who are wondering how to succeed on social media, she suggests you:
• Find your niche.
• Post consistently. [And I mean] all the time.
• Provide content that your followers want and need to see.[/su_quote]

It should be noted that Jennifer has other streams of revenue, including:

• Consultations: Jennifer advises people on how to flip furniture for a rate of $100 per hour with a 15-minute minimum.
• Affiliate links: She also sells products to paint furniture on Amazon using affiliate links. Learn more about affiliate marketing.
• Etsy: Jennifer also makes additional revenue by selling gallons of paint on Etsy. The colors for painted furniture range from neutral shades to bright yellow and Tuscan red.

Word of mouth requires a great product and excellent customer service, which we’ll discuss next.

Get referrals

You can get referrals by handing out business cards, asking for customer reviews, or running an affiliate program. The goal is to get people who have already benefited from your furniture flip services to spread the word (which means you have to do a good job).

Step #8. Provide excellent customer service

Customer service can make or break companies. Jennifer explained how to flip furniture and provide excellent customer service. She started with a little about her history:

[su_quote]I was trying to figure out what made me such a great salesperson and concluded that follow-through is the difference between what I did and what other salespeople do. … People want to know they can believe what you say. [Which means] always underpromise and overdeliver.[/su_quote]

Jennifer explained that she takes this approach from the first time someone reaches out to her about a project. She’ll use an email or script that says:

[su_quote]Thank you for reaching out to me. I will always be honest with you, and if I can’t do something, I’ll tell you.[/su_quote]

Something as simple as that helps build trust with customers, even if she has to reject certain requests. She explained:

[su_quote]I reject a project mainly because I am too busy. I will (also) reject pieces if it’s so far gone that we can’t, or it’s a piece that so inexpensive we can’t justify working on it.[/su_quote]

In the rare instance that Jennifer has an issue after completing an order, she has an excellent way to handle that, too!

[su_quote]If you did make a mistake, own it and offer to fix it. Alternatively, ask them what can I do to correct this?[/su_quote]

Sometimes, that just isn’t enough, and you must be more creative. Jennifer explained:

[su_quote]When people just want to be angry, offer them solutions. Tell them we’ll have to agree to disagree if they don't accept them, but these solutions are still open if you change your mind.[/su_quote]

Another piece of customer service Jennifer and her daughter employ is personally delivering the furniture themselves, further building a relationship with the customer.

Step #9. Keep detailed records of each furniture flip

As a small business owner, you must track expenses and income. When flipping furniture for profit, make sure to document:

1. The cost of the furniture piece.
2. The mileage to pick up and deliver it.
3. The time it takes you to do the makeover.
4. The cost of paint, varnish, and anything else went into the redesign.

Use accounting software, like QuickBooks, to track income, expenses, and payroll. You might also want an accountant to help you automate your record-keeping and audit your books quarterly.

Step #10. Reinvest in the business

You’ll want to expand your business as you go. This may mean investing in more tools, moving into a store, advertising, hiring employees, or adding new revenue streams.

However you decide to expand your business, Jennifer recommends reinvesting profits. She told us how she handled hers:

[su_quote]It took at least a year for [the company] to fully cover [our living expenses]. … When we started, we reinvested 50% of our profit. As we’ve grown, we reduced our reinvestment down to 10%.[/su_quote]

Pro Tip: You can make a profit, and a business still fails. Imagine your cost of running a business is $2K per month. You make $3K per month, but your living expenses are $5K monthly. Are you paying all your bills? Nope. When calculating the cost of doing business, include your cost of living by adding up all your bills and multiplying by 2.5.

How much can you make flipping furniture?

The sky is the limit. People spend over $243.8 billion annually on furniture, with an average of $767 per person. That means there is plenty of room for you to expand, especially if you focus on living room furniture.

The most significant percentage of the spending is on living room furniture, like coffee tables, end tables, and couches.

When is the best time to buy furniture?

The best time to buy furniture from a store is during the end of the summer or winter seasons because that is when retailers shift their stock the most. During those times, you are likely to save money.

What is the best way to find free furniture near me?

If you hope to find free furniture to make extraordinary profits, you should look at online marketplaces. While you can sometimes find free pieces on the side of the road, people moving will often include words like “sold immediately” in posts that you can find with an easy search.

Valuable resources for furniture flippers

• Furniture Flipping Teacher: Want to take a course on furniture flipping? Blogs typically recommend Furniture Flipping Teacher. We have not audited the course to see if it is applicable. We suggest watching their YouTube videos first.
• Dave Does Carpentry: Check out the YouTube channel on carpentry.
• Home Depot: Home Depot does lots of DIY videos.
• Business book: Try reading Jennifer’s favorite business book, Financial Peace by Dave Ramsey

Start flipping furniture yourself

Now you know how to start furniture flipping. It’s up to you to create creative ideas that will look amazing in people’s homes. Then find people who want the redecorated furniture. What kind of furniture revamps have you done?

Did you know that there are approximately two million U.S. farms, earning a combined $549.8B annually?

That means the average farm makes around $275K per year.

Whether you want to get your hands dirty growing crops or raising livestock, you can make a great living doing it. You can even start a hobby farm to grow food and make some extra money while you do it.

We’ve talked to dairy farmers, fruit farmers, and people raising goats, pigs, chickens, and other animals. These farmers make between $200K and $10M per year. With their guidance, we’re going to share how to start a farm and make a great living.

[su_note note_color="#dbeafc"] Each farmer we spoke to uses different strategies, but all of them love their craft, believe in hard work, and want to share their strategies with you. Click on any of the links below to jump to the section you want to know more about.

• Farming Business Case Study: Miami Fruit
• How much does it cost to start a farm?
• How much do farmers make?
• Is owning a farm difficult?
• What is the most profitable farm to start?
• How to Start a Farm
  • Identify Your Niche
  • Learn About Farming
  • Conduct Market Research
  • Write a Business Plan
  • Register Your Farm Business
  • Get Financing
  • Buy Farmland
  • Buy Farming Equipment
  • Start Operations
  • Go to Farmers Markets and Other Sales Channels
• Go Start Your Successful Farm Business [/su_note]

Farming Business Case Study: Miami Fruit

Rane Roatta started Miami Fruit when he was living with his single mom. His operation started as a family farm whose fruit he sold off the back of his bike. Now he’s selling millions of dollars worth of farm products every year.

He uses social media and an eCommerce site to help educate people about small farms and fruit recipes.

Want to know more? Check out our interview with Rane below to learn how to start farming.

How much does it cost to start a farm?

Farming is also a business, so you need to understand exactly how much it will cost. And it’s a complicated question with no set answer.

However, you can expect to spend anywhere from $600-$10K to start a small-scale farming operation. Large-scale operations can cost well over $2M to start!

To clarify your costs, create a comprehensive list of everything you need. Don’t be afraid to ask for help and advice from your farmer connections.

The costs of starting a farm might surprise you, but consider these essentials:

• Land
• Equipment and machinery
• Business management systems

We’ll discuss each of these later, but first, let’s discuss farmers’ earnings.

How much do farmers make?

That means the average farm makes around $275K per year, according to USDA data.

A farm’s cash flow may not be evenly distributed throughout the year. During the planting season, for instance, there will normally be an outflow of cash or borrowing money. During the growing season, spending may decrease but revenue will remain low.

Come harvest, revenues generally skyrocket while expenses are nominal. During this time, you may also need to pay back farm subsidies that help support agriculture farming throughout the year.

Next, let’s discuss some of the challenges you might experience when you start a farm.

Is owning a farm difficult?

Yes. Farmers and ranchers often experience uncertainty and conflict that put pressure on them during planting and harvesting. Some of the main stressors of farm operations include:

• Maintenance: Farming requires maintaining animals, crops, equipment, and your property. Maintenance can consume time and money quickly.
• Weather: You can’t predict when droughts, heatwaves, floods, freezing weather, tornadoes, or hurricanes strike and wreak havoc on a farm.
• Natural risks: Insects and soil-borne diseases can also make it difficult to run a successful farm business.
• Financial risks: Startup costs are high, market prices fluctuate, and earnings are inconsistent.
• Climate-compatibility: Some crops are just incompatible with local markets. For instance, you can’t grow tropical fruits in the middle of a desert.
• Mental aspects: Stress and mental fatigue can often make a farm operation difficult, especially for beginning farmers.
• Family turmoil: You know the old saying that business and family don’t mix? They almost always do in a farming business and that can cause stress.

Self-financing, crop insurance, and a commitment to dealing with problems head-on can reduce many of the stressors involved in starting a farm business.

What is the most profitable farm to start?

According to Insider Monkey, the source for the top-rated Yahoo blog, the most profitable farms are:

1. Corn/Maize: $82.4B
2. Soy Beans: $57.6B
3. Wheat: $12B
4. Tomatoes: $10.5B
5. Almonds: $8.5B

You should look at whether these crops are suitable for your area when you consider starting a farm business. Next, let’s look at how to start a farm.

How to Start a Farm

Here are some steps to take to start a farm:

1. Identify your niche.
2. Learn about farming.
3. Research the market.
4. Write a business plan.
5. Register your farm business.
6. Get financing.
7. Buy farmland.
8. Buy farming equipment.
9. Start operations.
10. Establish sales and distribution channels.
11. Market to your customer base.

Get ready to learn how to start a small farm.

Identify Your Niche

Before starting a farm business, you must choose what kind of small farm you want to run.

There are many options, and each one presents its own pros and cons. You will need to base your choice on a balance of passion (what can I wake up every morning and be happy doing?) and good business sense.

With experience and education, the decision about the type of farm you want to run will be a bit easier.

Remember that while passion is key, it’s essential to consider more than your favorite crop. Understand that farming is a business, and you must know what the market can handle. For example, hemp farmers in Wisconsin hit a bottleneck in their market and ran out of buyers in 2019.

These are some types of farms to consider:

Dairy Farms

Specifically dedicated to the production of milk (typically from cows or goats), a dairy farmer can have as few as one animal and as many as a few thousand. Milk used for drinking will need special equipment to comply with government guidelines.

The Lukens family started their family farm operation with just two goats. Now they make over $120K per month. Here’s part one of our interview with them.

Check out the second part of our interview with them, too.

Crop Farms

Every month there are more than 3,100 searches for the terms “vegetable farms near me” and “vegetable farm near me.” That’s a pretty good indicator that you should be selling to the public if you are growing fruits, vegetables, or grains.

These farms are dedicated to feeding people. For a small farm, this might mean a diversified list of various crops sold locally at farmers markets or co-ops. Make sure to rotate your crops to maintain the nutrients in the soil and provide healthier food.

Larger farms tend to stick with only one type of crop and may rely on large corporate deals for their produce.

Chicken Farms

Poultry farms (chickens and turkeys) are typically used for meat but may also supply eggs. Many smaller farms featuring cage-free, locally produced poultry and eggs are competing with larger-scale producers.

Check out how Geoff Scott and his partner started Marion Acres, Helvetia Farm Market, and Helvetia Poultry Processing.

Flower Farms

Flower farms supply their products to florists who then sell the product to an end-user. This type of small farm may also sell at farmers markets or to local grocery chains.

Organic Farming

Organic farming means that a product meets strict growing, handling, and processing standards. There are two levels of organic products:

1. USDA-Certified Products: These products contain at least 95% organic content, go through a 12+ week certification process, and bear the USDA Organic seal.
2. "Made With" Organic Materials: These products contain at least 70% organic materials and are mostly a marketing ploy but may still fetch a higher price.

A farm or processing facility must go through a rigorous process to get their products deemed USDA-certified organic products. The steps include:

1. Following federal guidelines for soil quality, animal raising, reduction of pests and weeds, and additive use
2. Preserving biodiversity, respecting the natural cycles, and caring for animals
3. Avoiding GMOs, synthetics, and chemicals, while providing transparency on labels
4. Submitting an Organic System Plan
5. Allowing an accredited agent to inspect farm operations
6. Waiting for a certified agent to review the inspection report

If your products pass the certification process, you can sell them with the coveted “USDA Organic” seal.

Other Interesting Farms

You wouldn’t believe how many types of farms people want to learn about. Some of the most common Google searches are about how to start a:

• Christmas tree farm
• Bee farm
• Mushroom farm
• Cattle farm
• Fish farm
• Lavender farm
• Goat farm
• Crawfish farm
• Shrimp farm
• Hog farm
• Deer farm
• Hydroponic farm
• Sod farm
• Sheep farm
• Butterfly farm
• Petting farm
• Regenerative farm

While this may indicate demand, it’s important to conduct market research to determine whether the above farms are economically viable.

Whether it’s just a hobby or you want to make farm work a small business, there are plenty of opportunities for finding land and starting a farm business. But there will be a learning curve.

Learn About Farming

If you grew up in the concrete jungle, then your first step is getting out of town.

The idea of a farmer wandering around on his property with a wheat stalk sticking out of his mouth isn’t reality. Farming is dirty, smelly, and hard work. It’s not for the faint of heart.

To gain a better understanding, visit the different farm types you might be interested in running and view them from a hands-on standpoint. If you don’t know a farmer, try searching online and scheduling a private tour.

Even better, ask if they’ll let you spend a whole day (or more!) with them to see how everything runs. Farming is a complicated business, so it’s vital to do loads of research on the front end so you know what you’re facing.

Education and Experience

A tour may be educational and inspirational, but it won’t cut it to run a successful farming operation. Farm managers need experience! Fortunately, there are many training programs available in the U.S.

• Rogue Farm Corps
• The Land Connection
• University of Vermont Farmer Training Program (6 months)
• New Entry Sustainable Farming Project

Learning how to become a farmer may be a slow process, but you’ll benefit from spending time on the land and working with real farmers.

Take courses at local universities or community colleges to learn about land preparation, seed propagation, soil fertility, pest control, harvesting, and crop storage.

Make Local Connections

Like many businesses, farms function better when they’re in a community that supports each other. Community Supported Agriculture is a new business model for farming to consider before starting your farm.

The system connects farmers to locals who can become subscribers. In return, they receive a weekly delivery of produce or other goods from the farm. Farmers regularly update subscribers on the status of the farm and invite them for on-site tours.

As a newcomer to the farming industry, you can get involved in this model to not only gain investors in your own farm but to learn from and cultivate relationships with other local farmers.

Connect to one of these farming communities through local relationships, farmers markets, or by finding one online.

Conduct Market Research

You’ll need to understand land preparation, seed propagation, soil fertility, pest control, harvesting, and crop storage.

Just growing things isn’t enough to make a farm successful.

Like any business, you must conduct a thorough market analysis and match your crop to your customer base. According to Tim Lukens, finding your customer base is one of the most critical aspects of running a viable farming business. You need to know who will buy your products.

[su_quote] I’ve seen people and heard of people investing a lot of money into infrastructure thinking, ‘Well gosh, everybody is going to want it!’ Well, guess what? That’s not the case. There’s a lot of competition out there. [/su_quote]

Researching the market where you want to sell your products will give you an idea of what type of marketing budget you’ll need once your farm is up and running. If you are selling food, then keeping the market local can be beneficial, but don’t rule out the online marketplace.

The United States Department of Agriculture (USDA) is the top source for agricultural market research and has extensive resources available for free.

Case Study: Grace Harbor’s Growing Customer Base

For Grace Harbor’s business, the customer base developed over time. Since she started with goats, the natural progression for Grace Harbor was to make soap and then lotions. Her business began at farmers markets and moved to a mall kiosk to sell its goods.

[su_quote] By the end of the farmers’ market season, people were asking, ‘Where can we find you when the season is over?’ So, we rented a kiosk. And we launched a business. [/su_quote]

Demand continued to increase, and now over 100 stores nationwide carry her skincare products.

The Lukens also began selling their soaps and other skincare products online, which is where their largest market is today.

The Washington State Department of Agriculture offers resources to help local farms market their products, providing marketing guidance, regulation education, and training specifically for small, local farms. Oregon has a similar program for those with a small farming business.

A quick online search will reveal assistance programs if you are starting a farm in another state.

Write a Business Plan

To understand if your farm is viable as a business, you need a business plan.

Your business plan is a “roadmap to success.” It provides information about who you are, what you want, and how you intend to get there. It’s a set of guidelines and is subject to change, but it’s a good place to start your journey towards becoming a farmer.

Fortunately, the USDA offers assistance in creating a business plan along with other resources to farmers who are just starting.

Other Resources

• New England Small Farm Institute’s sample business plan resources for farmers
• North Carolina State’s organic farm planning resources
• Kansas State Ag Manager’s sample business plan
• Small farm business plan sample

Register Your Farm Business

Registering your farm helps with income tax and securing funding, and it looks more professional to investors.

To legally start your farming operation, you need to establish a business structure for legal and tax purposes. Like any business, farmers operate under one of five structures: limited liability company, sole proprietorship, corporation, partnership, or cooperative.

Permits and Licenses

Besides a business structure, your farm will require various permits and licenses based on your location and style of farm.

The USDA has an online resource that maps out the federal licenses for each farm type. However, you must visit your state’s Department of Agriculture site to check on state and local licenses and permits.

Farmers Business Insurance

There are a variety of insurance policies that you should consider including:

• Crop insurance: There are all kinds of crop and livestock insurance available through the USDA Risk Management Agency
• Farmstead insurance: This is often called farm and ranch insurance. It works like homeowners insurance but covers more than a typical homeowners policy. You’ll also be able to get add-ons like livestock or crop insurance.

Get Financing

Once you complete a business plan and understand the feasibility of your agriculture business, it’s time to organize your finances. Although taking out loans to start a farm can be challenging, you may find it unavoidable.

Securing financing like loans, grants, or investment partners can help with startup costs, working capital, expansion, and growth.

Conventional Loans, the USDA, and Other Options

Traditional bank loans and small business loans may be available for your farm business. However, without some collateral or previous business history, they may be difficult to secure.

The best resource for a small farm loan (and for all things related to agriculture in the U.S.) is the USDA. The U.S. government aids farming operations of any size through their beginning farmer and rancher loans.

There are thousands of local USDA service centers throughout the country available to help with farming business needs.

Many people who don’t have startup capital may find help from family or friends, grant opportunities (make sure your business plan is solid!), or even the use of a 0% credit card.

Avoid Debt

While you might need a bit of money upfront to get started, many farmers suggest that those starting a farm business avoid getting into debt.

The Lukens family learned this the hard way when a bout of E. coli found its way into their product line. Health officials traced the bacteria back to Grace Harbor when someone became ill. The farm took a financial nosedive overnight. They tried to rely on credit cards to bail themselves out but ended up declaring bankruptcy.

After this disappointing situation, the Lukens regrouped by using only cash reserves to pay for operations. They learned a very hard lesson about avoiding debt at all costs.

[su_quote] The bankruptcy did some good things for us, too, because it forced us to operate on our own cash. We didn’t have any credit to do anything else. We had to do everything by cash. If we needed a new truck, or we needed a new anything, we had to do it with the money we had. [/su_quote]

Advice from Chris Hogan, formerly of Ramsey Solutions, states that debt can magnify problems, and entrepreneurs need to keep a close eye on cash flow.

Buy Farmland

Obviously, you need a parcel of land to grow your food or keep your animals. If you already have property, you could start a small farm in your own backyard. If you need to buy or rent land, factor that into your startup costs.

Buy Farming Equipment

You’ll need to buy farming equipment. Your farmer tools depend on the type of farm you run.

Large crops may require tractors and storage buildings, among other equipment. Dairy farms may require special milking and pasteurizing equipment. Animals require fences, outbuildings, and a variety of handling equipment.

If you’re making products on-site, like Grace Harbor’s skincare line, you need a manufacturing space for production equipment and labeling.

It may be possible to borrow or share equipment at the beginning, which is a great way to keep your costs low. This is where those connections with other farmers continue to come into play.

Farm workers might also need to purchase:

• Water pumps
• Soil preparation
• Seeds
• Irrigation
• Cooling and storage
• Packaging
• Marketing
• Animals and veterinary services (if running a farm with animals)

If farming sounds like it will be too costly, check out some of the most profitable businesses.

Start Operations

Once you have all the equipment, crops, and livestock, it’s time to run your business. That means you’ll need to:

• Care for crops or livestock: This might mean hiring farm workers. Learn more about hiring.
• Manage financials: Use QuickBooks, Easy Farm, or Farmbooks.

Go to Farmers Markets and Other Sales Channels

Based on our interviews about how to start a small farm business, there are several sales and distribution channels you should consider.

• On-premises: You can sell your products directly to consumers at your location. This requires marketing your farm but no shipping.
• eCommerce: Sell your products online and ship them to customers.
• Farmers markets: The USDA has a national farmers market directory where you can find your local market, contact the director, and negotiate your way into the market.
• Distributors: Sell your cattle or food to distributors that will transport it to grocery stores and other locations.

The distribution channels you choose will impact your profitability, but most successful farm businesses will use multiple channels.

Go Start Your Successful Farm Business

We’ve discussed the farm industry, farm ideas, how to start a farm, business structures, how to buy a farm, and where to sell farm produce and meat. It’s up to you to take the information, turn it into a farm business plan, then enact it.

One thing farmers need to understand to be successful is who their buyers are. Tim Lukens says:

[su_quote] If you don’t know who your buyer will be, you can’t sell your product. Even if you can grow or make a good product, you have to find someone to buy it. [/su_quote]

Lukens says that a farmer needs to understand what the market potential is and understand what the operating costs are. This will help protect those who want to start a farm business from getting in over their heads.

Are you ready to get started on your own farm? Let’s hear what you’re going to be raising or growing on your very own land!