• Jin Gan

How To Start A Farming Business


Defining Your Farm Business Goals And Objectives

Before diving into starting a farm business, it is important to ask yourself what do you want out of this farming business. It is therefore very important to define your goals. It is encouraged to think your goals in terms of "tripe bottom line": people, profit and planet. Here are some questions to ponder upon:

  • What is your profit goal? What sort of income are you expecting from this business?

  • What are the goals for enhancing or maintaining your quality of life?

  • What are the goals of how your farm will maintain or contribute to the natural resources and environment?

Other specific questions to ask:

  • What is your personal goal for this business? (I.E to provide enough income to sustain your lifestyle)

  • How much sales do you forecast for your farm business?

  • How many hours a week do you plan to work?

  • How many employees are required to run this farm?

  • What is your profit goal?

  • How do you plan to measure the success of your business?

It is good to have SMART goals: Specific

  • Well defined

  • Clear to anyone that has basic knowledge of the project

Measurable

  • To know that the goal is obtainable and how far one is away from completion

  • Find out when you have achieved the goal

Agreed Upon

  • Agreement with all stakeholders

Realistic

  • Within the availability of resources, knowledge as well as time

Time-Based

  • Enough time to achieve the predetermined goal

  • Not giving it too much time as it will affect performance

Business Plan

Once you have identified your goals, it is wise to create a business plan before starting any new venture. There are several templates available. One of which is called Business Model Canvas.

Information in each section of the business plan should also include an evaluation of the strengths, weakness, opportunities, and threats that may apply.

Production Plan

Every farm is unique in its own ways in terms of location, soil quality and labour requirements and so on... The business plan must therefore include "production plan". This will include details such as how the farm operates as well as what products will it be producing for the market.

Equipment

Every farm will need equipment and storage facilities to function. Hence, within the business plan, it is also important to include the cost of equipment and storage facilities.

Finance

Without funds, there is no business. A well thought out plan to fund your farming business is vital to the survival of your business. Figure out the sources to acquire capital as well as how much capital is needed in order to run the business successfully.

Location

It is vital that the location of your farm suits the type of product you wish to produce. The location will very much depends on space limitations and type of farming. For example, producing Free Range Poultry would require a larger space in order for the chicken to roam around freely.

If you are planning to produce maize, then you will have to consider the requirements such as climate.

Equipment And Livestock

Capital would be required to buy livestock, equipment and land. Therefore, it is important to have the funds budgeted to cover buying or leasing of land on which to house the farm in suitable area.

Training

It is recommended to get some training or to attend some local courses before you start. If you are unable to find a local course around you, another option would be to go for online classes on how to start a successful farm.

Market Positioning

Market positioning is vital when starting a new venture. Here are some important questions to consider:

  • Does this idea fills a market need?

  • Who are the competitors?

  • What is your competitive advantage?

  • Are you able to deliver better service?

  • Can you create demand for your products?

Funding

In order to support your routine production cycle, it is important to have sufficient financial strength. There are different ways to go about it depending on your location.

In the US, the 5 main funding sources for new farmers and ranchers are:

  • Local banks

  • Private contacts

  • Farm Credit Services

  • Aggie Bond Programs

  • U.S Department of Agriculture (USDA) Farm Service Agency (FSA)

In South Africa, Land Bank is a specialist agricultural bank guided by a government mandate to provide financial services to the commercial farming sector and to agri-business and to make available new, appropriately designed financial products that would facilitate access to finance by new entrants to agriculture from historically disadvantaged backgrounds.

It is also useful to do case studies to see how other farmers found innovative ways to acquire the startup costs for their farms.

Types Of Farms

Small Scale Farming

Small scale farming can be very lucrative. They are also easier to manage. With that being said, you will need a genuine interest in farming if you want to be a successful farmer. A farmer is a businessman first, a farmer second. You need to be self motivated to ensure your own success.

Dairy Farming

If you want to be a dairy farmer, you have to make sure you love working with cattle and have experience in this field. It is recommended that you take some time off to work in a dairy farm before striking out on your own. It is important to have a good understanding of animal anatomy, cattle health and milk production.

If you are still new to this field, classes are recommended to help you develop the skills needed to run a successful dairy farm. These include :

  • Animal handling skills

  • Mathematical and business skills

  • Communication and organisation skills

  • Practical skills such as using mechanical tools

Dairy farming is a lifestyle. You would need to work very long hours throughout the year, rise early to milk and feed the cows. You have to also be very detailed oriented and keep careful records on each cow so they can measure the cost of keeping it against the income produced.

Legislation

Before starting your farm, it is important to check the details of any legislation and regulations governing the industry, product and production processes. It is encouraged to consult with your local municipal authorities to ensure that the land is zoned for farming and that there are no by laws that could affect the farm negatively.

Marketing Strategies

When starting out, it is important to have a marketing strategy so that people will know of you. Doing your own research is necessary. Try to figure out who are your ideal customers, what kind of problem are they facing and how to reach them.

Case studies can be a great way to get ideas for marketing strategies. It is important to evaluate whether the strategy employed fits your goals and comfort with risk.

There are many ways to get the message out. You can start doing outbound marketing such as emailing or cold calling customers or advertising in magazines. Another way is to do inbound marketing by letting others discover you. A good way to do that is to start your own website and blog page and publish useful content to your potential customers.

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