How to Start a Farm (and Make $120K/Month) in 2020

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Have you ever wanted to get out of the city and run a farm of your own? This guide will provide you with what you need to know to get started. Today, you’ll hear from successful farmers who built their business from the ground up. And we’ll show you, step-by-step, how to do it yourself.

We recently interviewed expert farmers, Tim & Grace Lukens of Grace Harbor Farms. They shared with us the ins-and-outs of the successes (and failures!) of their farming business in Washington state. Although the Lukens began their business with only two goats, their hobby soon turned into a viable business that now brings in close to $2 million in sales each year.

To meet the Lukens family and hear their story about starting a small farm business and turning difficulty into success, watch our two-part video series here and here.

Drawing on the vast experience from Grace Harbor Farms, in this guide, we’ll take you step-by-step through the process of how to start a small farm for profit. We’ll provide you with actionable answers to the many questions you have about learning how to farm.

How do I start my own farm?

Starting a farm, even when done on a small scale, takes a big investment of time and energy. It requires several steps before you are ready to actually plant seeds or buy animals. As you read on, you’ll learn the most critical aspects of starting a farm so that you can avoid certain pitfalls and mistakes along the way. Whether you are learning how to start a small farm, or you’re aiming toward commercial farming, these steps will point you in the right direction.

Step 1: Consider What Kind of Farm Business You Want

Tractor on farm Before starting a farm business, you need to know what kind of small farm you want to run. You could choose between crops, animals, dairy, or even a flower farm! Various options exist, and each one with come with its own pros and cons. You will need to base your choice on a balance of what you are passionate about as well as what makes good business sense.

If you have grown up in the concrete jungle, then your first step must be getting out of town! The idealism of picturing a farmer meandering lazily along on his property with a wheat sheaf sticking out of his mouth may not be based in reality. Farming can be dirty, smelly, and hard work. It’s not for the faint of heart!

You should make plans to visit the different types of farms you might be interested in running so that you can learn about farming from a hands-on standpoint. Learning how to become a farmer may be a slow process, but you’ll get significant benefits when you find a farmer and spend time on the land.

If you don’t know a farmer, try looking some up online and calling to see if you can come for a tour. Even better, ask if they’ll let you spend a whole day (or more!) with them to see how everything actually runs. Farming can be a very complicated business and a big investment, so it is vital to do loads of research on the front end so you know what you’re facing.

Once you’ve visited some farms, the decision about the type of farm you want to run will be a bit easier. Some of your decision will be based on your location, how much land you will have, and how much of a budget you can secure to start.

Remember, you need to consider more than just the things you are passionate about and want to start growing on your small farm. You also must know what the market can handle! Therefore, you need to start small and continue growing as time goes on.

These are some types of farms you might consider:

Dairy Farm: Specifically dedicated to the production of milk (typically cows or goats) a dairy farmer can have as few as one animal, a few hundred, or even a few thousand. Milk that is used for drinking will need special equipment in order to comply with government guidelines.

Crop Farm: Whether growing fruits, vegetables, and grains, these farms are dedicated to feeding people. For a small farm, this might mean a diversified list of various crops that are often sold locally at farmers’ markets or co-ops. Larger farms tend to stick with only one type of crop and may have large corporate deals for their produce. You’ll want to consider which crops will grow in your location, as well as who will buy them.

Poultry Farm: Raising chickens or turkeys, poultry farms are typically used for meat but may also supply eggs. Many smaller farms featuring cage-free, locally produced poultry and eggs are beginning to effectively compete with larger-scale producers.

Flower Farm: Producing cut flowers for sale, flower farms typically supply their products to florists who then sell the product to the end-user. This type of small farm may also sell at farmers’ markets or to local grocery chains.

Orchard and/or Vineyard: Dedicated specifically to growing fruit, orchards and vineyards require special types of soil and weather patterns and are only effective in certain parts of the United States. Apple orchards, for instance, can be planted in many regions in the US. But grape vineyards and olive farms are more specific to warmer climates in the west and south. When growing a crop these fruits, consider what your end product might be–a U-pick apple orchard with cider, a vineyard combined with winemaking, or some other type of small farm market.

Vineyard farm

Hay Farm: Also a crop farm, this type of farm grows hay (or other grains) that are used to feed livestock. This requires a large amount of land as well as heavy equipment such as tractors, rakes and balers, as well as storage areas.

How to start a farm from scratch?

Once you have learned enough to get a good idea of what you want to grow (animals, crops, or a combination of both), you will need to learn how to farm. You can do this by trying to learn anything and everything you can about how to start a farm.

So what’s your next step? Connections!

Step 2: Make Connections

When you’re just starting a farm, you may not know anyone personally who is in the farm business. So it’s time to try to make some friends! In addition to the farms you toured when making your product decisions, reach out to local farmers who are able (and willing) to teach you the farming basics. Most of the time, farmers are happy to share what they know with dedicated learners.

Like many businesses, farmers function better when they have a community. You can get connected to other farmers through local relationships, farmers’ markets, or even by finding a mentor online. Use connections to learn everything possible about your type of farm, as well as gleaning local advice related to seasonal weather patterns, markets, etc.

How profitable is a small farm?

Woman counting moneyJust like many questions about farming, the answer of profitability depends on a variety of factors. Profit may be based on size of farm, type of farm, location, production costs, and who will be buying the farming products

Tim & Grace Lukens have been running Grace Harbor Farms since 1999 and it has now turned into a multi-million dollar business. However, according to Tim’s son, David, who is in the process of taking over the farm, the profit margins for a farmer can be very low–sometimes only around 2% or so.

While it can be an excellent long-term investment, farming is not a get-rich-quick scheme. It will take some calculations to figure out how much profit you can make. The United States Department of Agriculture provides reports on various past figures that may help a farmer estimate according to certain regions and small farm types.

How much money does it take to start a farm?

Because farming is also a business, it is necessary to understand exactly how much it will cost to start farming. You’ll need to make a comprehensive list of everything you’ll need, so don’t be afraid to ask for help from your farmer connections on how to start a farm business! The next step is estimating how much farming will cost. Looking back, Grace Lukens notes that:

We didn’t have any money. We just had two goats and we made some soap–but we launched a business!

Step 3: Estimate the Cost

Before you get too excited about getting your hands dirty as a farmer, you’ll need to make sure to crunch some numbers. Remember that farming can be expensive. Of course, the numbers will change based on a variety of factors such as your location, the type of farm you plan to run as well as the size.

Consider these costs of starting a farm:

Land

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

Animals

Farm chickens

For a dairy or poultry farm, you’ll need funds to purchase healthy animals.

Equipment/Machinery

Again, this depends on the type of farm you run. Crops need tractors and storage buildings, among other equipment. Dairy farms may require special milking and/or pasteurizing equipment. Animals require fences and outbuildings. And if you’re making products, like Grace Harbor’s skincare line, you’ll need a place and special equipment for production and labeling.

Some equipment may be borrowed or shared 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.

How to keep track of farming costs?

You might be wondering if it’s hard to keep track of all of these numbers. Especially if you’d rather be outdoors with your crops and animals!

To organize your financial data, try a simple bookkeeping program that can keep your small farm in top financial shape. Some farm-appropriate suggestions are QuickBooks Desktop Pro, Easy Farm, Farmbooks, and Quickbooks Online, among others.

Step 4: Create a Business Plan

In order to understand if your farm is actually viable as a business, you’ll need a business plan. Your business plan is like your “road map to success”, providing information about who you are, what you want, and how you intend to get there. Of course, this is only a guideline and is subject to change based on future events, but it’s a good place to start.

The USDA offers assistance in creating a business plan, as well as offering other resources to farmers who are just starting a farm. New England Small Farm Institute also offers a list of sample business plan resources for farmers.

Step 5: Find Your Customer Base

Farmers Market transactionJust growing things isn’t enough to make a successful farm!

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.

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

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.

As the demand continued to increase, the skincare products were stocked in various places, which now encompass more than 100 stores nationwide. Then, when the internet became a viable place for retail, the Lukens began selling their soaps and other skincare products online, which is still where their largest market is today.

Research into the market where you want to sell your products will give you an idea of what type of budget you may need for marketing 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.

Washington State Department of Agriculture offers resources to help local farms market their products–providing marketing guidance, understanding of regulations and training specifically for small, local farms. Oregon has a similar program for those with a small farming business. A quick online search can reveal assistance that might be available if you are starting a farm in another state.

Why do some farms fail?

Having brushed up against potential failure and then bouncing back, the Lukens understand what it will take to make a farm work. Everyone knows that farming requires hard work. But Tim also believes that many small farms fail because they don’t understand the market (see Step 5 above).

One thing farmers need to understand in order to be successful is who their buyer is. Tim Lukens says:

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.

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

Step 6: Secure Funding

Business fundingOnce you have made your business plan and understand the feasibility of your agriculture business, it’s time to make sure you have the finances you need. Although taking out massive loans to start farming can be challenging, you may find that you need a boost to your finances by securing funding from a reliable source.

Traditional bank loans and small business loans may be available for your farm business. But many people who don’t have startup capital may find help from family or friends, grant opportunities (which is where the business plan becomes important), or even the use of a 0% credit card (although that can be very risky).

While you might need a bit of money up front 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 life. Although no one knows for sure how it got there, bacteria were traced from someone who became ill back to Grace Harbor Farm. The farm took a financial nosedive practically overnight, tried to rely on credit cards to bail themselves out, and finally ended up declaring bankruptcy.

After this disappointing situation, the Lukens were able to regroup. However, they were then forced to only buy what they could pay for with cash. It was then that they were able to learn the very important lesson of avoiding getting into debt if at all possible. Expert advice from Chris Hogan, a financial strategist for Dave Ramsey, states that debt can magnify problems, and entrepreneurs need to keep a close eye on cash flow.

Step 7: Start Your Farm (And Work Hard!)

Once you learn about farming and have everything ready on paper, it’s time to get things up and running! Get your land, buy your animals, sow your seeds. All of these details will be seasonal and time-sensitive, depending on which type of farm you want to start.

Whatever type of small farm or large farm you want to start, you must be prepared to do one thing: work hard! Animals and crops are certainly demanding, but it can also be extremely rewarding when you learn how to run a farm.

How do you get your farm products into stores?

According to the Lukens family, it takes time to build relationships in order to get shops to stock your products. Grace Harbor had the fortune of getting into Whole Foods years ago, when the chain was much smaller. But even with that existing relationship, it takes time and patience to get a store to work carry products from your farm.

Even Grace Harbor had to start by building its reputation at farmers’ markets. Once you have a trusted product, it may be feasible to get in a conversation with a locally-owned shop on a low-commitment level, and then grow from there. David Lukens says it may take up to six months of negotiations or more to get into larger stores or chains.

Step 8: Build Your Brand

Brand GraphicYears ago, Tim Lukens heard some important advice given by Sir Richard Branson, owner of Virgin Airlines among many other successful businesses. It wasn’t actually about farming but applies nonetheless.

Sir Branson inspired the idea that, if you want to start a business, you don’t have to create something completely new. You simply have to find a profitable category and then do it better than the competition. You don’t have to sell your product for less. You just have to make it better than the rest.

If you understand the market and determine to provide a superior product and service base than your competition, then your small farm is more likely to be a success.

And since part of being the best is the image you’ll be creating, you may need to invest in a logo, website, labels, and possibly a social media presence.

Consider these resources for building your brand:

Logo Creation: Fiverr ; Upwork or 99 Designs

Business Cards: VistaPrint; Zazzle ; or Moo

DIY Web Platforms: Wix; Squarespace; or Weebly

Step 9: Expand Your Farm Business

Expanded farm fieldSometimes your farm business takes a turn that you didn’t plan for, as the Lukens’ story shows. Although they began with just soaps and lotions, Grace Harbor customers began asking for other goat milk products as well.

After some persuading, the Lukens dipped a toe into selling raw milk, yogurt and various other goat products. They didn’t plan it this way but, as they continued to keep up with the demands of the market, the business grew. They got some cows, added other products, and the business just kept growing.

In fact, the demand became higher than what they could source with their goat and cow farming so they now outsource some of their milk to two other local farms.

Now, as Tim’s son, David, looks toward taking over the business, he is looking for opportunities to extend the reach of Grace Harbor. He follows along with the idea by Wes Herman of Woods Coffee Shops–that a business should “own your backyard”. This means that he wants his biggest influence and customer base to be local. And there’s no doubt that he’ll do it!

As we’ve learned from the Lukens family, farming can start out as just a hobby and then turn into a multi-million dollar business! With some hard work and dedication, and the steps above, you can also learn to run a farm.

Are you ready to get started on your own farm? Let’s go!

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