{"id":904,"date":"2015-09-14T15:46:58","date_gmt":"2015-09-14T19:46:58","guid":{"rendered":"http:\/\/blog.uvm.edu\/farmvia\/?p=904"},"modified":"2015-09-14T15:47:19","modified_gmt":"2015-09-14T19:47:19","slug":"business-benchmarks-for-start-up-small-vegetable-farm","status":"publish","type":"post","link":"https:\/\/blog.uvm.edu\/farmvia\/?p=904","title":{"rendered":"Business Benchmarks for a Start-Up Small Vegetable Farm"},"content":{"rendered":"

Last week I had the opportunity to sit with 9 farm managers and business advisers to analyze 3 years of farm financial data for 25 farms. This meeting was closure on a\u00a0 three year research project coordinated by The Carrot Project<\/a> and funded by Northeast SARE<\/a>. The project set out to deliver financial education, measure financial performance and assist in planning for micro loans (under $25,000) with farm managers in New England.<\/p>\n

How much money can a small vegetable farm owner expect to make? After looking at three specific sets of finances and combining that with the numerous farm financial statements I read every year for UVM Extension Farm Viability, I have observed a few key trends for small vegetable farms:<\/p>\n

    \n
  1. Farm start up is driven by initial owner visions, resources at hand and easily accessible markets.<\/li>\n
  2. Early market plans of direct sales (CSA, farmers market) mixed with direct wholesale (stores\/restaurants) typically gets the business to about $35,000 – $50,000 in gross sales somewhat “easily”. At that point, the market mix is maxed out and it becomes difficult to expand. The business now needs a phase 2 market strategy.<\/li>\n
  3. Owner operated produce farms can hit $30-40,000 in annual sales with one full time equivalent\/FTE (the owner) working seasonally. During this phase, the owner may be able to pay themselves up to 20%-30% of gross sales from cash flow if costs are managed well… that equals a paycheck of maybe $10,000 not including equity generation as assets are acquired and paid for.<\/li>\n
  4. To grow past $40,000 in sales, hired labor is required. This paid labor will require cash that typically leaves an owner unable to pay themselves from the business. I advise managers to find ways to leap-frog or grow through the $40,000-$80,000 scale as fast a possible. It’s a tough scale to operate at.<\/li>\n
  5. As the produce business hits the $80,000 – $125,000 scale, many of the blips of start up have passed. The farm is in Phase 2 of marketing, usually including a reduced amount of direct sales and a specialization of few key crops for wholesale. A small but manageable labor force (and formula) is in place.<\/li>\n
  6. Here are some benchmarks at this scale: try to keep hired labor at 30-45% of gross sales, capital expenses or debt service will range from 10-20% of gross sales (largely depending on how the real estate is being paid for) and owner draws might be about 25% of gross sales.<\/li>\n<\/ol>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

    Last week I had the opportunity to sit with 9 farm managers and business advisers to analyze 3 years of farm financial data for 25 farms. This meeting was closure on a\u00a0 three year research project coordinated by The Carrot … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1307,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[52812,52813],"tags":[52834,52835],"class_list":["post-904","post","type-post","status-publish","format-standard","hentry","category-business-planning","category-farm-finances","tag-small-farm","tag-vegetable-farm"],"_links":{"self":[{"href":"https:\/\/blog.uvm.edu\/farmvia\/index.php?rest_route=\/wp\/v2\/posts\/904","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.uvm.edu\/farmvia\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.uvm.edu\/farmvia\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.uvm.edu\/farmvia\/index.php?rest_route=\/wp\/v2\/users\/1307"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.uvm.edu\/farmvia\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=904"}],"version-history":[{"count":2,"href":"https:\/\/blog.uvm.edu\/farmvia\/index.php?rest_route=\/wp\/v2\/posts\/904\/revisions"}],"predecessor-version":[{"id":906,"href":"https:\/\/blog.uvm.edu\/farmvia\/index.php?rest_route=\/wp\/v2\/posts\/904\/revisions\/906"}],"wp:attachment":[{"href":"https:\/\/blog.uvm.edu\/farmvia\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=904"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.uvm.edu\/farmvia\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=904"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.uvm.edu\/farmvia\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=904"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}