Are you interested in starting a commercial farm from scratch? If YES, here is a complete guide to starting a commercial farming business with little money and no experience.
Okay, so we have provided you an in-depth sample commercial farming business plan template. We also took it further by analyzing and drafting a sample commercial farm marketing plan backed up by actionable guerrilla marketing ideas for commercial farms. In this article, we will be considering all the requirements for starting a commercial farming business. So put on your entrepreneurial hat and let’s proceed.
The agricultural industry of which commercial farming is a subset of is no doubt among the leading industry in most countries of the world; it is the industry that produces food for the populace and raw materials for industries. Because of the significant role the agriculture sector plays, the government of most countries ensures that they go all the way to subsidize seedlings, fertilizers, and farming implements and machinery for farmers and also encourage entrepreneurs to go into farming.
Table of Content
- Why Start a Commercial Farming Business?
- What Does It Take to Start a Commercial Farm?
- Starting a Commercial Farming Business – Market Feasibility and Research
- Starting a Commercial Farming Business – Legal Matter
- Writing a Business Plan for Your Commercial Farm
- A Detailed Cost Analysis for Starting a Commercial Farm Business
- Starting a Commercial Farming Business – Technical & Manpower Details
- Starting a Commercial Farming Business – The Marketing Plan
Why Start a Commercial Farming Business?
There are several business opportunities available in the agricultural industry and one good thing about the industry is that there is market for all the produce from the industry. Over the years, researchers and scientist have been researching on ways to improve crop cultivation especially in areas where the soil composition and climatic condition does not support the growth of certain crops (cash crops, food crops et al). So also engineers have been improving on their invention as regards mechanized farming et al.
If you are looking towards leveraging on the agriculture industry to generate huge income, then one of your best bet is to start a commercial farm. Commercial farming is all about mass – cultivation of crops and rearing animals, fish, and birds’ et al for the sole aim of making profits. In most cases it is referred to as mechanized farming.
As a matter of fact, with the recent advancement in technology farmers can now comfortably grow crops in a country where such crops can hardly survive and in places where there are few farming land, people can make use of the rooftop (basement) of their houses to cultivate crops even for commercial purposes.
What Does It Take to Start a Commercial Farm?
One thing is certain about commercial farming, if you are able to conduct your market research and feasibility studies; you are more likely not going to struggle to sell your farm produce because there are always food processing companies and consumers out there who are ready to buy from you.
Lastly, with commercial farming, you can afford to combine crop cultivation and animal husbandry or you can decide to only special in the cultivation of crops or rearing of animals / birds / fish. The bottom line is that if you have enough land (space) and you are interested in maximizing commercial farming, you are sure going to make huge profits from the business.
Starting a Farming Business from Scratch With No Money – A Complete Guide
- Commercial Farming Industry Overview
Statistics has it that there were 2.2 million farms, covering an area of 922 million acres (3,730,000 km2), and an average of 418 acres (1.69 km2) per farm in the united states of America. No doubt, an estimated 97 percent of farms in the United States of America are operated by families, family partnerships, or family corporations.
Statistics also has it that farming (most especially commercial farming) employs more than 24 million American workers (which is roughly17 percent of the total workforce in the United States). For example, in 2006, the average American farmer grew enough food for about 144 other people and also in 1940, the average farmer grew food for about 19 other people (which was close to enough food).
- Interesting Statistics About the Agriculture Industry
Records has it that in 2007, just 187,816 of the 2.2 million farms in the United States of America accounted for 63% of sales of agricultural products, marking a trend toward the concentration in agricultural production. Agricultural efficiency has increased over the past century from 27.5 acres/worker in 1890 to 740 acres/worker in 1990
It is on record that American dairy farmers receive less than $1.32 per gallon of milk they produce from their farms and the average retail price of milk $2.76. The average cow produces 7 gallons of milk a day, 2,100 pounds of milk a month, and 46,000 glasses of milk a year. There are 350 squirts in a gallon of milk. For example, rearing beef cattle is the single largest segment of the United States of Americas’ agriculture industry. Statistics has it that The United States of America produces more beef than any other country in the world and about 34 million cows are slaughtered in the U.S. every year.
Global statistics has it that commercial livestock farming employs about 1.3 billion people globally and livestock farming feeds billions of people and employs 1.3 billion people. That means about 1 in 5 people on Earth work benefits from the business value chain of commercial livestock farming.
For instance, in the United States of America and in other developed countries, most livestock is raised on large factory farms called concentrated animal feeding operations (CAFOs) and the largest CAFOs house poultry and contain more than 125,000 chickens at one time.
Statistics shows that more than 100 agricultural crops in the U.S. are pollinated by bees. In fact, one out of three bites of food people eat is thanks to honeybees. Bees contribute to more than $15 billion worth of crops every year through pollination.
Despite the fact that commercial farming has been in existence since time immemorial, that does not in any way make the industry to be over saturated; commercial farmers are exploring technology to continue to improve cultivation processes and also food preservation process; mechanized farming has indeed increased the tons of food produced by farmers. The fact that there is always a ready market for commercial farming produce makes the business ever green.
Entrepreneurs are encouraged and motivated to start their own commercial farm business simply because it is a profitable business venture, and also it is a business that attracts government supports and funding. More so, acquiring farm land is far cheaper when compared to acquiring land for real estate purposes.
Starting a Commercial Farming Business – Market Feasibility and Research
- Demographics and Psychographics
The demographics and psychographics composition of those who are the end consumer of commercial farm produce and also those who benefits from the business value chain of the agriculture industry is all encompassing; it is far – reaching.
Every household consumes produce from commercial farms be it vegetables, fruits, grains, tubers, fish, eggs, poultries, and cattle et al. So also a large chunk of manufacturing companies depends on commercial farms for some of their raw materials. In essence a commercial farmer should be able to sell his or her farm produce to as many people as possible.
- List of Niche Ideas within the Commercial Farming Industry
There are several areas an entrepreneur who is looking towards starting a commercial farm can specialize in and as a matter of fact, it is easier for a commercial farmer to combine two or more niches especially if they have the resources and trainings.
These are some of the available niche ideas within the commercial farms industry;
- Cash Crop Cultivation (Tobacco, Coffee, Cotton, Rubber et al)
- Crops Cultivation (Vegetable, Grains, Tubers et al)
- Fruits Plantation
- Poultry Farming
- Animal Husbandry (Cattle Ranch, Dairy Farms, Pigs Farming, Grass cutter Farming)
- Fish Farming
- Bee Farming
The Level of Competition in the Agriculture Industry
It is easier to find entrepreneur flocking towards an industry that is known to generate consistent income which is why there are more commercial farmers in the United States of America and of course in most parts of the world.
For example, Statistics has it that there were 2.2 million farms in the United States of America, covering an area of 922 million acres. These goes to show that there are appreciable numbers of farmers in the United States of America but that does not mean that there is stiffer competition in the industry.
As a matter of fact, entrepreneurs are encouraged by the government to embrace commercial farming. This is so because part of the success of any nation is her ability to cultivate her own food and also export foods to other nations of the world.
List Of Well – Known Brands in the Agriculture Industry
These are some of the well – known innovative commercial farms brand both in the United States and perhaps the world;
- Sky Greens Farms in Singapore
- The Pasona HQ office building in Tokyo, Japan
- The Roots on the Rooftop in downtown New Orleans
- Vancouver’s Local Garden
- Green Sky Growers in Winter Gardens, Florida
- The Greenhouse Project, New York City
- Sweet Water Organics in Milwaukee, Wisconsin
- Growing Power in Milwaukee, Wisconsin
If your intention of starting a business is to maximize profits and to favorable compete with other players in the industry you intend pitching your business tent, then you should endeavor to go all out to conduct thorough economic analysis. With a thorough economic analysis, you will be able to determine the total amount that is safe for you to invest in the business, and also you will be able to make projections on the profits you are likely going to get from the business.
When it comes to the economic analysis for commercial farm business, you should be guided by the value of farm land in the area you intend starting your commercial farm, the type (niche) of commercial farm you want to start, the size of the farm, the cost of farming equipment, the numbers of employees you intend hiring and of course the market value of the farm produce and the available market.
Is Farming Worth Starting from Scratch or is Buying a Franchise Better?
If you are looking towards starting a commercial farm, then you must be willing to start from the very scratch simply because there are no opportunities to buy a farm franchise. It is fact that you can hardly come across anyone selling a farm franchise. This is so, because the nature of commercial farm business gives room to entrepreneurs who are interested in starting the business to start from the scratch and still build the business to compete with leading farms especially if you have the needed resources.
Possible Threats and Challenges You Will face When Starting a Commercial Farm
Some of the threats and challenges that you are likely going to face when you start your own commercial farm are global economic downturn that can impact negatively on household spending, bad weather cum natural disasters (draughts, epidemics), unfavorable government policies and the arrival of a competitor (a commercial farm that cultivates same crops or rear same animals, birds and fish) within same location. There is hardly anything you can do as regards this threats and challenges other than to be optimistic that things will continue to work for your good.
Starting a Commercial Farming Business – Legal Matter
- Best legal entity to use for a commercial farm
It is important to note that if you are considering starting a commercial farm, then you should ensure that you choose a legal entity that will not only position you to grow the business but also to access support and funding from financial institutions.
When it comes to choosing a legal entity for your commercial farm you have the option of choosing from a sole proprietorship, a general partnership, a limited partnership, an LLC, a “C” corporation, or a “S” corporation. It is important to clearly state that these different forms of legal structure for business has its own advantages and disadvantages; which is why you must weigh your options properly before making your choice on the legal structure to build your commercial farm on.
These are some of the factors you should consider before choosing a legal entity for your commercial farm; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and tax issues. If you take your time to critically study the various legal entities to use for your commercial farm, then you will agree that Limited Liability Company; an LLC is most suitable. You can start your commercial farm as limited liability company (LLC) and in future convert it to a ‘C’ corporation or a ‘S’ corporations especially when you have the plans of going public.
Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your commercial farm so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, stock market, you will enjoy separate tax structure, and you can easily transfer ownership of the farm; you will enjoy flexibility in ownership and in your management structures.
Catchy Business Name ideas for a Commercial Farm Business
- Hawaii Farms
- Sandy Tee Poultry
- Evans Green Farms
- Benny Blanco Organic Farms
- Usborne and Bella Fish Farm
- Henry Marvin and Sons Cattle Ranch
- North Dakota Commercial Farm, Inc.
- Texas Dairy Farm
- Clip and Clock Pig Farm
- Green Life and Agro Allied Incorporated
The Best Insurance Needed for a Commercial Farm
The fact that you can operate your commercial farm as a sole proprietorship business does not meant that you will not have need for basic insurance policy that is expected for a business owner or company in the United States of America. You can talk to your insurance broker and he or she will be able to guide you on the best and most suitable insurance cover that you should buy for your commercial farm business.
Well, these are some of the basic insurance cover that you should consider purchasing if you want to start your own commercial farm business in the United States of America;
- General insurance
- Health (medical) insurance
- Liability insurance
- hazard Insurance
- Workers Compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
Does a Commercial Farm Need Intellectual Property Protection?
On the average, it is safe to state that starting a commercial farm business does not require filing for an intellectual property protection. However, some business owners usually go the extra mile to ensure that everything that emanates from the business is well protect to guide against other competitors taking advantage of their brain child.
For instance, one of the reasons why a commercial farm company would want to file for intellectual property protection is when they are able to come up with their own invention. Other than that, there is no point filing for intellectual property protection.
Does Running a Commercial Farm Require Professional Certification?
Ordinarily, if you decide to start a commercial farm business in the United States, you would not have need for a professional certificate except in situation when you have to handle chemicals (pesticides, insecticides, fertilizers and fumigation et al).
Be that as it may, it is important to note that you might have to undergo specialized training if you want to engage in some core area of specializations in crops cultivation or animal rearing et al.
List of Legal Documents You Need to Run a Commercial Farm
These are some of the basic legal documents that you would need to successfully run a commercial farm business in the United States of America;
- Certificate of Incorporation
- Business License
- Business Plan
- Non – disclosure Agreement
- Employment Agreement (offer letters)
- Operating Agreement
- Insurance Policy
- Employees Handbook
- Contract Document
- Trademark registration for your logo (optional)
- Tax Payer’s ID number.
Writing a Business Plan for Your Commercial Farm
It is a fact that there is hardly business that does not require a business plan. If you are serious about starting a business with the aim of competing and making good profits, then you should ensure that you prepare a business document before investing your hard earned money and time into the business. Besides you will need a good business plan if you are considering starting a commercial farm because it involves huge start – capital especial as it relates to acquiring farm lands and farming equipment
A business plan is like a blue print that is needed to successfully run a business; it is the document that will influence all your business decisions and actions.
The whole idea of writing a business plan is not just for the sake of having a business document in place; but to draft strategies that will help you effectively administer and manage your commercial farm business. Your business plan should cover strategies on how you intend to generate your start – up capital, attract clients and also to expand the scope of your business. These are some of the key components that must not be missing in your business plan.
Other key components that should be included in your business plan are as follow;
Executive summary and your company’s descriptions: This is the section where you are expected to clearly state what your commercial farm business is all about, your company’s corporate culture, your sales and marketing strategies and perhaps what stands you out from your competitors, You are also expected to state your company’s vision statement, mission statement and the areas where you want to cover.
Lastly, other key components that should not be missing in your business plan are your products or service offering, SWOT analysis, marketing and sales analysis / strategies, pricing, costing and financial projection, publicity and advertising strategy, budget and start – up capital generation et al.
You may not have to engage the services of a business consultant to help you write a business plan for your commercial farm business, you can go online to source for business plan template. With the aid of a good business plan template, you can come up with a good business plan document for your commercial farm business. But if you have enough money, you can engage the services of business plan consultants; they are going to help you produce a world class business plan document.
A Detailed Cost Analysis for Starting a Commercial Farm Business
When it comes to calculating the cost of starting a commercial farm, there are some key factors that should serve as a guide. The different niche of commercial farms determines the total cost of setting up the business.
For example, the start – up cost for a fish farm is different from the start – up cost for mechanized crop farming, so also the start – up cost for poultry farming is different from the start – up cost of cattle ranch (dairy farm) et al. As a matter of fact, if you choose to start a mechanized crop farming, then you should be willing to raise huge capital base to start the business. This is so because some cultivation machines / equipment can be pretty expensive.
Basically, you would need to tick most of the item listed below if you want to launch your own commercial farm business in the United States of America;
- The Total Fee for incorporating the Business in United States of America – $750.
- The budget for key insurance policies, permits and business license – $2,500
- The amount needed to acquire / lease a farm land – $50,000
- The amount required for preparing the farm land (for crop cultivation, fish ponds, poultry, fencing et al – $30,000
- The cost for acquiring the required working tools and equipment / machines / tractors et al– $500,000
- The Cost of Launching an official Website – $600
- Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) – $2,000
Going by the report from detailed research and feasibility studies conducted, you will need an average of $250,000 to start a small scale commercial farm business (most likely fish farming or poultry farming) in the United States of America.
If you want to start a medium scale commercial farm business in the United States, you would need nothing less than $500,000. And if your intention is to start a large scale commercial farm business in the United States of America, then you should look towards generating well over a million US dollars as your start – up capital.
- Financing your Commercial Farming Business
No matter how fantastic your business idea might be, if you don’t have the required money to finance the business, the business might not become a reality. Finance is a very important factor when it comes to starting a business such as commercial farming. No doubt raising start – up capital for a business might not come cheap, but it is a task that an entrepreneur must go through.
The first thing to put in place before sourcing for start – up capital for your business is to draft a detailed business plan. With a good business plan, you can easily convince investors to invest in your business. The truth is that no bank can give you a loan if you don’t have a good and workable business plan. Besides, investors will not take you seriously if you don’t have a business plan on ground before launching out to source for start – up capital to finance your business idea.
There are several options when it comes to raising money to finance a start – up business. Some of the options are;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Applying for loan from bank (agriculture bank)
- Pitching your business idea and applying for business grants and seed funding from the government, donor organizations and angel investors
- Sourcing for soft loans from family members and friends.
Choosing a location for your commercial farm requires that you take into consideration the type (niche) of commercial farming you want to stand, the climatic condition of the environment, the soil composition of the location, the availability of manpower, availability of market and of course the laws governing farming activities in the State / locations you intend starting your commercial farm.
For instance, if you are looking towards starting a fish pond especially if you want to rear salmon fish, then you should consider locating your fish farm close to a river or in a riverine area. So also if you are looking towards going into crops cultivation, it will pay you to choose a location that is close to a river; it will reduce the cost of building irrigation. Besides some crops such as rice et al are known to do pretty well when they are cultivated in swampy areas.
So before settling for a location for your commercial farm, you must put all the conditions stated above into proper perspective. As a matter of fact if you choose a good location for your commercial farm, you are likely going to maximize profits from the business; a good location will help you cut cost.
Starting a Commercial Farming Business – Technical & Manpower Details
No doubt, most of the machines, equipment and tools needed to start a commercial farm business can be bought as fairly used and they will serve you for a long time if well managed, maintained and utilized. It is safer and economical to purchase fairly used machines, tools and equipment for a commercial farm business especially if you are low on cash and you are looking towards cutting cost.
These are some of the equipment that you would need to fully launch your commercial farm business;
- Soil cultivator
- Harrow (e.g. Spike harrow, Drag harrow, Disk harrow)
- Stone / Rock / Debris removal implement (e.g. Destoner, Rock windrower / rock rake, Stone picker / picker)
- Broadcast seeder (alternatively: broadcast spreader, fertilizer spreader, or Air seeder)
- Plastic mulch layer
- Potato planter
- Seed drill (e.g. Precision drill)
- Transplanter (e.g. Rice transplanter)
- Sprinkler system irrigation
- Milk machine (bulk tank, milking pipeline et al)
- Wheel Barrow
Basically, the nature of commercial farms does not require an office space; most people that run commercial farms operate directly from their farms. But if you have enough resources, then you may decide to open a small liaison office; a place where administrative jobs will be carried out.
As regards the numbers of employees needed to run a commercial farm business, it varies. For example, a handful of workers can effectively run a fish farm and a poultry; while it will take well over 10 workers to run a standard commercial farm. You would need a farm manager, marketers, tractor drivers and laborers if you are into commercial crop cultivation. Basically their activities will be at its peak during land preparation / planting season and of course during harvest period.
- The Production Process in Commercial Farm Business
The process involve in commercial farming depends on the type (niche) of farming that you want to start. No doubt the production process in fish farming is different from the production process in poultry farming so also the production process for crop cultivation is different from the production process of animal husbandry.
If you are considering venturing into commercial fish farming, then part of what you need to do to get the production process started is to secure a good space, build artificial ponds (it could be water tanks), design an effective water inflow and water outflow process, secure fingerling of the kind of fish you want to rear, secure fish feed supply and then know when to harvest your fish.
If you are looking towards going into commercial crops cultivation, then the process is first securing a farm land that is ideal for the kind of crops you want to cultivate, prepare the land, plant your seeds, water the crops, weed the farm at regular interval, and harvest the crops as at when due.
The process involved in poultry farming and animal husbandry are almost same. The process involves securing a farm land, building cages / fencing the space, bringing in the animals or birds, feeding them and selling them off when they get to maturity stage.
Starting a Commercial Farming Business – The Marketing Plan
- Marketing ideas and strategies for a commercial farm
If you want to generate income for your business, then you must market your products and services. The marketing approach that you should employ should be guided by the type of commercial farming that you are into.
For instance, if you are into the cultivation cash crops, then you should do all that is within your power to market your produce not only in the United States, but also in the international market. The truth is that commercial farmers who are into the cultivation of cash crops make more money when they export their produce.
One thing is certain, if your commercial farm is well located, then customers are likely going to come to your farm to make purchase without any serious marketing efforts from your part. On the average, people that are into commercial farming take their farm produce to farm market to sell them off to buyers.
Here are some tips that you can adopt to market your commercial farm business;
- Introduce your business by sending introductory letters alongside your brochure to stake holders.
- Advertise your commercial farm in agriculture and food related magazines and websites
- List your business on local directories / yellow pages ads
- Attend related agriculture / farming expos, seminars, and business fairs et al
- Leverage on the internet to promote your commercial farm business
- Adopt direct marketing approach
- Employ the use of word of mouth marketing (referrals)
Factors That Will Help You Get the Right product pricing for your Farm Produce
Some of the factors that will help you sell your farm produce at the right price that will guarantee that you make profits is dependent on your strategy while some of the factors are beyond your control. For example, if the climatic condition is unfavorable and if there are natural disasters in the location where you have your commercial farm, then it will directly affect the prices of your farm produce.
Over and above, if you want to get the right pricing for your farm produce, then you should ensure that you choose a good location for commercial farm, choose a good breed / seeds that will guarantee bountiful harvest, cut the cost of running your farm to the barest minimum and of course try as much as possible to attract buyers to your farm as against taking your farm produce to the market to source for buyers; with this, you would have successfully eliminate the cost of transporting the goods to the market and other logistics.
Possible Competitive Strategies for Winning Competitors in the Agriculture Industry
There is hardly any business that you are not going to face some level of competition and all you have to do is to come up with strategies that will give you edge over your competitors in the same industry or line of business.
If you are running a commercial farm, then the type of commercial farm you are running will inform the strategies you are to adopt to help you stay ahead of your competitors. If you are into crop cultivation, you can choose to offer free transportation of the farm produce purchased by your customers (for those who purchase a reasonable amount) from the farm directly to wherever they want you to deliver it to. This will help you keep your big clients. You can also give preferential treatment to your big – time customers by ensuring that they have the options to buy first whenever you are harvesting your farm produce.
Possible Ways to Increase Customer Retention for Commercial Farm Business
One of the surest ways of increasing customer retention in your business is to ensure that you treat all your customers with respect and courtesy. If you continue to meet or surpass your customers’ expectations whenever they do business with you, then you will not have to struggle to generate repeated business from them. The number one reason why people look for alternatives is when their needs are not met or when they aren’t getting value for their money.
Strategies Needed to boost your brand awareness and Create a Corporate identity for your Commercial Farm Business
It is important to create strategies that will help you boost your brand awareness and to create a corporate identity for your commercial farm business. This is very important especially if you are into the commercial cultivation of cash crops. If you are into the cultivation of cash crops, your customers will not be restricted to people in the United States, but people from other countries of the world.
Below are the platforms you can leverage on to boost your commercial farm brand and to promote and advertise your business;
- Encourage your loyal customers to help with Word of Mouth mode of advertisement (referrals)
- Advertise your commercial farm business in relevant magazines (agriculture and food related magazines), local newspaper, local TV stations and local radio station
- Promote your commercial farm business online via your official website
- List your commercial farm business on local directories (yellow pages ads)
- Leverage on the internet and social media platforms like; Instagram, Google+, LinkedIn, Badoo, Facebook , twitter, et al to promote your commercial farm business
- Employ direct coupon mailing approach to market your commercial farm
- Distribute your fliers and handbills in target areas (farm markets) at regular interval
Creating a Suppliers/Distribution Network for your Commercial Farm
One of the major challenges of commercial farmers is the ability to sell their farm produce at the right time. There are loads of farmers whose farm produce get spoilt because of their inability to sell the produce when they become ripe and are due for harvest.
For example, if you are into the cultivation of vegetables or fruits, then you should ensure that you network with hotels and restaurants so as to supply them vegetable at a competitive price. And if you are into the commercial cultivation of fruits, it will pay you to have a robust network of fruit juice companies that you can readily supply assorted fruits at competitive prices.
The hallmark of any business owner especially those who into the production of goods is the ability to easily supply their products to a ready market. So what you need to do as a commercial farmer is to ensure that you secure a rich suppliers / distribution network.
- Tips for Running your Commercial Farm Successfully
Irrespective of the kind of business you run, your ability to get all the members of your team to be on same page at all times is one of the keys you need to successfully run the business.
As the chief executive officer or owner of a commercial farm, it is you responsibility to give direction to the business. Part of what you need to do is to ensure that you create time for meetings with your workforce; a time where challenges, feedbacks, projections and relevant issues are discussed. The meetings could be daily, once in a week, twice a week or once in a month. The bottom line is that there should be consistent meetings in your organization.
Carrying out appraisals on a regular basis and training your employees will help you run your organization effectively.
Lastly, you should keep your doors open for suggestions from members of your team and your customers. It is very important to reward excellent performance in your organization; it will go a long way to encourage healthy competition in your organization.