How to Start a Small Farm Business

13 min read

Starting a farm business might be a big dream for a young entrepreneur. There are simply so many questions and processes involved, it can be hard to know where to get started. For example, you worry about how to go about obtaining the land you need, getting licensed, and making sure your farming ambition generates money. Not to mention, having the skills as a farmer to make your business sustainable.

These questions might seem too daunting to tackle, and make you want to hang up your farmer’s hat right here and now. However, don’t let the complexity of this new undertaking get you down. Therefore, this article will be your complete guide on how to start a small farm, wherever you find yourself. It will explain each step using applicable scenarios to ease your understanding along the way. At the end of this article, you will have enough information to get started towards building that small farm that you always wanted. So, let’s dive in.

Why Do You Want to Start a Small Farm?

For you to be a successful farm owner, you should really have a deep understanding of why you want to start a small farm. This is the first thing you need to consider and it is very important. Are you starting a small farm as a business or a hobby?

Knowing the reason for your ambition is important, as it will drive your motivation and shape your business strategy. For example, in terms of business strategy, it can play a huge role in taxation and financial aids. Here, hobby farms’ tax implications are different from business farms.

After knowing the reason why you want to start a small farm, the next thing is how to start it. Below is a stepwise procedure on how to start a small farm anywhere you are. These steps have been tailored for any type of small farm that you have.

Step 1. Identify Your Niche

The first thing to do to make into reality your dream as a farm owner is to identify your niche. Jumping into the farming business without identifying your niche is not a good strategy, especially for those starting a farm business. If it is a hobby, for personal use, or any form not centered on generating profit, it might not be that important.

Are you going to be into fruits, vegetables, or livestock? As a potential farm owner, selecting a particular niche is good as it makes planning easier. Consequently, you will be able to do market research and draw a business plan based on the selected niche.

Step 2. Market Research

This is undoubtedly an important step when looking to start a small business farm. Having market research will allow you to know what your target market looks like.

Market research is important as it will let you plan the following:

Where will you sell your farm’s produce?
To whom you will sell your farm’s product(s).
How will you sell your farm product?

Let’s create a scenario where you don’t have proper market research. Let’s say you start a pineapple fruit farm in California. However, on harvesting, you “suddenly” discover that the demand for the fruit you are selling is in Florida. That is what is termed “not knowing your target market location and what they want”. Assuming you did proper market research, you would have been able to plan against such a scenario. For example, you would have:

Known your target market is not in California
Chosen a niche that is in demand in California
Start your fruit business in Florida

Any of these choices would have saved you a lot of trouble and money.

For effective market research, you should note the following things:

Your potential customers.
Distribution channels.
Learn about the local market.
Do a survey of underrepresented crop or animal products in the farmers’ mark

Step 3. Business Plan

Having a business plan will help you project into the future. A business plan is important as it translates your vision into a blueprint, so other people can understand and support the vision. When doing a business plan, you should incorporate what you learnt during your market research and draft something that will seamlessly bring your dreams to reality.

Step 4. Getting Financial Aid

Financing can be a problem for many new entrepreneurs, thereby, making it challenging to set up a small farm. Therefore, it is important to get sources of financing. There are many options to get financed. Two most important methods include;

Grants And Subsidies

Most governments don’t offer grants for people intending to start a small farm. However, there are many subsidies and other forms of assistance available. You can contact the local state department of agriculture around you for information on grants, subsidies, and other forms of assistance available for small farm owners.

Loans

Loans are the quickest option of getting financing when setting up a small farm. However, getting a loan also depends on what type of farm you are running. For example, there is a low tendency of getting a loan if you are running a hobby farm. However, with a solid business plan, you can get a loan for business farms.

Step 5. Getting a License

If you are going to run a small farm business or a hobby farm, you need to obtain some proper licenses. Also, when getting a license, you should be familiar with the state and local regulations of your environment. This is because of zone restrictions on some farming activities which can make them not to be available. Also, some farming activities as a result of zone restrictions might lead to expensive licensing and inspection.

Consult the local state department of agriculture as they will provide you with the latest information about zone restrictions and the necessary licenses you need.

Step 6. Find the Right Land

Once you know what to farm and you have the necessary information about starting, the real work starts with having the right land. There are two options available for getting land for farming. You can lease or buy it.

Buying land

We recommend against buying land as an entrepreneur thinking of setting up a small-scale farm for the first time. While buying land will give you complete control, you will also have to assume the financial risk involved in such a large decision.

Leasing land

This is the most popular option for young farmers. There is a little financial risk to leasing land and it requires less upfront in terms of capital. The only thing you have to do is find landowners that have arable land which is available for use.

Things to consider when looking for land

Whether you choose to buy or lease, you don’t just spontaneously decide that this is the right land to get for your farm. There are many factors to consider before making such a decision. Below are a few important ones to consider.

Market proximity and land accessibility

It is important to get land that is near the market. Getting land in a far place will bring risks of financial and logistic issues. Since you would have completed your market research, you should have an idea of your market location and judge the viability of a space-based on that.

After knowing how close the land is to your marketplace, you should also consider transportation problems and accessibility. You must be able to balance easy access and proximity when choosing your land.

Access to water

Access to water is another important factor to consider when looking for land. The place you should choose must have a steady water supply. This is to make sure that you can provide water for your crops, animals, and production process.

Water sources such as a well are widely considered the best, as it is free. However, the cleanliness of your well water depends on the environment you are living in. Using a municipal water supply will provide you with clean water. However, there is a price tag that you must consider.

Choosing a water supply must be based on a blend of accessibility, water quality, and price tag attached.

Soil quality

Soil quality directly influences crop production capacity and expenses. For example, you can make an accurate prediction for fertilizer use based on the test result. Also, the soil type influences the growth and health of the livestock you might want to rear. You can ascertain the soil quality by carrying out a soil test using the local extension services in your area.

Step 7. Selling Your Products

This is the last and most important part of setting up a small farm business. You already know how to start a farm and the little details needed. However, for those into farming as a business, your farm must generate profit which is obtainable only after selling your farm produce. There are many ways to sell your farm produce.

Farmers markets

These are no doubt the most popular places to sell your farm produce. It involves harvesting and setting up a storefront at a local farmer’s market to sell your products at. Unsure about selling in person? Look into an ecommerce platform like Ecwid that will allow you to accept physical payments. More information on that can be found here.

A farm shop

Another popular way to sell farm products is having your own proprietary farm shop. However, this method is only ideal if you have enough traffic near your farm and you already have a good track record of selling high-quality goods.

Create a united brand

You could also team up with other farm owners and sell your product under a United Brand.

Ecommerce

Ecommerce is another option to try for potential farm owners. Ecommerce has a global reach. Consequently, you can easily get in touch with a wide range of audiences and up your profit level. Setting up an ecommerce store is possible on platforms such as Ecwid, Wix, Squarespace, etc., and it is one of the best options there. You can also combine it with other methods listed above to help you get more sales.

Final Thoughts

Setting up a small farm can be challenging for new entrepreneurs. Therefore, this article answered the different questions that might make setting up a small farm problematic. By going through this article, you would have the necessary information required to turn your dreams into reality.

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Jul 2, 2021

About the author

Max has been working in the ecommerce industry for the last six years helping brands to establish and level-up content marketing and SEO. Despite that, he has experience with entrepreneurship. He is a fiction writer in his free time.