Business Ideas | Small Business Ideas: How to Start Agricultural Farming

Tuesday, December 30, 2014

How to Start Agricultural Farming | Business Ideas

Most large modern intensive farms include innovation in agricultural machinery and farming methods, genetic technology, techniques for achieving economies of scale in production, the creation of new markets for consumption, the application of patent protection to genetic information, and global trade. These farms are widespread in developed nations and increasingly prevalent worldwide. Most of the meat, dairy, fish, eggs, fruits, and vegetables available in supermarkets are produced by these industrial farms.

Agricultural farming is one of the few industries in the U.S. with a consistent history of trade export surpluses. Just in the first three quarters of 2010, the U.S. Department of Agriculture estimates that farm cash receipts have reached $301.8 billion. Considering that 54.4 percent of the farm businesses in the U.S. are less than 100 acres, these statistics indicate a distinct opportunity for growth for those interested in a farm start-up business. In fact, a 2008 USDA long-term projected growth report estimates continued farm export growth by 26.25 until 2017.

Instruction

Step 1

Select a farming specialty and develop a business plan. Farming falls into three categories: crop, wind and animal farming. Crop farming consists of growing plants, such as trees for lumber, corn and soybeans. Government grants have created a new revenue source for farmers called wind farming where farms harness wind energy using giant wind turbines. Animal farming is the raising of animals to produce such products as milk, cheese and beef. Factors affecting the choice of farming specialty include the farm’s location and the farmer’s level of business and agricultural experience.

Step 2

Write a business plan for the farm. A business plan will help define thefarm's business, startup expenses, lines of distribution, operating expenses and future profitability. Farmers also need a business plan to apply for farmloans and government grants. Farmers can contact their state's department of agriculture for business assistance. These state departments provide state agricultural business statistics, information on crops, product distribution and warehousing system information, export assistance and assistance to receive federal, state and county grants.

Step 3

Acquire financing for living expenses, the farm and equipment. Agriculturalbusiness requires a strong farming business plan. It is essential to include living expenses as part of the business plan because income is delayed until the begins to farm produce. Farms have many options in getting federal and state agricultural grants. Existing farms can receive cash grants, such as crop and dairy subsidies. The USDA offers loans for first-time farmers. Minorities, veterans, the disabled and women seeking to start a farm business have even more opportunities to obtain financing since these groups are often under-represented in the agricultural industry. Small business farmers can find information on getting small business bank loans and government grants by visiting Grants.gov and Business.gov.

Step 4

Hire an accountant. Controlling and monitoring farm operating expenses is crucial to profitability. An accountant with farm operation experience can help small business farm owners establish accounting systems to oversee and control costs, identify deductions to lower taxes and assist in finding agricultural vendors. The American Accounting Association offers information on how to hire an account and business referrals throughout the country. American Accounting Association 5717 Bessie Drive Sarasota, FL 34233-2399 Phone: (941) 921-7747 Fax: (941) 923-4093 Email:info@aaahq.org

Step 5

Research and follow all federal, state and local business and agricultural laws, zoning and regulations pertaining to the farm. Farming is a business so all business regulatory laws apply. This means the business must state the business structure sole proprietor, partnership or limited liability company. All farms must register as a business, however, employment laws vary from state to state depending on the amount of agriculture a state produces. Two factors that directly affect a farming business are city zoning law and the Environmental Protection Agency (EPA). Farms must follow EPA regulations on such things as water run-off, wet land designations, protected habitats and chemical applications. The EPA supported National Agriculture Compliance Assistance Center helps farmers with environmental protection issues and EPA regulations. The government recommends that farmers contact the center for detailed information tailored to their specific farming business. Farms that do not comply with EPA regulations face fines and closures. The National Agriculture Compliance Assistance Center 901 North 5th Street Kansas City, KS 66101 Toll-free phone: 1-888-663-2155 E-mail: agcenter@epa.gov Fax: 913-551-7270

Step 6

Find appropriate farm property. Retain a real estate agent who specializes in farmland sales and consider purchasing an existing farm business. Farming requires land, equipment, farm buildings and supplies. An experienced farmland Realtor understands these requirements and can direct new farm start-ups to land that will best support their farming business. Always consider existing farm businesses to save money because they often include the farm equipment as a part of their price. Always hire an attorney to review all business contracts. Before signing any contract, check local and state zoning laws to address any compliance problems and make sure the property's mineral rights are included in the sale. Many Texas farmers have regretted not owning mineral rights after discovering oil on their land.

Step 7

Establish farming operations, purchase equipment and begin farming. Once the sale is completed, farm business owners must have all licenses and permits approved before starting any building construction and land preparation for farming. Farms without permits and licenses in place before farming may find it difficult to bring their products to market because the government closely monitors the food supply through the USDA.
Things Needed Business Plan Financing Attorney who is a specialist in agricultural law Accountant Farmland Farm equipment based upon the type of farm

References

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Easy Tips and Ideas to Start Business

Although anyone can start a business, many people fail because of a bad product or improper research. If you want to start your own business, you can improve your chances for success before you even begin. In order to make your business successful, start strong and make sure that your idea will hold out for the long haul.

Have a Good Product

Ensure that you plan to sell something useful. Although you may think that your product is important or special, that doesn't mean the general public will agree. Ask friends, family and strangers what they think of your product. If they don't seem that interested, ask them why. With their suggestions, you can either improve the product or scrap the idea completely. According to Brad Sugars of Entrepreneur magazine, most small businesses fail because they sold a product that didn't have an adequate market. This also applies to small businesses that provide a service. A lawn-care business might be useful for part of the year in a northern state, but it is in-demand year-round in the south. Consider whether people will actually want to use your service and get constructive advice from those not afraid to give their opinion.

Research Local Businesses

Research local companies before starting up your own business. This will not only give you an idea of the amount of competition you will have, but it will also help you price your product or service. If you're looking to start a wedding photography business, you may find during your research that the market is over-saturated in your area. If not over-saturated, you should contact each business and ask them for a price list. Alter your prices so you can stay competitive with the competition in town. Researching similar local businesses will also help you decide where to locate your business location. Try not to start up a store or office close to another business of your type. If your small business is located away from similar business types, this will cause locals to choose you over businesses that are farther away from where they live.

Get Professional Advice

You may know someone who has started their own successful business. Ask him for advice and listen to his stories of how he started his company. You may gain useful advice on the good and bad ways to start a business. Local entrepreneurs can also introduce you to local product providers or advertisers that you may not have met without their help. Accept any advice with open arms, especially if the advice is coming from someone successful in the area.

How to Calculate Business Start Up Costs

Starting a business in no easy endeavor. It takes a great deal of research, perseverance and hard work. While sweat equity will make your small business more successful, you will most likely need real capital to get the business started. Before you start raising capital and/or investing your own funds, the first thing you need to do is determine the total start-up costs.

Step 1

Determine your costs of sales. For most small businesses this means inventory, the cost of raw materials, manufacturing equipment, shipping, packaging, and warehousing. However, not all businesses sell products. In this case, the cost of sales is primarily the direct labor involved in making the sale. For example, to open a small shoe business entails purchasing enough inventory ($10,000) to stock the store.

Step 2

Determine professional fees. Planning your business structure, i.e., limited liability corporation or general partnership, means hiring an attorney. There may also be the need to pay an attorney for help with establishing trademarks, copyrights, and patents. In this scenario, that puts total professional fees at an estimated $20,000.

Step 3

Determine technology costs. Technology can greatly reduce the cost of labor for small business if used effectively. Most small businesses require computers, printers, cell phones, website development, Internet access, software applications, information security, data storage, and outsourced information technology (IT) consulting. If the cost of technology is $10,000 to start, add an additional $5,000 a year for maintenance (hint: maintenance is not included in start-up costs).

Step 4

Determine administrative costs. This varies with business types and may include items such as business insurance, office supplies, product packaging, parking, rent, express shipping, desks, chairs, fax machines, phones, or anything else necessary to operate the business daily. A good estimate for start-up administrative costs would be $5,000 for the first six months.

Step 5

Determine initial sales and marketing costs. Now that you have your product, you need to let folks know about it. Sales and marketing costs generally include marketing materials for presentations, printing stationery, business cards, advertising, trade show events, and public relations. These initial sales and marketing costs can add up to $3,000.

Step 6

Determine the wages and benefits needed to secure a staff. This includes employee salaries, benefits, workers compensation, and payroll taxes. Let's put the cost of wages and benefits estimated at $20,000 for the first three months of business.

Step 7

Add all costs associated with starting the business for a total. Be sure to only include business start-up costs that will be incurred in the first three to six months of operations. For this example, the calculation is: $10,000 + $20,000 + $10,000 + $5,000 + $3,000 + $20,000 = $68,000.

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