Business plan or strategic plan—which is right for your farm business?

Business plan or strategic plan—which is right for your farm business?

Many years ago, I was president of a marketing services division for a Fortune 500 company. And every year I had to create a strategic plan that would have made Tolstoy proud. Always in excess of 150 pages, chock-full of financial recaps and projections, capital allocation plans, market assessments, key performance goals and indicators, human resource plans, and the like.

It was grueling.

A few pages were helpful to position and propel our division. But honestly, 98% of them were CYA pages designed to impress the board of directors.

Later, I rebelled against big business and quit that job. I wanted to start my own business. A business that I bootstrap financed with a wallet full of credit cards.

It had to work—I had everything riding on it. Just as you do if you’re a business owner.

So I needed to make clear strategic choices and focus on the factors most critical to our success. But only on those factors.

Since there was no one to impress at my one-person start-up, I ditched what I had learned and created a far simpler strategic planning process.

And it worked.

Five years later we had 450 employees, offices in six countries, and Inc. Magazine named us the 130th fastest growing company in the United States.

Later, I applied the same strategic lessons to starting and growing our farm business. I’d like to share a few lessons I’ve learned on how to make strategic choices for any small business.

  1. A business plan is not a strategic plan. When someone dreams of starting a business, farm, or otherwise, they often search for a business planning template. Lenders and investors always request a business plan. It’s the document that explains the “who and what” of a business. Who are the founders, what are the products, etc. And boilerplate business plans ask you to list your competitors and so on. But that’s really the problem with business plans—they’re fill-in-the-blank. They really don’t help an entrepreneur to make strategic choices. By contrast, a strategic plan is the “how, why, and when” of a business. Done properly, a strategic plan requires the owner to make clear strategic choices. That’s important in any business, but it may be more important in farming than any industry I’ve seen. There are just so many product, enterprise, and go-to-market choices in farming. If choices aren’t made clearly and decisively, the farm business can suffer for years.
  2. Simplify. There may be nothing more critical to the success of a business than choosing a clear strategy and executing well. But that doesn’t mean it has to be complicated—or 150 pages. In fact, I argue that creating a plan on one-page is a better approach. One thing I’ve learned about starting anything is that it’s important to focus. It makes sense that getting your plan on one-page makes it easier to focus than scrolling through 50 or more pages. So get the essence of your entire business strategy on one page so you can see it, assess it, and revise as needed.
  3. Get clear on your why – In business planning, there is a lot of talk (and confusion) about vision, mission, and core values. And it’s okay for others to be confused. But when you own a business you must be clear on where you’re going, why you’re going there, and your non-negotiable values. That vision, mission, and core values will inspire others to help you achieve your vision. “Others” could be family members, apprentices, employees, lenders, or advisors. And it includes your community and customers. Trust me—you need a team to build an impactful business. And you’re their tribe leader. But they’ll want to know where they’re going and why. Invest the energy to nail your vision, mission, and core values so you can attract your tribe.
  4. Choose your competitive advantage – I cover this issue in great detail in my book The 1-Page Strategic Plan. But the gist is this: you need to either commit to being a low-cost producer or a value-added producer. Either can work. Getting caught between those two is a business death trap. In the farming world, this means it’s hard to succeed by selling low-price chickens and also offer value-added services such as shipping.
  5. Define your top critical success factors – There are lots of little things that impact business success. But it’s not the little things that keep you from falling asleep. It’s the big things. These are the critical success factors to define. For example, a critical success factor could be rapidly growing your email list. Or finding and negotiating an agreement with a USDA processor. Or securing farm liability insurance and buffering your personal assets. There are many possible critical success factors, unique to each business and owner. But these are the things that you worry about. Instead of worrying about them, create a plan to address them.
  6. Create key performance goals (KPGs) – KPGs differ from key performance indicators—those are metrics that relate to the goals. You’ll want to create a KPG for each critical success factor. This allows you to develop a plan to address each worry you have. And when you do that, my goodness, will you feel liberated. There’s nothing better than taking something that worries the hell out of you and creating an actionable plan for addressing that concern. That’s what a SMART KPG does. You stop worrying. You start acting. And you move in the direction of your vision.
  7. Actually USE your strategic plan – The problem with those boilerplate business plans is that no one looks at them once completed. They get filed away. Don’t misunderstand me—I’ve created those plans too. I used to borrow against lines of credit in the millions of dollars each month. Those lenders required business plans. And I gave them what they wanted. And then filed it away, never to look at it again. Why? Because, again, it was a CYA document for the bank. It had nothing to do with how I would successfully operate my business. I needed a clear, 1-Page Strategic Plan for that. But completing that initial plan is just the start. Things change in business all the time. Opportunities arise. We fail to execute the way we expect. Crises emerge. These are opportunities to escape our business for a moment—to sit, reflect, and plan. So whatever approach you use for planning, keep your plan alive. Make your plan a tool you use frequently, just as you would, oh, I don’t know—a wheel hoe.

Some people make business look easy. I’m sure you’ve seen this. Whether it’s another farm or an entrepreneur in another industry, some people just seem to have a knack for business. Their business prospers and we wonder, “why them and not me?

I was speaking with a friend recently who has created a remarkable farm business. His farm has passed $30 million in annual sales selling all sorts of pastured protein. And I’ve followed their story for many years, watching them take risks and make big strategic bets. Yet, this farmer doesn’t think of himself as a strategist. He just “does it.” And he does it well.

Honestly, most people aren’t like that.

Not everyone is an intuitive and decisive decision-maker or an innately strong strategic thinker. The rest of us need to follow a process to help us. A process, guide, or plan can give us the confidence we need to make better decisions.

The good news is that there are tools out there to help. And no, I’m not just talking about my book on the subject. You can find a mentor. And there are other books on strategic planning.

The important lesson is to simplify and clarify your strategy. To succinctly describe how your business will succeed.

“How” is the essence of strategy. The word is simple, short, and easy to understand. And that’s exactly what your strategic plan should be.

10 Business Rules for Starting a Successful Farm

10 Business Rules for Starting a Successful Farm

It seems that more and more people share the dream of starting a sustainable family farm. It’s a sentiment that I understand very well, since back in 2006, my wife, Liz, and I opted out of the corporate world to start our own sustainable livestock farm.

Starting and running that farm, which grew into an award-winning artisan cheese business, is my fondest business memory. Serving the local food community and reconnecting heritage breed animals to neglected farmland was, and is a worthy pursuit, and it’s one that a growing number of people are drawn to.

If you’re one of those people, I “get it”, and encourage you to follow your dream. But before you jump ship to do that let me offer some guidelines that may help you create a family farm that succeeds in every important way.

Now, these guidelines, which I’ll call 10 Business Rules for Starting a Successful Farm, are based on my experience. Others may have their own rules, and as the title suggests, these are business rules. Not rules about growing or animal husbandry.

Still, through my farm marketing academy and my podcast, I speak with lots of family farmers who seem to be struggling. And when I look at their situations it’s understandable, as they’ve ignored several of these rules.

If you’re going to farm you should plan to succeed.

With that goal in mind here are my 10 rules for starting a successful farm business.

Rule #1 — Your Farm is a Business, Not a Hobby

There are a number of ways that people get into farming. Some folks are fortunate enough to inherit the land and a family farming tradition. For those folks, farming is in their DNA and they know it’s a farming business, not a weekend hobby.

Others get into farming by making a conscious choice to leave a career and start or acquire a farm. I’ve seen both sides of that fence, having left the world of B2B marketing to start a livestock farm. I also saw the acquisition side when I sold that farm business to a professional couple who wanted into that world.

But many people, if not most, get into small-scale farming more slowly. They start modestly…a chicken or two here, a raised bed or two there, and produce a bit more food than they can consume.

So they figure, why not sell it? First to neighbors, then to a local market. You know…it’s the, “if you build it they will come mentality.”

Before they know it they’re farming, without ever having created a business strategy to succeed with a farm business. A few years go by and they expand their flock of chickens. Their days are busy pulling chicken tractors, cleaning eggs, seeding, planting, and harvesting crops. Then they rush to a Saturday market to sell what they can, bring home what they can’t, and keep doing the same thing.

And they learn a hard truth — if you build it, they WON’T come.

Instead, you MUST attract them. That’s called marketing.

I know a lot of people like this. Many I consider friends. They never stop and assess if what they’re doing is the right business model because they never created a business plan in the first place. They just started with a hobby and keep doing the same thing.

That’s a mistake, so don’t do it.

If you want a hobby, that’s fine. That’s called a homestead, if anything, and you can look elsewhere for whatever income you want.

But here’s the thing. If you want the farm to produce your income, it’s a business. So you must treat it as such, which leads me to rule #2.

Rule #2 — Nail Down Your Competitive Advantage Before You Start

One of the reasons that so many people, at least on the livestock side, start with chickens is because they view it as low risk. After all, a few hens don’t cost much so it’s easy to start producing eggs for others. And chicken tractors aren’t expensive to build so it’s not that big a deal to get into the pastured poultry meat business, though you do have to figure out the butchering and processing side.

But here’s the thing. If the business is easy to get into for you it’s easy for someone else to do the same. That means the barriers to entry are low. Generally speaking, that’s not good.

So how will you achieve a competitive advantage?

Now don’t get me wrong…you can get an advantage in that business. But, if the barriers to entry are low, your advantage has to come from either:

  1. proximity to markets,
  2. being a low-cost producer or,
  3. because you’ve achieved great brand recognition. Or a combination of those factors.

There are a number of ways you can gain an advantage regardless of what specific farming strategy you choose, but the point I’m making is this: nail down what your competitive advantage will be before you start. Then, have a strategic reason for every farm enterprise you operate and every farm decision you make.

In other words, don’t just ramp up your meat chicken production next year because you sold out this year. If your motive is profit (and it should be because this is a business, right?) then you have to assess what the most profitable farm enterprise is for you and your market.

For example, years ago we raised heritage turkeys for Thanksgiving. We’d raise a few hundred per year and sell them to customers in and around Atlanta. We always sold out at $7.50 /lb, and that was in 2009–2010. But, although we sold out, it wasn’t the easiest sale since grocery stores pretty much give away turkeys at Thanksgiving.

And here’s the thing — -even at that price, it wasn’t a profitable business. A fact compounded by the downside of only getting paid once a year after many months of fronting cash for feed, labor, and utilities.

Sure, it was a complementary enterprise to our other meat products, but the point is that raising heritage turkeys did nothing positive for our bottom line, and removing the enterprise didn’t risk our customers in other areas.

So why not focus our efforts elsewhere?

We did just that, and that’s what led us to start a Grade-A raw milk dairy and farmstead cheese business. That business was not only much more lucrative it was far easier to differentiate ourselves and have competitive uniqueness. After all, the barriers to entry in that business are substantial, since it requires land, livestock, infrastructure, and, well…you gotta know how to make good cheese.

But there are other ways to stand out as well, whether it’s offering charcuterie and sausages instead of half hogs, or offering glamorous farm stays instead of simple farm tours.

Just make sure you can answer this simple question:

my farm’s defensible competitive advantage is ____________________

Once you know what that’s going to be, it’s time to think about the market, so here’s farm rule # 3.

Rule #3 — Select the Best “Go to Market” Strategy Before You Start

If you have a farm product to sell there are a lot of ways to sell it, right? Particularly in this age of e-commerce and drone shipments.

But the fundamental questions you have to CLEARLY answer are, who are you going to sell to and how are you going to reach them? In other words, you have to define your go-to-market plan.

With direct-market farming, there are several ways to go to market, including:

  1. farmers markets,
  2. farm stands or on-farm sales,
  3. CSA or community-supported agriculture,
  4. metropolitan buying clubs (MBC’s), or delivering to groups of farm customers,
  5. selling to restaurants,
  6. selling to retailers, and
  7. wholesale selling to distributors.

Of course, you can mix and match these, or evolve over time. In fact, I’ve sold farm products using each of these 7 go-to-market approaches.

But the strategy that’s best for me may be different than what’s best for you because each of these strategies has its own pros and cons.

As members of the Small Farm Nation Academy know I don’t believe in the notion of an “ideal” customer, because I don’t know of a single successful farmer who has started that way. So I don’t recommend trying to figure out who your mythical ideal customer is.

What you will have to determine is how will you find and reach target customer groups who will buy YOUR farm products.

If your chosen competitive advantage is dependent on the buyers having a relationship with you, that requires direct marketing to your customers, meaning you’ll be selling either at markets, on-farm, or via CSA or MBC deliveries.

And make no mistake—marketing will eat up half of your time in running your farm business, as you create and manage your website, build your brand, build your email list and do email marketing, manage orders and payments and deal with customer service issues.

Conversely, those marketing tasks are greatly minimized when selling through distributors, meaning that may be an easier path for you. But, you also get all the full retail price when selling directly, and only a fraction of that when relying on distributors.

So, create your one-page strategic plan, choose your competitive advantage and then decide the best way to go to market to achieve that advantage.

Rule #4 — Avoid Debt at (Almost) All Costs

So, I say “almost”, because debt can be used intelligently to gain leverage. But that doesn’t mean most people use debt intelligently.

Look—your farm is a business, and businesses have balance sheets. So let’s start with that.

Balance sheets are divided into assets and liabilities. Assets-good, liabilities-bad, right? Because liabilities are something you owe…they are debts you have to settle. So you better be sure you have the ability to settle it, or the creditor will come after your other assets. Like your land and house, if you don’t set your farm up correctly.

In fact, one of the members of the Small Farm Nation Academy recently posted in the forum how that exact scenario happened to them. But, if your business has the income to support the debt, then some debt may make sense.

For instance, I used to have a $3million line of credit with a bank to fund payroll and working capital until I received payments from customers, with the customer receivables being used as collateral. So, it made sense in that case.

But would I use debt to buy a tractor to make my small farm life easier? No way! Because I can’t quantify the income I’ll generate as a result of that purchase to service that debt. So no way. I’ll get that tractor when I can afford to buy it. With cash.

There are many ways you can fund your farm business, from grants to savings and family help, to upfront payments via CSA programs. Just remember…debt ruins far more farms than drought, and there’s enough to worry about in farming.

Design your farm business to run without debt so you don’t add that level of stress.

Rule #5 — Bridge the Gap Between What the Land Needs and What the Market Needs

This is both a business and an ecological rule. And it’s important because we often get caught up in our ideology, or our fantasies of what we want to do on the farm. That’s fine—if you have a hobby farm. But the minute you depend on it for income, it’s a business, and you gotta let go of those fantasies.

That doesn’t mean you can’t match your primary business objective—to earn attractive profits—with your ecological values and land resources.

For instance, I never set out to be a pig farmer. But my first piece of rural property was comprised of about 80 acres of pasture land and over 30 acres of hardwood forest. Sure, I put cows on pasture for beef and milk to use the grass. In fact, I raised sheep, turkeys, and tons of chickens out on pasture with the cows, stacking multiple enterprises on that resource. But what could I do to make the woodlot productive?

The answer was pigs, and it wasn’t long before I had over 100 Ossabaw Island pigs scampering through the forests. We sold them early on as retail cuts, but later on as half pigs, selling about 6 per month to our customers who wanted that very rare and very special pork.

So that’s an example of matching the land’s resources to the market’s demand. Demand, of course, that we had to create. I mean, no one actually ever came to us and said, hey, will you raise me an Ossabaw pig.

But that’s what marketing is all about, creating demand.

Beyond pigs in the woods and multiple species on pasture, we recognized another opportunity to bridge the gap between what the land offered and the market needed. And that was agritourism. So we offered lots of events over the years, ranging from our monthly farm tours, where up to 100 people would visit, to farm dinners with James Beard award-winning chefs, to classes on charcuterie, hog, and chicken butchering and even cheese making. And I led many farm business classes, including farm schools and classes on starting an artisan cheese business.

Speaking of artisan cheese, I certainly never intended to become a cheesemaker. But that happened because the land we purchased had an old milking parlor. It was run down and gutted…but the walls were there. So we invested in fixing it up, began milking cows, and learned how to make cheese pretty well. Well enough to win awards at the United States Cheese Championship and at the American Cheese Society’s annual competition anyway.

So there are lots of ways to match the land resources to the market opportunities. Just think about the best way to do that without using debt, and you’ll be on your way.

Now, let’s move on to rule #6.

Rule #6 — Balance Profit With Passion

Okay, so we’re talking about a business, right? Not a hobby. So we must measure EVERYTHING that impacts profitability. Everything.

It’s not about what animals are cute or what garden tasks you like to do. It’s about earning money. Unashamedly! And making enough money, both in terms of profit margin and in terms of steady cash flow.

Often I see or hear people ask this silly question. “What should I charge for my beef/beets/chicken/soap”…you name it. Silly because that’s not a question business owners ask others. Do you think Apple is asking Samsung what to charge for the new iPhone?

The answer of what to charge is simple, and is derived from three data points:

  1. what is your cost of production,
  2. what is your required profit margin, and
  3. what will the market bear.

Only you will know those data points. Sure, others might have an opinion of what the market will bear, but their answer is meaningless.

For one reason, you can create a market for anything. Do you think we were all sitting around a few years ago thinking we’d be paying Apple $1,000 for a cell phone? Of course not, and who knows where we found the money to do so. But Apple created the market for it just as you can for your farm products. Just as we did for Ossabaw pork on my farm and as other farmers have for their own unique products.

Also, others won’t know what profit margins you require. For instance, if you have debt to service your margins must accommodate that.

And others certainly don’t know your cost of production. Nor do they know your specific target market and its demographics.

The point is, measure everything that affects profit. Because you absolutely need to know your cost of production, down to the nickel. What it costs you, ALL IN, to produce that chicken, carrot, or cheese curd.

Rule #7 — Know the Difference Between Profit Margins and Cash Flow

If running a business is new to you, this next statement may sound strange. But there are lots of ways a business with decent profit margins can go out of business. Or file for bankruptcy. It may sound counter-intuitive, but it’s true.

There have been plenty of businesses that had attractive profit margins but poor cash flow management. They went bankrupt because they couldn’t come up with the cash to service the debt.

And, there have been even more companies that grew too fast, so they went under.

Sounds crazy, right?

But think of it this way. Let’s say you start a pastured poultry business with a few hundred heritage breed chicks. You grow ’em out, butcher and sell them and get rave reviews.

Then, a local retailer catches wind and wants to carry your birds. And they want you to grow 150 per week for them. The heritage breeds take 12 weeks to grow out and need 3 weeks in the brooder. So, you use your carpentry skills to expand the brooder, but you still need to order the chicks. Since it takes 12 weeks to grow out, you’ll have ordered 1,800 chicks before the first chick is processed. If the birds cost you $2 each, all in, that’s $3,600 you’re out, just for the birds. And that’s on the low side, believe me.

Then there’s the organic feed for the chicks on top of that, not to mention the additional chicken tractors, feeders, and waterers you’ll need to build or buy, which, no matter how handy you are, will cost you more.

Next, you have to pay to process your first batch of birds. Even if you do it on farm, you had to buy the scalder, plucker, knives, tables, chill tank, and bags. And all the while you’re providing the labor as well.

So you’re no doubt out well over $5,000…more likely $10,000 before you deliver that first order of 150 chicks. When you do, the retailer is thrilled, and you are too. Until you find out their payment terms are net-45. So you have to wait another 45 days to get paid.

By then you’re well over ten grand in the hole and sinking fast.

This simple example is how businesses, big and small, get crushed.

Believe me, I know. My first business started with just me working at home. Five years later I had 450 employees in six countries, so I know what that kind of growth is like. Exhiliarating? Yes. Scary and dangerous? You bet.

And there are all kinds of other events that can kill your farm business, such as uninsured loss.

On my farm, we had three 28’ walk-in freezers for meat, cheese, and eggs. What if they failed and we had no ability to store the meat? What about our refrigerated cheese caves that housed well over $100,000 worth of cheese? If those fail and you’re not insured, you’re done for.

Same thing with livestock that’s stolen or destroyed, flood or fire damage, and so on. In all these cases, one old saying has stood the test of time for a very good reason. And that saying is this: CASH IS KING

Yet another way you can be profitable and go out of business is that you run into legal problems, perhaps from a lawsuit. And that’s a perfect segue into rule #8.

Rule #8 — Protect Your Assets

I’ve said this a bunch now, so I’ll say it again. This is a business, right? So, does any real business NOT operate as a corporation? Of course not. So form an LLC at a minimum to provide some separation of business and personal assets.

Now I’m not a CPA or lawyer so I’m not giving legal advice. See your own experts for that. But, in any business, you gotta protect your personal assets, especially in our litigious society where a person can sue (and win millions) just for having hot coffee spilled on them.

Beyond legal structure, be sure to get sufficient insurance to protect you. That means a farm policy to insure against loss of equipment, infrastructure, and livestock.

But more important, it means a product liability policy. That’s super important if you’re producing food like, say, cheese.

Keep in mind that product liability insurance likely won’t save you if you’re negligent. I mean, you gotta make the cheese the right way following good manufacturing processes, and so on. Ditto with processing chickens, raw milk, or any other farm product.

So protect your assets by forming the legal structure recommended by your advisors, and by getting insurance. Now, onto, I’m sure, my most controversial rule on this list.

Rule #9 — Quit Your Day Job

Yep, there it is. I said it. Close the door behind you, burn the bridge, and quit your day job. If you want to have a successful farm business—or any business—get rid of your crutches. Go out and do it!

I know there are many readers who will think, “No! That’s crazy! Don’t take the leap until you know it’s working!”

Okay, that’s fine if that’s what you wanna do. But I’m willing to bet that if you think that way you’ll always be stuck in your day job.

Now, I am NOT telling you to quit your job and go start a farm because I don’t know you or your situation. What I am saying is if you are determined to have a farm business, then—yes—go out and build one. You want to build a great farm business and it will take your full-time energy, passion, and commitment to achieve that.

Holding on to a separate job creates two problems for you.

First, that income (and yes, health care) from the job will always be tugging you as a safety net, saying things like, “Hey man, you can always come back to the rat race. It’s clean in here and you get a paycheck. Stop doing that dirty farm work.

The second problem is that it takes away a lot of your attention, what with the commute, the stress, and the actual day job you’ll have to do. That’s consuming energy that could go into your building your farm business.

And, believe me, this isn’t a case of me not practicing what I preach.

I jumped ship as president of a division of a Fortune 500 company at the height of my career to start my own business. Suddenly I found myself without a job and used 15 credit cards to run up $120K in debt to finance the launch of my first business. So, yeah—I broke that debt rule I mentioned earlier. I did it because I believed I’d sell clients quickly and service the debt, which I did, so I paid off the debt the first year.

But one reason I succeeded was that I burned the bridges behind me. So with no place to run back to I only had one direction to run—forward. I’ve been running that way ever since.

Bottom line? You’re much more likely to build a successful farm business if you HAVE TO.

And now, here we are, the final rule.

Rule #10 — Start Marketing Before You Start Farming

So, if the last rule seems crazy, this one may as well. I mean, how can you start marketing before you start farming? Well, you can, and that’s exactly what we did, as we started blogging and marketing over a year before we had our first product.

Now, does that make you nervous? As in, you’re afraid to market and don’t know where or how to begin? Are you thinking, ”Hey, I don’t even have a farm yet. No products, no nothing. So I have nothing to share!

Well, that’s not true, is it? Because you have a story to share, even if you’re just taking your first steps. And the reason you’re taking..or contemplating those steps is a very important part of your story. That’s the part that people will care about and connect with!

So you have an opportunity right now to be open — to be vulnerable, and connect with people on a very emotional level.

How?

By sharing the truth. Your dreams about the life you want to create. Your vision for the change you represent, which could be for the animals, the environment, your community or even personal health reasons. Or all of them.

And be honest about your fears, because we all have fears. If you’re worried that you don’t know how to farm, or how to run a business, then say so. And that’s all very powerful stuff that connects on an emotional level with an audience in a way that big brands simply can’t match.

So, you don’t have to worry about pushing product, or spouting features and benefits of what you have. You simply get to share your story and build relationships. And that is at the core of effective farm marketing.

Now, here are five Benefits of marketing your farm business before you start farming.

  1. You’ll build a loyal tribe of supporters because you’re allowing others to live vicariously through you.
  2. If you do it correctly, you’ll get a head start on building your most important marketing asset: your email list.
  3. By creating one blog post per week, for example, you’ll get a huge head start on search engine optimization (SEO) by marketing early.
  4. You’ll gain the potential for media exposure by sharing your plans.
  5. You’ll have access to free and valuable market research and find out what folks seem to be interested in, and what they’re not.

Here’s a podcast episode that more fully explains each of these benefits and how to start marketing your farm early.

Okay, so let’s recap my 10 business rules for starting a successful farm business

  1. Your Farm is a Business, Not a Hobby
  2. Nail Your Competitive Advantage Before You Start
  3. Select the Best “Go to Market” Strategy Before You Start
  4. Avoid Debt at (Almost) All Costs
  5. Bridge the Gap Between What the Land Needs and What the Market Needs
  6. Balance Passion with Profit
  7. Know the Difference Between Profit Margins and Cash Flow
  8. Protect Your Assets
  9. Quit Your Day Job
  10. Start Marketing Before You Start Farming

While farming may not be the most financially rewarding career, I can think of few careers that rival its rewards in other areas. The ability to work with your hands. The freedom to work on your land and close to nature. The chance to work alongside children and other family members, and the opportunity to help reconnect consumers with the origins of their food.

And, of course, you’ll eat more nutritiously yourself, with grass-fed meats, fresh organic vegetables and, perhaps, creamy raw milk gracing your table.

So, yes, farm life is appealing on many levels, but if you plan on a farm supporting you financially, you must plan for that financial success. Adhering to these business rules will get you started down the right path.

Multi-Species Rotational Grazing to Maximize Food and Income, Part 2

Multi-Species Rotational Grazing to Maximize Food and Income, Part 2

This is part two of a two-part series on rotational grazing. In part one I made the case for multi-species rotational grazing and described the benefits of it. 

What is Multi-Species Rotational Grazing?

Rotational grazing is simply moving the animals from one paddock to another to allow the previously grazed paddock to recover. In that way, the grazed plants, such as the clover, can grow sufficiently until it can be grazed again. The time for this rest varies greatly, depending on local climatic conditions, time of the year, and forage in question but is often anywhere from three weeks to two months. Very intensive rotational grazing, or mob grazing, is when a large number of animals are put in a small paddock for a very brief period of time (hours). While this can be an effective tool today, you will unlikely practice such an intensive method in a TEOTWAWKI scenario.

Very intensive rotational grazing, or mob grazing, is when a large number of animals are put in a small paddock for a very brief period of time (hours). While this can be an effective tool today, you will unlikely practice such an intensive method in a TEOTWAWKI scenario.

In our model, we have a four-strand, high-tensile electric fence around the perimeter of the grazing land, powered by a solar fence charger. This is a permanent fence with metal T-posts that is supported on the corners with six-inch wood posts. We find that the easiest way to rotationally graze the animals without having permanent paddocks is to strip graze. We achieve this by using plastic step-in posts that section off a slim strip of the paddock. When that paddock has been grazed 75{f08661e966cfbba2afdc219076bf0ce6e15467ec087bdfb769bbeccdbc1c77ea}, we move the herd into the next strip and allow the previous section to recover.

We find that the easiest way to rotationally graze the animals without having permanent paddocks is to strip graze. We achieve this by using plastic step-in posts that section off a slim strip of the paddock. When that paddock has been grazed 75{f08661e966cfbba2afdc219076bf0ce6e15467ec087bdfb769bbeccdbc1c77ea}, we move the herd into the next strip and allow the previous section to recover.

Unfortunately, as many readers may realize, parasites are a significant and ongoing concern with sheep and goats. Regardless of the livestock species, worm eggs are deposited in the animal’s manure, which then incubates the egg until it hatches. If the species that deposited the manure is allowed to graze nearby when it hatches, it will ingest the parasite. Repeated exposure of this kind will result in a build-up of parasites.

Rotational grazing is also a very effective method of parasite control since animals are moved away from their manure deposits, which incubate their species-specific parasites. Further, when they return to graze, the plant growth will be taller and since parasites tend to stay on the lower parts of the plant, the risk of parasite contraction is further reduced.

This will become a critical issue in a TEOTWAWKI scenario, as dewormers and parasite controls will be not only cost-prohibitive but likely unavailable. Even if they are available, if you procure them, you inadvertently advertise that you have the animals, which may not be wise. Instead, choose animals that have some resistance to parasites, such as Katahdin sheep, and practice rotational grazing.

One alternative to rotational grazing for parasite control is the leader-follower method. In this model, species are grazed separately in paddocks and follow one another to clean up what the previous species chose to not graze without any fear of parasite contraction. We do not prefer this model, because it is more time and labor-consuming, and it requires more fencing. Some do prefer it, however, and it can be an effective tool.

I would like to stress that this concept of rotational grazing is VERY important if you hope to:

  1. maximize production on your land,
  2. improve grass coverage, and
  3. control parasites.

Failure to use this management tool will likely result in an ever-increasing population of weeds and browse, which may be fine if you hope to raise only goats and sheep, but meat production per acre will be significantly reduced, as you will not be able to graze as many cows and you will definitely experience livestock loss due to parasite load.

Fencing, Protection, and Operational Security

Maintaining control of your livestock is critical, both now and in a TEOTWAWKI environment. Frankly, keeping cows contained is pretty straightforward and can often be achieved with a single strand electric fence.

Sheep and goats, on the other hand, are notorious for performing escape acts worthy of a Houdini award. If you’re fortunate enough to have a field fence (or woven wire) around your property, that will certainly suffice to keep your livestock in and most predators out.

However, most woven wire is 4” x 6” or thereabouts, meaning that goats can easily stick their heads through, get caught by the horns, and become a coyote’s drive-by fast food meal. Of course, you can dehorn goats to eliminate this threat, but it doesn’t change the fact that field fencing is more expensive and not suitable for some terrain.

Goats and sheep can be confined with electric fencing, particularly with electrified netting, but this is not only laborious, it is difficult to maintain a high electric charge with a solar charger on the netting. Moreover, in some areas (such as ours), it is VERY difficult to get electric netting posts into the hard ground when summer rains are scarce. The result is many broken posts.

Another approach is to use six to eight strands of high tensile to confine goats and sheep, and this works if the fence is maintained, but the model we arrived at is much simpler and less expensive. After two seasons of fighting a losing battle with the sheep breaking out in a leader-follower system, we simply put them in a permanent herd with cows, goats, and donkeys. It took a short period of time, but the result was that the mixed clan became a single herd that relied on each other.

Goats and sheep often played the role of an early warning system and retreated to the herd to present a formidable challenge to any would-be predator. As a result, while the sheep and goats sometimes venture a little ways off, it is only that…a little ways. At the sign of any trouble, they retreat to the herd with the larger cows. In the end, we found that the fencing wasn’t the solution; the herd mentality was. Getting the sheep and goats to be part of the cow herd solved this problem and is another reason we prefer rotational grazing to the leader-follower model.

Of course, an additional livestock protection tool is livestock guardian dogs (LGD’s), such as Great Pyrenees or Anatolian Shepherds. Many homesteaders use this approach, and these indeed normally keep coyotes and other predators away.

In a grid-down situation, you’ll be grateful for a solar charger

However, they should be used with caution in a grid-down situation, as their greatest weapon (constant night barking) will surely call attention to your retreat. Now, this could also be desirable if you want the menacing growl of the LGD’s to deter invaders, but if that is your aim you may be better off with a German Shepherd or the like just inside your yard or house.

To our way of thinking, we’d like to preserve operational security (OPSEC) by keeping animals protected AND quiet. To achieve this, we use donkeys as very effective guardian animals, instead of dogs. They are part of the herd, just like all the others, and our two donkeys often stand quietly facing opposite directions, ready to stomp any invader. Also, unlike LGD’s, donkeys are inexpensive (sometimes free on Craigslist) to purchase and FREE to feed!

As you may have noticed, we also think quite a bit about the best way to keep our herd quiet to preserve OPSEC. An obvious way is to not have noisy animals, such as roosters, as part of the mix. The same is true with bulls, who will call for the cows unless you keep the bull as a permanent part of the herd, but this may increase your risk as you will need to be careful around bulls.

Still, another consideration regarding noise level is how the animals are fed. One of the reasons we so love sheep, goats, donkeys, and cows is that they can freely harvest their own feed and pay us back with protection, protein, and pelts. Simply match the species to the environment, and let them do their thing.

With pigs, however, you may want or need to give them supplemental feed, unless you have A) a breed of pig that is nearly feral and B) lots of land for them to roam. If you do choose to feed them, I recommend hand feeding daily in a trough and not using a metal feeder with a flap lid. Those metal feeders produce a loud and unmistakable noise that will be heard far away as the pigs clank the lid up and down through the day and night, calling attention to your bacon on the hoof.

You’ll achieve these goals of protection and OPSEC by allowing the herd to bond together, protecting them with quiet but alert guardians, eliminating inherently noisy animals, and not feeding them in a noisy manner.

Recommendations to Get Started

In closing, let me offer a couple of thoughts if you’re just starting out with grazing. Of course, these are just ideas, as every situation, parcel, climate, and budget is different, but hopefully, this will help get you started.

  1. Choose breeds that require little labor. For example, wool sheep require shearing, but hair sheep (such as Katahdin) do not. Also, ensure rocks are available for sheep and goats so that you do not have to trim their hooves. In our case, we have never trimmed animal’s hooves, giving them the environment to do it naturally themselves.
  2. Choose breeds that fit the environment for your retreat, i.e. no Scottish Highland cows in south Texas.
  3. Choose parasite-resistant breeds.
  4. If you supplement with minerals, take care to choose low copper minerals for all, as sheep are more sensitive to copper than cows.
  5. Finally, in terms of stocking amounts, here are some recommendations for our neck of the woods, in the southeast U.S., though recommendations may be VERY different in your region:
    • PER every three acres of pasture/forbs/browse – one cow, one calf, two goats, one sheep, ten chickens in movable henhouses (no roosters), two turkeys. So, for nine acres, we would have three cows, three calves, three sheep, six goats, 30 chickens, six turkeys.
    • Wooded areas – six pigs per acre, moved monthly to a new paddock, confined by a solar-charged electric fence and fed by hand. For smaller herds of one or two pigs, try to locate adjacent to the garden for A) ease of feeding waste and B) monitoring.

I hope this two-part series has been a helpful introduction to multi-species livestock grazing. The aim is for you to not only survive a long-term grid-down scenario but to thrive. Producing an endless supply of organic fats and complete proteins will help you and your loved ones to achieve that goal.

Multi-Species Rotational Grazing to Maximize Food and Income, Part 1

Multi-Species Rotational Grazing to Maximize Food and Income, Part 1

When new homesteaders begin planning their homestead they often first visualize an abundant garden, overflowing with fruit and vegetables, and focus their food production efforts on learning to garden. This is wise, but perhaps a disproportionate level of attention is paid solely to the labor-intensive task of annual gardening.

Vegetable gardening produces primarily carbohydrates, versus the less labor-intensive task of rotational grazing of livestock, which produces a perennial supply of protein, fat, and pelts (if desired). Also, unlike most plants, protein derived from animals is complete and includes all nine essential amino acids.

Now, don’t get me wrong; I strongly advocate annual and perennial gardening. We have a 5,000-square-foot garden ourselves, along with dozens of fruit trees, vines, and beds. However, over the past decade, we’ve practiced intensive multi-species grazing with cows, sheep, goats, donkeys, pigs, chickens, turkeys, geese, and ducks on our homestead, where we are serious about preparedness and long-term self-sufficiency.

We’ve gardened in years with plenty of rainfall and consecutive years of historic drought, only to watch the crop yields suffer greatly in tough conditions. The livestock, however, grew and sustained us regardless of the weather.

The aim of this two-part article is to share some of what we’ve learned and to encourage readers to consider multi-species livestock grazing, particularly for long-term self-reliance in uncertain times. This article does not include other important sources of animal husbandry that manage, such as rabbits and bees, since we manage those enterprises separately from grazing animals. (more…)

How to Make Money Farming Grass-Fed Beef

How to Make Money Farming Grass-Fed Beef

Everyone knows that you can make (or lose) money in the stock market. Let’s dive into the other “stock” market and discuss how to make money farming with livestock. For most homesteaders this means cows, but it could mean bison, water buffalo, sheep, goats or pigs.

What about chickens, rabbits and other animals, you ask? I’ll cover those enterprises in another post. Let’s just define livestock as hooved animals, and for now, we’ll talk about raising cows for the grass-fed beef market.

To get started, you’ll need adequate pastureland to accommodate these voracious grazers. But they’ll do wonders for you, both returning fertility to the land and cash to your bank account. Here’s an example of how they’ll do that.

If you were to purchase a young bull for $1,000 and five ready-to-breed heifers for $1,500 each, your $8,500 investment will likely produce five calves that will be fed for free (by their mothers and your pastures) each year for 12 to 15 years.

What can you do with these calves?

You could sell them as stockers when they are weaned for anywhere from a few hundred to, perhaps, a thousand dollars or so each, depending on market conditions at the time.

However, if you were to finish raising the calves as organic grass-fed beef, it is likely that each calf would become worth at least $2,200 for you (net). This assumes selling to consumers in urban markets. Often the prices are even higher than this and prices have been rising steadily over the past few years. That’s in your favor, but keep in mind that there is a ramp-up period of a couple of years before you realize any income, since it will take roughly 24-28 months to “finish” the cows.

This delayed cash flow is why many farmers layer other livestock enterprises, such as pastured poultry and pigs, atop their grass-fed beef enterprise. The poultry and pigs will return cash much more quickly. However, since they require purchased feed, much more intensive management, and higher processing costs, you’ll find they’re not nearly as profitable as grass-fed beef is.

Once your “beeves” are ready for market beginning in year three, those five heifers (now cows) will be throwing off about $11,000 per year in gross profit ($2,200 per calf X five per year). If they do this for 12 years, then your initial investment of $8,500 for the bull and heifers will return a gross profit of $132,000. Again, that’s only with one bull and five cows. If you have the land you can multiply the herd size to fit your resources. Try safely getting those returns in the financial stock market.

Safely Make Money Farming With Livestock

The nice thing about this financial model is that it’s very safe. Even if you lack the skills or time to market the product as beef, you can always sell to private buyers or at sale barns. Unlike with pieces of paper, such as worthless stocks, I’ve never heard of anyone having a total loss with livestock.

Staying with this scenario and assuming each cow needs one acre of grazing land, you will need approximately 16 acres of pasture. This is for, A) the initial bull and five cows (6), B) the five calves born the first year that will take two years to grow (5), and C) the five calves born the second year (5). After the second year the five grown calves will be sold or processed, clearing the way for the five new calves born the third year, keeping the pasture demand static at 16 acres.

Now, there are entire books on this topic, such as Grass-Fed Cattle: How to Produce and Market Natural Beef, and I encourage you to read them if this path interests you. We raised and marketed grass-fed beef for years and found it very rewarding, both in terms of the relationships developed with our animals and our loyal customers. 

Of course, generating these high returns may require that you purchase land for the animals. While the chart to the left shows the national average value of pastureland to be $1,200 per acre, good luck finding that in most areas.

In my neck of the woods, pasture land goes for $3,000 to $5,500 per acre, which is probably a better average to work with for most new homesteaders. So, the 16 acres of land necessary for grazing will cost anywhere from $48,000 to $88,000 (not to mention paying modest taxes on the land), which takes a big “capital” bite out of the gross profit.

I emphasize the word “capital” because the land acquisition cost does not reduce your profit since, if you desired, you could sell the land at the end of the 12 years, likely get back at least what you paid for it, and still have earned the $120,000. Plus you would still have a dozen or so cows leftover.

Purchasing land ties up your capital for a LONG time, which is why you are entitled to the returns you can generate through certain farming enterprises. The returns go along with the risk and potential loss of capital.

Do you have to own land to raise livestock? No, you don’t, and some farmers follow Missouri farmer Greg Judy’s advice in his book No Risk Ranching.

Today, Judy runs a grazing operation of over 1,400 acres of LEASED land over 11 farms. He and his wife went from near bankruptcy in 1999 to paying off a 200-acre farm within three years using his custom grazing model.

Using the above example of starting modestly with one bull and five heifers, you could consider leasing pasture land adjacent or local to you for perhaps $30 per acre, per year. Your annual rent would be $480 for 16 acres and you would have no income from the grass-fed beef operation to offset this for the first two years.

However, after this, you would generate $11,000 per year in income, far more than you would need to cover the expenses. In this model, however, you would need to lease land that had good water (which will cost you more) or incur the cost of drilling a well. You would also have to fence it, as Greg describes in his book, but you would tie up far less capital. Perhaps you can even be debt-free!

You may incur other minor expenses such as hay when grass is not growing, vet bills if you plan to use vets, and, of course, taxes on the land you own. But the income will drastically exceed the expenses… IF… you can market the product successfully. I cover marketing homestead products in chapter six of How to Make Money Homesteading. If you need some help/advice with farm marketing, check out my online farm marketing courses.

I caution you to avoid exotic animals unless economic times are likely to be very strong. In poor economic times, people want and need basic foodstuffs and materials, and your attempt to market grass-fed zebra may prove more challenging than you expect.

Stick what people want and know unless you’re a skilled marketer. Stick with beef.

You can do similar calculations to scale this model up or down to suit your needs.

The point is this: putting cows to work allows you to generate a stream of FUTURE income, improve your soil, and create wealth over time.

Bottom line? There is big income potential with large livestock, but it requires land and the confidence to handle large animals.

Income Opportunity: Agritourism & Farm Events

Income Opportunity: Agritourism & Farm Events

Agritourism is an area that has been growing for many years. On our farm, we hosted many events, including:

  • farm dinners with award-winning chefs
  • whole hog butchering classes
  • Thanksgving turkey butchering classes
  • cheesemaking classes
  • farm tours
  • campouts
  • farm schools, and more.

Can you not imagine a soon-to-be-married couple wanting to have their wedding overlooking your beautiful pastures, ponds, and happy animals? I can, and they will pay well for it, because competitive alternatives also charge good money for the service. But ask yourself if this is a one-time, seasonal or continuous opportunity? Perhaps it is seasonal, but you could use the same facilities for corporate retreats and other events as well.

What about a farm-stay bed and breakfast in your home or in a refurbished barn? Sounds quaint, romantic, and what a lot of people would be in the mood for, does it not?

If you don’t want to use your house, you can always provide a glamour camping (glamping) experience instead. It could be a yurt, tee pee or the wall tents that are offered at Mary Jane’s Farm bed and breakfast… for $240 per night. Remember that when economic conditions are soft, they are not necessarily soft for everyone, as wealthy folks generally do just fine and retain plenty of disposable income.

Mary Jane’s Farm is not the only one catering to these well-to-do customers. The Martyn House, an 18-acre restored homestead just over an hour north of Atlanta, offers upscale glamping in wall tents as well as event facility rentals, farm dinners, a bed and breakfast, and weddings. Heck, they will even rent the entire farm if someone wants it!

If these ideas are too upscale for you, then consider setting up a permanent tent camping area and facilities on your land. Jinny Cleland did just that at Four Springs Farm on her Vermont farm, where she also offers event rentals, baked goods, catering, poultry, fruits, vegetables, and much more.

If you don’t want guests staying overnight, then you could consider farm dinners. These outings normally feature local chefs and offer the advantage of introducing paying customers to other products or services you have available.

For example, Green Dirt Farm in Missouri has a series of farm dinners and cheese appreciation events throughout the year. The cheese appreciation events are $50 per person and the 11 farm dinners per year, limited to 30 people each, all sell out at a price of $170 per person. That works out to $5,100 in revenue per dinner, or just over $56,000 per year just for the dinners. The cheese appreciation events can generate another $15,000 in sales.

To be sure, there are expenses to offset this for food, chefs, and marketing, but this is a very nice ancillary business to their main business of producing fantastic farmstead sheep’s milk cheese. Of course, their location being only 30 minutes from Kansas City ensures they have a base of customers to whom they can market, as well as chefs upon whom they can rely, but the point is for you to consider proximity to markets before you purchase land if this is something that interests you.

A few other agritourism options include:

  1. RV/tent farm camping,
  2. summer youth farm camps,
  3. pond fishing,
  4. corn mazes,
  5. Easter egg hunts in the spring,
  6. haunted woods in the fall, etc.

There are lots of ways you can make money homesteading and farming, and agritourism may be a great fit for your farm or homestead.

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