Advice on setting up a minifarm for profit

[knuckledragger]

I am considering setting up my minifarm as a for profit venture. In addition to the tax benefits associated with a "for profit" venture, it would also help with some extra income, so that my wife can continue to stay home with the kids. I am strongly considering raising Dward Nigerian dairy goats and dong some beekeeping (kind of a "land flowing with milk and honey kind of thing"). My wife was a vet tech, has worked on a horse farm, and has a father who raises exotic animals, so she's got access to alot of practical knowledge/resources. But I'm a firefighter/cop, and I've never done anything like this, so I have some questions about the business side of things.

I know that I will need to draw up a business plan.

• What are some good resources to help me figure out how to do that?
• Where do you go to research market demand and all of that kind of thing?
• What are some cardinal "do's and don't's" of running a mini farm business?
• What kind of insurance is required or recommended for such a venture?
• Are there any grants available for such business ventures?

[marvella]

i'm curious why you need a business plan? will you borrow money? otherwise you just need to build a fence and shelter, get some goats and jump in.

i must warn you that it's not easy to make a profit farming. i don't think i've ever shown a true profit. there's always something that causes it to cost more than it makes- feed bills, vet bills, losses to predators, etc. but as you said, there are some tax benefits. if you have enough land, over 15 acres, look into the greenbelt program. it saves me around 1/3 on my land taxes each year.

[knuckledragger]

In case you are audited, the IRS will make you demonstrate that you are involved in a business venture "for profit" rather than being a "hobby farm." One of the ways of demonstrating this is to produce for them your business plan. Otherwise, it is my understanding that you risk being designated as a hobby farm and you will have to pay back taxes for any deductions you may have taken in the past.

[Terri]

Are their farmers markets in your area? If you want to sell at a farmers market, try the Market Master.

When I went to the DeSoto market, the Market Master told me that no one was selling jelly yet, that one of the sellers would sell very ripe fruit at the end of the day for much less, and then she put me next to the bread maker.

I found it easy to earn money but hard to earn a LOT of money. On a good Saturday-a very good one- I might make $30 profit.

Some people made much more, of course. But, that was what *I* earned!

[Joshie]

DH owned his own business for many years. He never had a business plan. You don't need a business plan. You just need to keep very good track of your expenses and income and show a profit. You don't have to have profit every year but you do need to have profit after a certain number of years. You can research that.

I think you'll find that most of the people here do not make a profit on their homesteading efforts. Most of this activity is for their own family's use.

Why don't you start with chickens? You could raise them for eggs and for meat. You could raise nice ones to sell to 4Hers.

Some neighbors raise sheep. Their market is primarily to 4H children.

What about looking at homesteading as a way to provide for your family and reduce costs rather than as a way to make a profit. Your wife is likely to bring in more income by babysitting. Do you wish to spend every Saturday at a Farmer's Market your whole summer?

[shanzone2001]

My children wanted ways to make money, so they both chose something they were interested in. My daughter chose chickens and my son chose pigs. It has taken quite a while to get enough laying hens to produce more eggs than our family consumes, but my daughter sells the extras and she does make a little money after I deduct the cost of feed and egg cartons. Also, we will need to buy new chicks every year to replace the older hens who stop laying (and become stew).

I bought a freezer pig for "practice" and once it is butchered, my son wants to buy a male and female to breed and sell piglets for profit. He is also considering raising one in 4H and selling it at fair. We will see!

My primary purpose for having a garden and raising farm animals is to be prepared to provide for my family if and when other resources are no longer available. The current benefit of my efforts is the ability to provide healthy, natural food for my family...as well as knowing the animals we eat were treated humanely.
As for my kids, they raise their own animals to earn spending money to go to the movies, the mall, or just to have money to buy the things they want.

[wyld thang]

Originally Posted by knuckledragger

In case you are audited, the IRS will make you demonstrate that you are involved in a business venture "for profit" rather than being a "hobby farm." One of the ways of demonstrating this is to produce for them your business plan. Otherwise, it is my understanding that you risk being designated as a hobby farm and you will have to pay back taxes for any deductions you may have taken in the past.

it almost sounds like you are setting this up as a way to "technically" get farm/business deductions, instead of making any real profit to support your family.

"Making a profit" involves a lot more work than people think. Performing that profit work on your farm your wife(who I assume will be the one performing most of this work as a work at home job) will still be work distracted as far as being with the kids. If your kids are older and can work, that is cool and well, but her making the farm profitable with small children to wrangle alongside will be plain hard. Aside from working the 4 acres to provide your own needs, I'd look into something simpler your wife can do for money, like childcare, or perhaps she can go care for old people on your off hours(I have a friend who does this). A lot simpler involvment for the bucks earned(not to mention the accounting and business set up and overseeing).

IE, if you want to start a business and be square with the IRS, you have to have a BUSINESS. None of this selling at one Farmer's market a year to qualify as a business. Do NOT even go there with doing the minimum to get business deductions(not saying you are, but there sure are a lot of people who do this). You do NOT want to screw with the IRS. They are bad enough when you are for real.

Cash is gold. Just sayin.

[wyld thang]

In the end you need to take a realistic look at costs of set up, labor to produce and sell and account(be honest!), and work out your $$$$ per hour you make, along with the family stress of making it work, and figure out how your deductions affect that. It might be a surprise--you'll probably break even(maybe). It's all about the volume of product and what people are willing to pay(and actually making a sale) that gets you a profit.

Not saying it can't be done, but with you having a full time job with weird hours(?) and your wife at home with kids, that's not something to take lightly.

[Missy M]

No Pets!! If you feel sorry for every little creature or make pets out of everything you get you will never make a dime. You'll just have a really big petting zoo. It's not always easy to do this, some times it comes down to hard choices.

[Big Dave]

again like many others you do not post an area where you live.

[MaineFarmMom]

I wouldn't run a business without a plan. If you find a good outline it will walk you through the questions you need to answer. Making a true profit should be a yearly necessity. The bills have to be paid even if you don't make a profit. You should be able to find something useful here.

Your cooperative extension might have information and/or know who to put you in touch with. Small business development centers are a good place to start. We have an incubator without walls program that is excellent.

Micro Eco-Farming

What do you plan to do with the goats that will earn a true profit?

[wyld thang]

ha, I feel stupid telling a cop not to mess with the IRS

seriously it takes a certain kind of person to run a healthy business. My hub's grandfather built a profitable farm in the depression, and plowed his profits into buying more land and enjoyed a comfortble well set life for him and his kids--as long as he was running the show. When he passed it onto his sons, they were great FARMERS and loved the work, but were idiot businessmen and lost the farm(it was a couple thousand acres).

Just trying to impress on you that a profitable business is a whole different ball of wax than making some extra money so the wife can stay with the kids. Doesn't matter if it's farming or some other business.

[muzzelloader]

As a older guy born and raised on a old stile subsistance farm it is a good life but a hard row to hoe as us old guys say. If you intend to have a modern mini farm it is possible however you need to take a verey hard look at what will return you a real profit. Goats are fine but you will need equipment, housing, vet fees etc. If you intend to do specialtey gardening is a good idea there are a number of folks doing that now but allso reqires good equipment and a good market.Markets in your cace because you are going to be mini you will need to find and involve yourslf wih customers , do lots of sales high end resturants etc. If yow decide to sell only Goat milk and honey boath of these efforts require a number of permits inspections etc. If you are going to make cheese more equip. and customer intereation, sales etc. So when you say you want to do this first not only do you need a bus. pland but a very in depth look at all the inpute you will have to do just to get up and running. Also as previousley mentionrd who is going to put in all thos long houres out in the field barn Goat pen garden?. P.S. Good luck and if you work at it will happen.

[knuckledragger]

Thanks to all who have tried to answer my questions so far.

To those who are cautioning me about the difficulties of running a business: I am fully aware of the potential difficulties, and I have a certain amount of apprehension (after all, I'm not a CEO, I squirt water for a living) That's why I am doing research, asking questions and wanting to put together a well researched business plan. Also, let me make it clear that I am not trying to cheat the IRS or run a hugely successful business. In all honesty, if, after a couple of years, I could turn a profit of $500-1000 a month to supplement my current income, I would be happy. I'm not even sure that is feasible, but once again, that's why I'm asking these questions, doing this research, and wanting to put together a business plan that will give me some idea of whether it is feasible or not.

Is your wife on board with this? What does SHE want to raise? Considering she will be heavily involved, you might want to make sure she's OK with goats. Just because you've taken care of a few different kinds of animals does NOT mean you want to take care of them all.

[farminghandyman]

in some locations it is the amount of income in a percentage of total income, to get farm breaks, most one needs to produce more than 50% of your income via farming,

as in any profit or loss situation one needs to figure the costs and what one has to produce for making the profit,

lest just say, (this is an example), you want to raise chickens, and sell the birds, for meat, (this may not be legal to butcher and sell), but lest just for get the building and the cost of electricity or even labor,

buy the chickens, http://www.mcmurrayhatchery.com/jumb...h_x_rocks.html
$1.48 a chick straight run, on the jumbo cornish rocks,
now feed, (don't remember exactly but I think when we were buying sacked feed wife said we were getting $3 to $4 a bird in feed, and one of the first years (when we did not have the chicken house set up, and was using a make shift building for the coop, we lost about 1/3 of them,
OK just in direct expenses, one has $5 to $6 in one bird, and that is if you do not have losses, no figuring on building, or waterers, feeders, and butchering cost, or labor.
(if you add the costs of the building, and supples, and labor, one probably doubles that cost),
(how do you lower your cost, one way is to do more of them the time involved to do 25 is nearly the same a one hundred, and a hundred the same as few hundred,
buy feed in bulk,
but one needs a market and one needs to learn how, to raise them if you have a contract to provide say 100 birds a month, or so many pounds of meat, you may have schedules to meet as well,
if you can not butcher them your self and sell them, then you will have to have a licensed butcher do the meat processing, or sell them live and let those who buy them butcher them,
there is a lot involved in making profit, true profit,

one day I was reading a farm magazine, and the story was about a commercial chicken meat farm, (the chicken houses held thousands of birds), but on a per bird basis the story said they were making 15 cents a bird, and they then brought the processing of the meat in house and doubled the profit to 30 cents a bird.

OK say you make 30 cents a bird when it is said and done, and you have the process and the systems to make it work, how many birds a year are you going to have to raise and sell to make any real money, to live off of, and at what point does hired help come in to and how many more birds does that take?

if you can find a niche market that one does not have to compete with the Normal factory farms, and have a quality or some thing special to offer in your offering,

just an example, if a commercial grain farm sells wheat, they get currently in our area about $3.50 a bushel for wheat, (60 pounds),
now go out and buy a 5 gallon bucket of wheat at whole grains store, you many pay a dollar a pound for,

now if one can get the market say one goes and buys a quality preteen wheat in bulk, from some local farmer, or elevator, and get it triple cleaned, (fanning mill, gravity table and length grader), and then bucket it and package in food grade buckets or sacks,

you have taken a $3.70 to $4.00 a bushel product, spent a buck or two a bushel to get it cleaned, and then some labor to package it, (may be possible to even have the plant that cleans it to sack it as well), but you have taken a product that cost one about 6 to 7 cents a pound, put in another 4 or 5 cents a pound cleaning it and possibly sacking it, and turning it into a $.50 to $1.00 product, (the trick is the marketing of it),

for most situations it will be difficult to make a real profit on the base of agriculture products, the farmer is the nearly the only business that buys ever thing at retail and sells all they produce at wholesale or below,

unless one can do the value added in your product it will be hard to make a profit of any real value,
yes one can sell eggs, say you make 20 cents a dozen, how many dozen would you have to sell to make a $1000 bucks, that would take 5000 dozen eggs, to make that $1000 bucks, to make a living off the eggs, would need 150,000 dozen eggs sold for $30,000 in a year, that would take a lot of hens at one egg ever 26 hrs or so.

maybe I missing some thing here, but farming and profit is not used normally in the same sentence,

[MaineFarmMom]

Originally Posted by Tonya

Is your wife on board with this? What does SHE want to raise? Considering she will be heavily involved, you might want to make sure she's OK with goats. Just because you've taken care of a few different kinds of animals does NOT mean you want to take care of them all.

It's the other way around. She's a vet tech with animal experience. He's a firefighter and doesn't have experience.

[knuckledragger]

I'm beginning to pick up on something here. Some people are very helpful. I greatly appreciate all of you who have given constructive input. Others tend to make negative assumptions and, rather than answer your question, they give veiled warnings of the impending mistake you are about to make, or they even start to chastise you.

For the record.

• I'm not trying to cheat on my taxes.
• I'm aware that starting a business is difficult, but I also am fairly adept at researching new ideas and tackling new stuff.
• I'm not selfishly imposing my will on my helpless wife.

The Dwarf Nigerian goats were actually her idea. She has worked as a vet tech and a zoo keeper. She worked on a horse farm. Working with her Mom and Dad, she has dealt with goats, sheep, donkeys, horses, prairie dogs, zebras, African hoof stock, camels, and kangaroos (yes, camels and kangaroos). Does this sound like a woman who will bemoan the fact that she is having to work with animals?!? Trust me, she's not going to be out there wishing that she were sitting at a desk doing data entry. Also,I will do much of the work myself (as a firefighter I work 24 hour shifts, but only 10 days out of the month, so I have a good deal of spare time to "work the business.")

So... can we please get back to the questions? That is, if you have any productive, non accusatory input on the matter. Thanks again to all who have given constructive input.

[marvella]

that's not what i got out of her post but see why it could be read that way. she said "you" (as an example) not "him."

i keep good records of what i spend and what i take in and all receipts to go with it. that's enough to keep the IRS happy.

vet tech experience is not the same as farm experience.

i say, start small, with some chickens or rabbits, a couple extra rows in the garden to sell at farm mkt. forget profit for now, then see how it goes and if you want to expand. reading this forum will show you at least a gazillion things that can (and likely will) go wrong. farming is not really the best way for a SAHM to earn a little extra money.

[shanzone2001]

[QUOTE=knuckledragger;4452584]The Dwarf Nigerian goats were actually her idea. QUOTE]

Many people here raise them to sell for 4H and do make good money. In CA does and bucks go for $200-$300 and wethers go for about $100. If your kids are old enough, they can do most of the goat care.

Pigs go for about $80, but a good sow will have many so you can make a profit there, too.