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How to Start an Organic Farm in 14 Steps (In-Depth Guide)

Updated:   March 29, 2024

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The organic food market has exploded in recent years, with growth estimated at 8.04% from 2017 to 2027. As health and sustainability concerns drive consumer demand, the organic farming industry is primed for even more growth.

Entrepreneurs hoping to tap into the sustainable agriculture market may wonder how difficult it is to start an organic farm. The barriers to entry are lower than you might expect thanks to innovative new technologies. With some grit, business savvy, and attention to organic certification, your small plot could blossom into a thriving organic farm.

This guide will walk you through how to start an organic tea. Topics include market research, competitive analysis, marketing, customer focus, sourcing equipment, accounting processes, and more.

1. Conduct Organic Farm Market Research

Market research is essential to starting your own certified organic farm and developing a solid business plan. It offers insight into your target market, organic farming practices, and trends in the small organic farm market. It also tells you how other local farmers are pricing produce and where to acquire suitable land.

Some details you’ll learn through research on sustainable farming practices include:

• While the overall farming industry is declining in terms of the number of farms, the number of organic farms continues to rise year over year.
• Diversified demand presents opportunities across crop types for new organic producers. Orchards , flower farms, pumpkin patches , and lavender farms are all becoming more common in the organic farm industry as time goes by.
• Location also plays an important role – organic farms across every U.S. region saw rising sales in 2021, led by the Mountain Plains and Midwest.
• Beyond direct-to-consumer sales at farmers’ markets and farm stands, organic wholesalers are reporting increased demand from grocers, restaurants, and food manufacturers.
• Organic ingredients helped food brands like Beyond Meat increase revenues by 35.6% last year as plant-based alternatives take off.
• Evaluating these B2B routes could significantly expand your addressable customer segments.
• Switching from conventional to organic production takes years of preparation to stop using synthetic chemicals and build healthy soil that meets NOP standards.
• Pricing pressure from rising competition also requires tight control of operations and costs.
• Startup organic farmers may consider targeting niche, high-value crops, and marketing directly to local customers.

The market opportunity for new organic producers is substantial. Success lies in identifying regional demand gaps across specific crops, creatively accessing wholesale distribution channels, mastering unique organic techniques, and above all, delivering a high-quality product that consumers are increasingly seeking.

2. Analyze the Competition

Entering the organic farming industry prepared means carefully evaluating your competition. From large wholesale producers to small CSAs. This analysis should assess both local farm competitors as well as benchmark against wider industry metrics.

Locally, identify direct competitors selling at farmers’ markets and operating CSAs in your geographic target area. Visit their farm stands and sign up for newsletters to gather intel on product offerings, production volumes, branding strategies, and pricing models.

For wholesale producers in your region, research available data on acreage, employees, crops, and certifications through state agriculture departments. Identifying potential partner farms for distribution deals can also help gauge regional competition.

Analysis should also cover the digital presence and marketing savvy of key local players. Review their websites, social media, and online advertising footprint – are they easy to find and engage with online? How effectively are they telling their unique farm story? This can spotlight digital opportunities to differentiate.

Benchmarking financial and operational metrics will indicate how competitive the landscape truly is. Industry average net profit margins for organic crop production range from 15-25% depending on scale, while the average cost of goods sold hovers around 65 cents per dollar of revenue.

Labor, certification, distribution, and marketing expenses also vary widely based on crops, volumes, and sales channels. Checking your business plan against these industry benchmarks helps set realistic goals.

This 360-degree view of regional and national competitors, including their customer reach, brand positioning, and economics, allows you to carve out your niche. It also sets a baseline for defining what competitive advantages you can create through superior product quality, customer service, storytelling, or technology integration.

3. Costs to Start an Organic Farm Business

Starting an organic farm requires significant upfront investment – often between $50,000 to $500,000 depending on size and model. Organic farms are also highly varied, ranging from organic orchards to pearl farms which makes finding an accurate estimate very difficult.

Start-up Costs

• The average cost of farmland in the U.S. is currently around $3,140 per acre according to the USDA, but prices vary widely by region.
• Leasing land via long-term agreements is often a cheaper option for new farmers, with average rental rates around $138 per acre.
• A small 5-10 acre starter organic veggie farm may require $15,000-$30,000 at purchase or $690-$1,380 per year rented. These costs are higher if you plan on growing more exotic organic produce, such as bamboo farming .
• The essential equipment needed, including a greenhouse ($5,000-$20,000)
• Irrigation system ($3,000-$15,000 depending on acreage)
• Tractor ($10,000 for used)
• Various farm tools can easily total over $30,000.

Ongoing Costs

• Labor costs typically make up around 35% of an organic farm’s operating expenses.
• Payroll for a small, moderately mechanized 5-10 acre farm may cost $15,000-$30,000 per year.
• Getting certified organic by a USDA-accredited agency involves fees of $500 to $4,000 paid upfront and annually.
• The organic certification process also requires implementing approved methods on your land for 3+ years in advance, representing a major upfront time and cost barrier.
• A minimum of 12 months of working capital is recommended at the start – perhaps $20,000 for a small starter farm.
• Starting an organic dairy operation often requires closer to $500,000 in working capital to sustain the longer ramp-up.
• Seeds, organic soil amendments, insect/weed control, etc. to sustain production may cost around $2,000 per acre.
• Aggregating, packing, and shipping crops to markets can cost 35% or more of revenue.
• Product liability and crop insurance to protect against weather/disease losses cost on average $380-$1000+ per year.
• Farm website, digital/print advertising, and branded packaging are often a minimum 5% of revenue

Careful financial planning and risk management are vital with the substantial cost outlays to profitably launch and sustain an organic farm.

4. Form a Legal Business Entity

When starting an organic farm, incorporating it as a formal business entity offers important protections and credibility, especially as you grow. Weighing the pros and cons of each structure will lead to the best choice for your operations.

Sole Proprietorship

Simplest and most common for small, early-stage farms. You gain complete control and avoid corporate taxes. However, you are personally liable for all debts and legal actions against the business – substantial risk exposure for a farm with heavy equipment, chemical inputs, and physical labor. Difficult to raise investment capital or take on partners for scaling.

Partnership

Allows multiple owners to share control and liability risks. Brings specialized skills together under one entity. However, any partner can be held responsible if another makes poor decisions or leaves. The partnership may dissolve if a partner departs. Less flexibility for changing ownership stakes over time.

Limited Liability Corporation (LLC)

The best of both worlds for shielding personal assets and allowing shared ownership. Profits pass directly to members’ tax returns, avoiding double taxation. Members cannot be held personally liable for LLC debts and lawsuits. Easy to modify ownership percentages, add new investors, and are even create new classes of membership interests over time.

Corporation

Most complex and expensive to establish ($1500+ incorporation fees) but offers the strongest personal liability protection for shareholders. Attractive to outside investors due to the ability to issue stock. However, profits are taxed both at the corporate rate and shareholder level – less efficient for smaller businesses with few owners. Significant legal/accounting oversight is required.

5. Register Your Business For Taxes

Forming a recognized business entity for your organic farm is an important first step, but you also need to register for the required tax IDs to legally operate. At a minimum, obtaining an Employer Identification Number (EIN) from the IRS establishes your legitimacy to pay employees and file taxes.

An EIN acts as a Social Security Number for your business. The IRS uses it to track tax obligations from business income, employees, etc under your farm’s entity. Applying online for an EIN is free and takes less than 30 minutes through the IRS website.

To complete the form, you’ll need identifying details like your name, address, Social Security Number, and business structure. No documentation is required upfront – simply submit the secure form. You will receive your EIN immediately upon approval.

With your EIN, you can open business bank accounts, apply for licenses and permits, and hire employees and contractors while being compliant with payroll tax obligations. It also allows you to file important tax returns and registration forms under your business name rather than your identity.

If selling products direct-to-consumer in your state, check specific requirements for collecting/remitting sales tax. For example, Wisconsin requires farm operations with over $4,000 in annual income to register for a state tax ID through the Department of Revenue before selling anything. Fees are under $100 and involve listing your chosen business name/entity and EIN.

Don’t let administrative tax tasks intimidate you from launching your organic farm dreams. Sites like the IRS and your state department of revenue walk you through the quick online application process for essential registrations.

6. Setup Your Accounting

Proper financial record-keeping is crucial for organic farm success and IRS compliance. With significant upfront investments and ongoing operating expenses, tracking every dollar coming in and out of your new business is imperative.

Accounting Software

Accounting software like QuickBooks helps track income, expenses, and account balances and categorizes every transaction from invoices to loan payments automatically. QuickBooks seamlessly integrates with your business bank accounts, payment processors, and other financial tools through bank data feeds and API connections.

Hire an Accountant

Working with an accountant experienced with farms is key. A qualified accountant provides financial oversight by reviewing your books monthly or quarterly to catch missed deductions or inconsistencies. This prevents avoidable tax liabilities before year-end. They also advise setting up a foolproof chart of accounts tailored to farm finances from cultivation inputs to market stand sales.

Open a Business Bank Account

You should also maintain separate business banking and credit accounts from day one. Keeping all farm finances isolated from personal avoids any question when deducting expenses or reporting self-employment income. Take time applying for a business credit card in your farm’s legal name, which requires your EIN and revenue projections but has much higher limits than consumer cards.

7. Obtain Licenses and Permits

Before selling that first organic tomato or head of lettuce, your farm must comply with federal and state permitting requirements. Find federal license information through the U.S. Small Business Administration . The SBA also offers a local search tool for state and city requirements.

Key permits and licenses to secure early when starting an organic farm include:

Organic Certification: Arguably the most crucial license, USDA organic certification opens doors to premium pricing and product labeling after rigorous vetting. An accredited agent will audit your farm’s application detailing its growing/handling methods, inputs used, adjacent land usage, and more before awarding certification.

Farm Vehicle Registrations: Tractors, trucks, and other vehicles for field work or product distribution require DMV registration, license plates, and often commercial insurance. Specific farm-use license plates may provide discounts. Always consult your state’s DMV handbook for classifications.

Health Inspections/Permits: If selling any value-added products like jams, dairy, or eggs, expect to require health department permits and commercial kitchen inspections. Even lower-risk whole produce sold direct-to-consumer often needs a grower’s permit for traceability and safety.

Farm Employee Work Permits: Hiring any farm laborers, seasonal or permanent requires formally reporting new workers for payroll/Social Security purposes. Verify eligibility requirements through state and federal wage/hour divisions. Safety administration may also require posting permits publicly.

Pesticide Applicator License: While organic production prohibits certain pesticides, some natural insect deterrents still require special applicator permits from departments of agriculture when sprayed commercially. Structural fumigation or adjacent conventional farms could also trigger oversight.

Waste Management Plans: Animal and crop waste contain contaminants requiring responsible disposal from irrigation runoff to livestock facilities. Your local conservation district can define what waste handling/registration falls under environmental regulations.

8. Get Business Insurance

Given the hands-on physical labor and heavy equipment involved, having adequate business insurance is crucial for organic farm success. Among small businesses, farms suffer the second-highest rate of workplace injuries, even a minor issue can disrupt operations for days during key growing seasons.

Just as importantly, organic farms become targets for lawsuits given chemical-free food’s perishability and consumer safety concerns. Lacking proper coverage leaves your personal finances and livelihood exposed.

Scenarios where business insurance saves organic farms include:

• Workers Comp Claim: An employee injures their back while unloading produce for delivery. Without workers comp, their $50,000 medical and lost wage bill falls to you personally.
• Equipment Fire: Outdated wiring in your barn sparks a fire, destroying your tractor, tools, and shelter for animals. Repair bills run $75,000 without insurance.
• Foodborne Illness: A child sickens from E. coli traced to your farm’s raw milk. Their family sues for $100,000+ in medical costs without proof of liability coverage.

Claiming these unpredictable losses out of pocket could bankrupt early-stage operations. Various insurance policies shield against the myriad risks farms face:

• General liability insurance covering personal/property damage lawsuits
• Product liability protecting against food illnesses/recalls
• Farm vehicle, equipment, and crop/livestock insurance
• Workers compensation for employee injuries
• Umbrella insurance providing additional liability gaps

The National Sustainable Agriculture Coalition lists various risk-sharing programs through the USDA helping organic producers access affordable policies. Considering every possible “what if” scenario and having the proper protection will let you focus on growth rather than worrying over risks outside your control.

9. Create an Office Space

While much of your time operating an organic farm is spent in fields or packing sheds, securing proper office or administrative space is still imperative for business health. Keeping your financial records, customer files, and technical reference materials well-organized requires dedicated infrastructure.

Home Office

A home office is a great way to set up an administrative space when starting. It requires the lowest upfront cost, perhaps just a desk and computer for around $1000 to start. You can also count on tax incentives through the IRS, including deductibles of up to $1,500 per year.

Coworking Space

Shared, flexible small business environments like WeWork allow cost efficiencies from pooled amenities (WiFi, printers, conference rooms, etc.) while ditching home office distractions. Customizable private offices rent for $300-$600/month depending on location and feature access.

Retail Farm Stand Office

If selling your organic produce in person from a farm stand, allocating the cost back office or storage area to administrative tasks keeps things convenient while onsite for customers. Just be sure to secure computer equipment and sensitive files. The cost might only entail locking cabinets and a basic desk in an existing built-out space.

Commercial Office

Maximum productivity and security come from a dedicated ground floor or single-story office space separate from your home and farm facilities. Expect leases starting around $20/square foot in rural locations and locations and up to $40+ in large cities. While air conditioning, ample parking, custom layouts, and high-speed internet provide an ideal work environment, the monthly overhead far outpaces alternatives.

10. Source Your Equipment

An organic farm requires a sizable upfront investment in heavy equipment and tools to cultivate acreage and distribute products. Smart sourcing strikes a balance between critical functionality and startup budget realities. Consider these options for acquiring essential organic farm equipment:

The latest models of tractors, seeders, and harvesters offer cutting-edge productivity features and warranty protection. But new equipment commands premium pricing, a 30HP utility tractor from John Deere starts at around $33,000. Carefully evaluate true capacity requirements and shop specialty farm equipment dealers.

As with vehicles, used tractors and implements often provide huge cost savings of over 50% compared to new ones with just slightly more maintenance. Well-maintained older Deere/Kubota models retain decades of usable life. Facebook Marketplace , Craigslist , and specialty forums like Tractor House are the best places to start.

An affordable intermediate option, equipment rental through national chains like United Rentals or Sunstate Equipment allows accessing necessary trucks, excavators, etc. for seasonal projects without huge upfront buys. Delivery fees are often waived.

The ultimate flexible option, leasing production essentials like greenhouse structures, livestock housing, or irrigation systems means making lower monthly payments rather than giant lump sum buys. As with vehicles, equipment leases run 24-48 months with buyouts possible afterward, allowing upgrades as needs evolve.

11. Establish Your Brand Assets

Creating a consistent brand identity helps organic farms connect with consumers seeking transparency around food sourcing and production practices. Investing in core brand assets sends the right message.

Get a Business Phone Number

Start by securing a unique business phone line via providers like RingCentral rather than using a personal cell. Listing a professional number builds trust when customers call your farm stand asking if eggs are in stock or restaurants place wholesale orders. Expect basic business phone plans to start around $30/month.

Design a Logo

A polished logo also helps. Consider bright, welcoming designs that incorporate images of your fields, harvest bounty, or barn packed with happy livestock. Sites like Looka make logo DIY simple by providing organic layouts and iconography specific for farms based on your vision. Paid creation services start around $20.

Print Business Cards

With a logo file, build complementary brand assets that feel cohesive across business cards, merchandise, delivery truck signage, and banners for your organic farmers market booth. Printers like Vistaprint allow ordering professionally branded mugs, hats, and signage with bulk order discounts.

Get a Domain Name

Secure matching domain names and social media handles whenever branding your farm online. Establish credibility by purchasing your .com domain for around $12/year rather than using free platforms. Recommended sites like Namecheap provide domain privacy and auto-renew options.

Design a Website

Building a custom website on that domain is your farm’s virtual home. Use website builders like Wix for easy drag-and-drop layouts, accepting online orders, and seamless mobile optimization. Expect prices from free for basic sites up to $20/month for advanced e-commerce functionality. Alternatively, freelancers on Fiverr can custom-code sites for just $100.

12. Join Associations and Groups

While organic farming starts in the dirt, expanding your networks is crucial to growth. Local and national associations, events, and online groups provide camaraderie while sharing invaluable insights into increasing crop yields, accessing new markets, and advancing the organic movement.

Local Associations

Seek out a chapter of the Organic Farmers Association (OFA) to join passionate food producers striving for sustainability like yourself. The national organization has regional cooperatives across the U.S. focused on education programs and policy advocacy to benefit organic operations. Expect dues between $50-$150 annually.

Local Meetups

Hands-on workshops about reducing input costs and regenerative techniques led by researchers and veteran growers alike. Many events also facilitate business-to-business networking and recruitment for hard-to-fill seasonal positions. Use listing sites like Meetup to find upcoming conferences near you for fees typically under $75 per ticket.

Facebook Groups

And don’t overlook the power of the digital community within organic farmer Facebook groups. For example, the thousands of members of Organic farming freely exchange advice about drought-resistant seeds, no-till practices, and soil nutrients (primarily coming from organic and natural sources such as nightcrawlers ). Other groups like Organic Farming & Self-Sustainability also foster valuable mentoring.

13. How to Market an Organic Farm Business

Spreading the word about your chemical-free bounty requires strategic promotion to connect local foodies seeking transparency with how their produce is grown. Leveraging personal networks, customer referrals, targeted digital ads and specialty farm publications/events ensures a thriving CSA and stand bursting with loyal shoppers.

Referral Marketing

An initial customer base must be nurtured through impeccable customer service and community goodwill. Pay it forward by gifting basket subscriptions and gift card rewards for referrals. Word of mouth, more than any slogan or jingle, makes an organic farm endure.

Digital Marketing

Digital platforms provide targeted promotion opportunities:

• Geofenced Google/Facebook ads spotlighting in-season cherry tomatoes offered to nearby households for free delivery on orders over $15
• Instagram Reels showcasing the sowing and harvest process from seed to market basket to attract sustainability-focused Millennials
• YouTube tutorials answering FAQs on specialized techniques like vertical growing in converted shipping containers
• Search ads for niche keywords like “grass-fed lamb CSAs” in regional hubs
• Retargeting banners across sites reminding customers of the heirloom tomato options available.

Traditional Marketing

Don’t ignore traditional channels favored by older generations making up significant organic shopper segments:

• Booth at the weekly county farmers market provides product sampling and specials to capture shoppers’ attention
• Team sponsorships and jersey ads for local youth sports like 4H leverage parents’ goodwill
• Direct mail postcard blasts announcing seasonal U-Pick berry availability
• Listings in culinary/farm life publications like Edible Communities
• Flyer placements in health food stores, churches, and community boards

The keys to marketing an organic farm sustainably are conveying your authentic passion for the land and highlighting the care behind each pepper and greens harvest. Build community through welcoming event hosting and forging partnerships with chefs/florists/beekeepers. What your organic farm nurtures is much more than exceptional produce – it’s the future well-being of both people and the planet.

14. Focus on the Customer

While nurturing healthy topsoil and crops are central skills for organic farmers, cultivating lasting customer loyalty through stellar service is equally vital to viability. Just like ripening cantaloupe, the farm-to-table journey hinges on thoughtful handling of every patron interaction.

Focus first on hospitality basics within the farm stand like quickly addressing questions from curious first-timers or sampling juicy heirloom varieties to inform rather than push sales. Such guidance builds trust in your chemical-free mission.

Further boost satisfaction by pre-emptively resolving potential issues, from proactively reaching out if a CSA box runs light during a drought week to replacing damaged eggs en route. Refunding without question also speaks volumes.

Exceeding expectations on delivery instructions for a struggling single mom or adding a surprise lavender bouquet to large orders sparks joy and word-of-mouth referrals. Seek customer feedback regularly to continually improve operations.

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Check Out Our Latest Articles

• Organic Farm Business Plan

Article Index:

2.0 Company Description

3.0 products, 4.0 market analysis, 5.0 marketing strategy and implementation, 6.0 organization and management, 7.0 financial plan, 1.0 executive summary.

Once the humble family vegetable garden, Franks Organic Farm is today a one acre working farm with over 30 varieties of vegetables. When Frank Burns was laid off from his corporate position three years ago, he first he turned to the vegetable garden for money saving / economic reasons. But with the uncertainty of recent events in the Middle East, the energy crisis, the long term effects of reliance on fossil fuels, and his personal philosophies on conservation, Frank Burns and his wife Kathy, turned this family vegetable patch into a thriving certified organic produce business.

Franks Organic Farm is based on the sound principles of conserving natural resources, limiting the carbon footprint, growing, hiring and eating locally grown and prepared foods, and making the world a better place to live in. This unique perspective clearly shows in the quality of the produce, the well cared for gardens, and natural friendliness and ease of its owners.

Franks Organic Farm was created to meet the growing needs of a community that shares these same views and is concerned about what they eat and feed their children. This is a community that is tired of ‘fresh’ tomatoes bought at the local grocery store. When more than likely the “fresh” tomatoes were picked while still unripe, shipped 3,000 miles over several days/weeks, and then artificially “ripened” using ethylene gas, thus robbing it of practically all of its nutritional value.

Franks Organic Farm is a Community Supported Agriculture (“CSA”) Business entity. CSA is both a marketing strategy and a philosophy. The farmers sell shares (subscriptions) in the next season’s produce, usually before the season begins. Each week of the season, the member receives a ‘share’ of produce from the farm. In some cases the members are involved in decision-making of all aspects of the operation; in others the farmer makes all the decisions. Each CSA is as unique to the farmer and the community it serves. Members may pick up their boxes at the farm, at delivery sites, or home delivery may be offered.

The purpose of this business plan is to provide a blueprint for near term and long term goals. The business plan will be utilized as a tool to gauge how well the farm is doing in the future compared to their initial goals and keep them on target. The business plan is also a tool for lenders, explaining the need for initial financing, the source and use of funds, and debt repayment capabilities.

1.1 Business Objectives

Franks Organic Farm has simple objectives: provide healthy and delicious tasting vegetables while simultaneously leaving a minimal carbon footprint. In order to accomplish this, the farm plans to:

• Sell 60 shares by Year 2 and have full-time income or 90 shares sold by Year 3.
• In Year 4, Franks Organic Farm plans to purchase an additional 9 acres for a total of 12 acres. The initial 3 years of operations will provide the excellent credit history and track record necessary for this large purchase.

1.2 Mission Statement

Franks Organic Farm’s mission is to raise the best tasting and finest quality fruits and vegetables for the local community. Franks Organic Farm uses only natural and sustainable farming methods, free from pesticides or fertilizers. Natural foods and natural farming methods leaves a smaller carbon footprint while simultaneously improves the health of its customers and its local community.

1.3 Guiding Principles

Franks Organic Farm’s slogan is simple: “Live life simply and simply live”. The owners also believe in contributing to their community and the planet by:

1. Local Franks Organic Farm believes that in order for the survival of the planet, we must rely on local resources. Buying from local farmers supports the local economy.

2. Sustainable Living By reducing reliance on energy is better for the planet and conserves our natural resources.

3. Satisfied Customers Happy members ensure repeat business and their referrals grow the business.

1.4 Keys to Success

Below are a Franks Organic Farm’s Keys to Success:

• Superlative Communication  – Franks Organic Farm keeps its members current on all aspects of the farm – through its weekly newsletters and blog updates on what is happening during the winter months such as new and exciting vegetable offerings being planted in the greenhouse. Additionally, Franks Organic Farm encourages member feedback and input and has its members complete surveys and questionnaires regarding how the farm is doing and what can be done to improve operations.
• Healthier Food Choices  – All vegetables are USDA certified organic. The vegetables are pesticide free and chemical free and no preservatives are used.
• Support the Local Economy – Statistically more than 70 percent of the local food supply is grown outside the state. Buying from Franks Organic Farm ensures that its members buy locally and creates jobs that support the local market.
• Offer Personalized Selections  – Franks Organic Farm strives to be the leading CSA farm supplier of choice by providing customized offerings to its members. If, say a member wants a cucuzzi fruit – Franks Organic Farm will grow this item if the soil and temperatures can accommodate this item. By providing foods the customers want (and will actually eat) cuts down on waste and makes the planet a better place for everyone.
• Home Delivery  – Franks Organic Farm will establish weekly delivery times that are convenient for its customers. This saves customers time and gas money – making everyone happy. Alternatively customers will also have the option to pick up directly at the farm.

Frank and Kathy Burns run, manage, and operate Franks Organic Farm. The company initially sold farm to market then quickly began supporting local restaurants with surplus (waste) sold at the local farmers market. Frank and Kathy are operating the business as a CSA, a business for the first time this year.

The Burns selected the CSA model, in which both the farmer and the members have a mutual interest in the crop. And because the shares are essentially presold prior to planting, the ‘waste’ factor (or excess crops risk) are eliminated. Based on their success at the farmer’s market and local restaurants, the Burns have already sold 100 percent of their 30 shares.

Franks Organic Farm is located on one of three acres located at the Burns’ primary residence in Plymouth, Wisconsin. During the off season, the owners of Franks Organic Farm will actively target and market new members, engage in public speaking events, and complete their forthcoming E Books.

2.1 Ownership

Franks Organic Farm is a C-Corporation formed in the State of Wisconsin and is wholly owned by Frank and Kathy Burns.

Frank Burns, a former Human Resources Director at Sargento Cheese, was recently downsized. Not desiring to re-enter corporate America, and concerned about the environment, global issues and the state of the economy, Frank began expanding his family garden. What began as a way for the family to save some money and reduce the carbon foot print, today has grown from its small ¼ acre plot to over 1+ acre with plans for expansion to 12+ acres. A shrewd businessman and well known in the community, Frank initially approached colleagues and friends in the local restaurant community. These connections marked the beginning of business for the startup farm and as word of mouth spread, Franks Organic Farm attracted ten other additional restaurants. All surplus was sold at the local farmer’s market.

Kathy Burns is an elementary school teacher for the Sheboygan Area School District. A graduate of Marquette University in Milwaukee, Kathy has been teaching fifth grade Science for over ten years. Raised on a family dairy farm, Kathy’s family also had a small fruit and vegetable farm and she loved helping the family grow and harvest the crop. Mrs. Burn’s summer schedule is flexible and helps the family maintain the garden during the busy summer growth season.

2.2 Legal Form

Franks Organic Farm is C-Corporation formed in the State of Wisconsin. The entity is wholly owned by Frank and Kathy Burns.

2.3 Start-Up Summary

The Burns have been managing the family farm successfully for the last fifteen years. Recently the owners installed a greenhouse with warming lights for early starts. They also invested in a pickup truck (2005 Ford F150) for delivering vegetables to the members. Most recently they purchased a tractor and borrowed their neighbor’s attachments as needed for harvest.

Last year, Franks Organic Farm passed the stringent requirements needed to qualify as certified organic as deemed by the USDA. This allows them to market all produce as organic and can also bring higher margins when surplus produce is sold outside the CSA or to restaurants or market stands. The Burns realized that although consumers may not understand all the requirements associated with the organic label (such as pesticide control and fertilizers), the consumer is comfortable with the label. This, is one of the keys, they believe which will set Franks Organic Farm apart from its peers.

All pre-harvest and harvest supplies have been paid for out-of-pocket. The owners have already spent in excess of $40,000 to start their farm business.

When the owners announced they were becoming a CSA, the news traveled fast and demand for their products was so great that they have already presold 100 percent of their shares for the upcoming growing season. In order to meet these demands and meet the opportunity for growth, the owners are seeking an operating loan from the USDA’s Farm Service Agency, Insurance Company or private investor.

The credit facility will be used to meet operating and cash flow needs for the pre harvest and harvest season. The $14,500 credit facility will be secured by a first lien position on the 3 acre plot of land, all buildings and improvements (a greenhouse). The land is valued at $30,000 and is currently owned free and clear by the Burns. The land is adjacent to the Burn’s primary residence.

2.4 Location and Facilities

Franks Organic Farm is located in Plymouth, Wisconsin, located in Sheboygan County Wisconsin. Sheboygan County is located in east-central Wisconsin. Sheboygan County is a one-hour drive to Milwaukee and Green Bay, and less than a 3 hour trip Chicago. Interstate 43 and State Highways 23 and 57 make are the main highways.

Sheboygan County’s population is 117,566. It has grown 4.4 percent between 2000 and 2009. The County is expected to continue to grow by a similar rate until 2015 when it reaches a population of 123,209. Major employers include: Kohler Company, Bemis Manufacturing, Aurora Health Care, Johnsonville Sausage, Rockline Industries, and Sargento Foods. The City of Plymouth is located in west-central Sheboygan County along State Highways 23, 57, and 67. It is the second largest municipality in Sheboygan County and one of the fastest growing in the County. (Sheboygan County Economic Development Corporation).

3.1 Products/Services Descriptions

Franks Organic Farm’s growing season will start in early May and end in October with the goal of 20 weeks. Shares will be comprised approximately 10-15 different crops every 8 weeks of in-season produce. Here is an example of types of produce throughout the season:

Spring: Beets, Broccoli, Cabbage, Carrots, Garlic, Green Onions, Kale, Lettuce (several varieties), Radishes, Peas, Spinach.

Summer: Beans, Carrots, Cucumbers, Eggplant, Green Onions, Leeks, Melons, Onions, Sweet Peppers, Summer Squash, Tomatoes, Zucchini.

Fall: Beans, Beets, Broccoli, Cauliflower, Cucumbers, Chard, Lettuce (several varieties), Potatoes, Red Onions, Spinach, Winter Squash.

All share sales are sold in advance.

A Full Share will provide a family of four vegetables for a week. (estimate). Likewise, a Half Share provides a week of vegetables for two people. Full Shares are $750 and Half Shares are $375 for the season. (The owners are currently only considering the sale of Full Shares at this time).

The Burns will utilize a detailed planting schedule which historically has helped immensely especially in the hectic summer planting season. The detailed guide begins with the plantings that tolerate the coldest spring and these are started in their greenhouse. Summer crops will be shaded with cloths if necessary (like spinach for instance). The farmers will plant many tomatoes (which are very popular) and only some eggplant which is less popular. Other considerations that are detailed in the planting calendar will be the amount of produce that is needed. One way to plant more is to plant smaller amounts more often. Examples include broccoli, carrots, scallions, and summer squash. The Burns have learned that planting these items two or three times during the growing season yields more crop and the surplus can readily be sold at the farmers market. Picking peas is difficult at harvest time, so the Burns always plan to plant surplus to make harvest time worthwhile. It is expected that any surplus can be sold at the farmers market.

3.2 Competitive Comparison

Plymouth, Wisconsin, reports six CSA entities, of which three represent direct competition for the subject.

3.3 Product/Service Sourcing

All produce will be grown on Franks Organic Farm. Frank and Kathy Burns will both actively work and manage the farm.

Distribution At Franks Organic Farm, members have the option for home delivery or to travel to the farm on the scheduled pickup day.

The home delivery choice is what most members prefer and allows the Burns to deliver the farm fresh produce directly. This distribution method has the least carbon footprint, with one driver and one truck. It is obviously the most intensive for the Burns and with busy summer season, this can be too time consuming for them. Items are delivered in reusable boxes. This distribution method represents any easy way to deal with any shortfalls in produce the Burns will simply ‘mix and match’ items for the members.

Alternatively, the members have the option to pick up the produce directly at the farm. The Burns enjoy this option especially during the busy season, because it frees up some of their time. This option requires that the driveway be easily accessible to the members and that the farm appears in good condition at all times. This onsite setup allows members to view firsthand what is growing, the condition of the plants and soil. The members will also be aware of any draught issues for example, and what remediation efforts the farmers are taking to care for the crops. On pickup day, the Burns have setup a stand and a ‘buffet-style’ layout in which members can pick and choose up to a specific limit of produce for that week. This option creates a ‘festive’ environment on the farm in which members can interact with each other, the farmers, and exchange recipes. If any shortfalls exist, this mix and match buffet style provides the solution. Just like home delivery, members are given a one box to fill and refill weekly with their selections for the duration of the growing season.

3.4 Inventory Management

N/A. The CSA farm concept is all about freshness. The produce is delivered immediately from the farm to the (member’s) table.

3.5 Warehousing and Fulfillment

3.6 future products/services.

• The owners of the farm have plans to introduce honey bees the following season and offer honey as another organic product.
• On occasion, Franks Organic Farm partners with its neighboring dairy farm and an organic bakery in town. From time to time members will find fresh cheeses and organic breads in their weekly selection boxes. Franks Organic Farm owners are currently considering joining forces with a local orchard company as well. The orchard will supply apple butter and jams.
• Within one year, Franks Organic Farm plans to utilize an additional acre and add 30 more families to their growing share program. They plan to add 30 more families (shares) by Year Three.
• Franks Organic Farm has long term plans to purchase an additional 9 acres or a total of 360 shares. To support the farm, they will hire apprentice farmers, part-time delivery drivers and a bookkeeper. The Burns would then be able to focus their efforts on crop research, marketing trends and their members. Part of the focus of organic growing is returning back to the community. All employees will earn fair wages for work performed.
• Other future plans include accessing the internet to increase awareness and the importance of local and community farming. Kathy Burns is compiling a recipe E-book which will supplement cash flow during non-productive months. In his spare time, Frank Burns is also compiling an E-Book to sell on Franks Organic Farm website. The book will focus on modern organic farming techniques for the novice farmer. A second book is forthcoming dealing with environmental concerns and social responsibility.
• Additionally, Franks Organic Farm will publish a weekly newsletter to be included in the member’s box as well as the website. The newsletter will identify what is in the weekly box, what is happening on the farm and recipes. The newsletter will educate members to seasonal eating and sustainable principles.
• Franks Organic Farm has future plans for constructing a vegetable processing area with electricity and water. The facility will have a walk in cooler, a washing and grading area, stainless steel tables and two scales. Additional capital expenditures will be for the purchase of a newer (used) pickup truck and attachments for their tractor. (Currently they borrow their neighbor’s).

Sheboygan County’s cost of living is lower than the national average and housing costs are much lower than the national average. At the same time, Sheboygan County personal income is greater than the national average. In other words, this community not only has a high demand for organic items, but it can afford them as well.

4.1 Industry Analysis

This analysis is based on the North American Industry Classification System (“NAICS”) 111998: Agriculture – All Other Miscellaneous Crop Farming. The US crop production industry includes about 1 million farms with combined annual revenue of about $205 billion. Major companies include Dole Food Company, Chiquita Brands International, and Sunkist Growers. Crop farming is the growing and harvesting of field crops such as grain, oilseeds, tobacco, dry beans, potatoes, vegetables and melons, fruits and nuts, and floriculture.

Global crop production revenue exceeds $1 trillion. The US and China are among the top crop producers. Large companies outside the US include Fresh Del Monte Produce (headquartered in Cayman Islands); Total Produce (Ireland); and Amaggi Exportação e Importação (Brazil).

Demand is driven by federal agricultural policy programs, food consumption trends, and the grain and oilseed export market. The profitability of individual companies depends on maximizing crop yield and minimizing disease risk. Large companies have advantages in highly automated technologies and access to the latest in seed and crop technologies. Small operations can compete effectively by harvesting heirloom, non-genetically modified (GM), or specialty products. The industry is capital-intensive: average annual revenue per employee is about $390,000. (First Research)

The CSA makes the following generalizations/guidelines regarding its industry:

• New entrants should practice farming 2 years prior to making a commitment to the challenge of CSA farming
• In general, 20-30 shares per acre is possible
• 30 shares per farmer or laborer is possible
• To earn full time income 80-100 shares may be necessary
• The share price ranges from $300-$800 per share annually ($15-$40 per share weekly) (CSA – Michigan 2012)

4.1.1 Market Size

The US crop production industry includes about 1 million farms with combined annual revenue of about $205 billion. (First Research)

Although the USDA does not have official statistics on U.S. organic retail sales, information is available from industry sources. U.S. sales of organic products were $21.1 billion in 2008–over 3 percent of total food sales and were expected to reach $23.0 billion in 2009. (Nutrition Business Journal)

4.1.2 Industry Participants

Major participants include Dole Food Company, Chiquita Brands International, and Sunkist Growers. (First Research)

4.1.3 Main Competitors

Plymouth, Wisconsin reports six CSA entities, of which three represent direct competition for the subject.

Backyard Bounty W4873 County Hwy U Plymouth, WI 53073 http://ljcomerford.wordpress.com/

This is a 22 acre family owned farm and has been operating as a CSA for several years. In addition to its offerings of organic fruits and vegetables this farm also sells organic poultry and eggs. The farm had mixed reviews by its members.

Eilert’s Acres N5575 County Road ZZ Plymouth, WI 53073 http://www.eilertsacres.com/

Owned by Edward and Kay Eilert, this farm began business as a CSA in 2011. The farm provides many of the same vegetables as the subject as well as providing farm to door delivery service.

Springdale Farms W7065 Silver Spring Lane Plymouth, WI 53073 http://www.springdalefarmcsa.org/

This CSA farm is the most established in the direct market and has been in existence 20+ years. Springdale Farm has various pick up sites in the greater Sheboygan MSA. Based on the farm’s website, members are not given the option to select specialty vegetables and instead members are encouraged to ‘trade-in’ any unwanted produce back to the community to share and thus avoid waste. This has not proven to be a deterrent for the farm’s following. For the most recent growing season, the farm has a waiting list.

The following are CSA businesses that compete indirectly with the subject:

Old Plank Farm W6028 County Road C Plymouth, WI 53073 http://www.oldplankfarm.com/

This entity only sells its goods at a local farm stand; it does not sell shares. In addition, this indirect competitor sells organic eggs at its farm stand. Based on its limited selection and differing offerings, this indirect competitor attracts individuals who are only seeking small, specialty quantities of produce, but do not want to commit to purchasing shares for a full season.

Log Cabin Orchard N4797 County Rd E Plymouth, WI 53073 www.logcabinorchard.com

This indirect competitor is a fruit orchard selling apples, pears, plums, honey, apple and maple syrup, fresh apple cider and apple butter. In the fall, this CSA generally offers U-Pick apples options. Due its differing selection of products, this entity is not a direct competitor.

Red Twig Farm http://redtwigfarm.wordpress.com/

This entity only sells to Goodside Co-op and Trust Local Foods; because this CSA farm differs in its target client, it is does not represent a direct competitor for the subject.

4.1.4 Market Segments

2008, Sheboygan County’s median household in-come was $51,681 and the mean household income was estimated to be $61,889.

Nearly 72 percent of Sheboygan County’s housing units are owner-occupied. The median housing value in Sheboygan County is estimated to be $149,700, which is $43,000 less than the United States estimated median home value. At the same time, Sheboygan County income is higher than the national average, which is the reason for high home ownership rates.

Franks Organic Farm is targeting the households with incomes above $50,000. The target market represents approximately 51.5 percent of the total population, which should easily absorb Franks Organic Farm’s entrance.

Sheboygan County’s population is 117,566. It grew 4.4 percent between 2000 and 2009. The County is expected to continue to grow by a similar rate until 2015 when it reaches a population of 123,209.

4.2 Market Tests

While selling produce to local restaurants, Mr. Burns realized that the CSA option could potentially come to fruition. Historically the restaurant patrons always asked the source of the beautiful and delicate lettuces and quality tomatoes. Realizing the popularity of his produce, Mr. Burns, while continuing on a quest for global carbon footprint reduction, began researching the possibility of beginning a CSA effort. With the help of his restaurant partners, Mr. Burns posted fliers and brochures in their lobbies. By the end of the summer, Franks Organic Farm had presold 100 percent of the shares for the upcoming growing season.

4.3 Target Market Segment Strategy

Franks Organic Farm is targeting households with earnings in excess of $50,000 in the greater Sheboygan County. Approximately 51 percent of the population resides in this category. Other farmers have missed this target by focusing on traditional farming methods while Franks Organic Farm has obtained the Certified Organic stamp of approval. Additionally, Franks Organic Farm will focus its energies primarily on its members and provide services exceeding expectations by offering farm to door delivery service, providing supplemental local organic products and by providing a festive like atmosphere at the farm – especially on harvest day and other special occasions.

The following chart depicts the target market:

4.3.1 Market Needs

According to a USDA survey of market managers (Organic Produce, Price Premiums, and Eco-Labeling in U.S. Farmers’ Markets, April 2004) found that demand for organic products was strong or moderate in most of the farmers’ markets surveyed around the country, and that the managers felt more organic farmers were needed to meet consumer demand in many states. (USDA updated 06/19/12)

As demonstrated on the national map Sheboygan County represents a strong demand for organic produce.

“Organically” grown’ is the key. The term “organic” is now legally defined and can only be used to describe produce that is grown in accordance with the USDA rules and is certified as such by an independent agency.

4.3.2 Market Trends

While consumers may not understand all the requirements associated with being certified organic, they are comfortable with the label. Which is why Franks Organic Farm sought the services of the independent certification agency and has earned the distinction to be labeled an organic farm. Comparatively their CSA counterparts that continue to operate by traditional farming methods, Franks Organic Farm holds itself to a higher standard, which in time, they believe will attract and keep new members.

4.3.3 Market Growth

U.S. sales of organic products were $21.1 billion in 2008 – over 3 percent of total food sales- and were expected to reach $23.0 billion in 2009 (Nutrition Business Journal).

4.4 Positioning

Franks Organic Farm is aware that its members are crucial to its survival and growth. The owners will make certain each member feels that Franks Organic Farm is indeed his/her farm! After all, they do own a portion of the farm! The Burns will encourage its members to stop by to see operations. In addition the owners will host an open house at harvest time to celebrate the season’s bounty.

To further ensure its members are satisfied and encourage retention, the owners will use surveys and questionnaires as tools to gauge member satisfaction. The surveys/questionnaires will allow members to express feedback and also represent additional opportunities to communicate with Franks Organic Farm.

Franks Organic Farm is targeting households with earnings in excess of $50,000 in the greater Sheboygan County. Other farmers have missed this target by focusing on traditional farming methods while Franks Organic Farm has obtained the Certified Organic stamp of approval. Additionally, Franks Organic Farm will focus its energies primarily on its members and provide services exceeding expectations by offering farm to door delivery service, providing supplemental local organic products and by providing a festive like atmosphere at the farm – especially on harvest day and other special occasions.

5.1 SWOT Analysis

SWOT stands for strengths, weaknesses, opportunities and threats. The following is the SWOT analysis for Franks Organic Farm.

5.1.1 Strengths

• Franks Organic Farm receives share proceeds prior to start of the season which helps to pay for seeds, supplies and inputs
• During the off-season the owners of Franks Organic Farm can market and recruit new members and complete their E Books
• Franks Organic Farm will establish long term relationships with its members lasting at least one season
• Members share in the financial risks of the farm
• Low capital requirements, relatively inexpensive startup business

5.1.2 Weaknesses

• As many as 30 or more different crops must be grown to provide diversity to members throughout the season
• Location-if the farm is not close to its customers, it becomes burdensome for the farmer to make deliveries
• Labor intensive – during the season, crops are continually being planted, harvested, cleaned, sorted and packed – leaving little extra time for the farmer
• Member retention is key – if the member is not happy the likelihood of returning next season or providing a good recommendation is not good.

5.1.3 Opportunities

• The greater Sheboygan County is a prime location for organic produce with an historically high demand.
• Because many farmers still utilize traditional farming methods (pesticide and herbicide applications) Franks Organic Farm stands out from the crowd with its Certified Organic stamp of approval

5.1.4 Threats

• New entrants to the market pose a threat. Partially mitigating this risk is the recommended 2-3 year trial farming period – which would give Franks Organic Farm the necessary ‘heads-up’ to go against (said) competitors.
• Weather, storms, pests – can damage or even destroy crops.
• The farm is economically tied, and in inflationary times, consumers could revert back to traditional methods of buying fruits and vegetables at the local grocery store.

5.2 Strategy Pyramid

Strategy Create awareness that Franks Organic Farm delivers a wide variety of quality wholesome and healthy vegetables on a consistent basis.

Tactics Create a specific, detailed planting guide, planting several times over the growing season.

Programs Post fliers and brochures at local restaurants, and locally owned and operated organic/natural item stores in town.

Strategy Create a community of awareness to think globally, act locally.

Tactics Constant communication with members will foster the awareness who in turn will relate these ideals to the local community.

Programs Host open house events at Franks Organic Farm for special events such as Harvest Time and Earth Day.

5.3 Unique Selling Proposition (USP)

Kathy and Frank Burns stand out from the competition: They are experienced operators and have demonstrated ability to grow large quantities of many different vegetables. They have demonstrated their ability to manage the crops, harvest, pack and deliver to their customers. They are doing business as a CSA. And unlike their conventional farming peers, Franks Organic Farm has met the stringent requirements to be designated Certified Organic.

5.4 Competitive Edge

CSA farming differs greatly from traditional farming due to the fact that members have ownership shares in the farm. Bearing this in mind, Franks Organic Farm will wholeheartedly focus on this vital aspect to retain members. The owners will constantly stay in touch with their members and encourage them to come and visit ‘their’ farm.

Unlike its traditional farm stand competitors, Franks Organic Farm will offer a variety of selections – up to 30 different types of produce during season. It should be noted that variety is a double edged sword: Many members will join a CSA because of the variety of offerings. It is important to have plenty of the basics like green beans, tomatoes and carrots. Conversely, too little a selection will be disappointing. To meet this balance, the Burns have created a questionnaire asking members what they prefer.

The Burns also provide weekly recipes and meal planning tips to coincide with the weekly boxes. Customers like the convenience of knowing how to prepare the items they are picking up from ‘their’ farm.

5.5 Marketing Strategy and Positioning

Franks Organic Farm will utilize product differentiation to stand apart from the competition. By growing wholesome organic produce, offering farm to door service, and actively engaging with its members, Franks Organic Farm will go above and beyond to maintain and grow its member base.

5.5.1 Positioning Statement

Franks Organic Farm will be the premier organic CSA in the greater Sheboygan County by offering at least 30 of the most delicious and mouth watering organic vegetables available in the local growing area and by providing exceptional relationships with its members, its community and the planet.

5.5.2 Pricing Strategy

Franks Organic Farm will utilize a fair price for a fair value. Some research suggests that the CSA farm is usually lower in price than organically grown food from local markets and is often less than foods from the supermarket. This could be a selling point for attracting new members, however, it also important to note this in not about cheap food.

5.5.3 Promotion and Advertising Strategy

The best strategy is word of mouth advertising. When people are happy with their shares they tell friends.

Franks Organic Farm will place brochures with other CSA businesses such as the local organic bakery and neighboring dairy farm.

Franks Organic Farm’s website will provide additional marketing information. In addition to its map and location, Franks Organic Farm will be listed with other CSA organizations such as national CSA and the USDA.

In the off season, the Frank Burns will provide lectures to civic and environmental groups.

During harvest time, the farm will be open to the public to browse and purchase surplus from the harvest bounty. They will also host special events such as Earth Day.

5.5.4 Website

Franks Organic Farm’s website will be a vital key in marketing. In addition to providing its history, location and contact information, the site will also have links to its CSA affiliations, the USDA website and current organic industry topics. The website will also have links to the current weekly newsletter (during season) and off season the owners will maintain a blog of what items are currently going to seedlings in the greenhouse and what new and exciting produce will be available in the upcoming season.

Additionally, the site will have links to Kathy and Frank’s forthcoming E-books which will provide additional cash flow during the non-production months.

The site will also take advantage of social media and have a Facebook link as well.

5.5.5 Marketing Programs

Franks Organic Farm will actively work to engage its members and local community by:

• Creating fliers and brochures and posting in community gathering places such as churches, community centers, farmers markets and other environmentally centric business.
• Franks Organic Farm’s website with emphasis on its USDA Certified Organic stamp of approval; the website will also have links to the USDA website and the national CSA website.
• Word of Mouth will play an important role

5.6 Sales Strategy

Franks Organic Farm has already sold all 30 of its shares for the upcoming season with future plans to sell 60 shares in Year Two and 90 shares in Year Three. In order to meet these goals, the farmers will continue to rely on advertising fliers, its online presence and most importantly word of mouth. The word of mouth recommendation from a satisfied member not only generates an opportunity for repeat business, but also is beneficial in recruiting new members.

5.6.1 Sales Forecast

The following table represents the annual sales forecast for the initial three years of operations:

Table 5.6.1 Annual Sales Forecast

5.6.2 Sales Programs

Franks Organic Farm’s primary sales program is the sale of shares. Additional sales programs will come from the sale of their forthcoming books. Honey production is expected to come online by Year Three.

During the slow winter months, both Frank and Kathy Burns will actively market their Franks Organic Farm, by providing speaking engagements at local events, becoming involved in the local community primarily its environmental issues, and writing and publishing papers supporting locally grown businesses. This slower time will also be utilized to create the weekly newsletter templates which coincide with the weekly deliveries. Historically the members love the newsletters – which facilitate additional contact between farmer and member. The weekly newsletter summarizes what is included in the weekly delivery, offers recipes and cooking suggestions, and summarizes what activities are transpiring at the farm. (This will be helpful especially during the busy summer months when there is little time available to write the weekly newsletters).

Franks Organic Farm is a C-Corporation doing business in the State of Wisconsin.

5.8 Milestones

The following chart depicts the Milestones Franks Organic Farm anticipates achieving:

Table 5.8 Milestones

5.9 Exit Strategy

In the event that Franks Organic Farm will cease operations, all assets (farm equipment, tools, scales) will be sold at auction. Proceeds from the sale will be first be used to pay off the financial obligation to the operating capital loan and the remaining proceeds will be paid to the members (if any obligations remain).

6.1 Organizational Structure

Franks Organic Farm will be wholly owned and operated by Frank and Kathy Burns. Mr. Burns will perform all office and accounting functions such as calculating the initial garden costs, seed costs and planting times. Both owners will harvest the crop. Franks Organic Farm will hire one apprentice farmer for each additional acre that is cultivated. Over time, they have plans to hire part-time delivery drivers as well as bookkeeper.

6.2 Management Team

Frank Burns, will actively manage the farm. Farm management duties will include the creation of a detailed planting guide and building a living soil. Only sustainable and organic farming methods will be used with no reliance on off-farm inputs and chemical pesticides/fertilizers. Growing methods include crop rotation, planting cover crops, applying finished compost and mulches, and encouraging beneficial insects, weed management, irrigation and harvesting. Mr. Burns will also be responsibility for preparing detailed accounting records for their tax accountant.

Kathy Burns will also actively participate in managing the crop during the busy summer months. During the slower winter months, both will work to complete their E-books which will be sold on line and supplement revenue. They will also actively market Franks Organic Farm by speaking to local civic groups, providing tours of the farm, and drafting the weekly newsletters.

6.3 Management Team Gaps

Franks Organic Farm will rely on its Tax Accountant to assist with tax reporting.

6.4 Personnel Plan

The following is a summary of Franks Organic Farm’s Personnel Plan.

Table 6.4 Personnel Plan

6.5 Board of Directors

The financial plan will cover the following:

• Required Cost of Start-Up
• Profit and Loss
• Balance Sheet
• Financial Ratios

7.1 Important Assumptions

• Revenues increase 50% Year One and 33% Year Two
• The following variable expenses are tied to volumes and will increase the same amount as revenue: salaries, fuel charges, postage, repairs and maintenance and supplies
• The loan example is based on traditional lending – with a collateralized working capital loan, fully amortizing with a three year pay down.
• The loan interest rate is based on the Prime Lending Rate plus 4.00%; Wall Street Journal Prime at this writing is 3.25%

7.2 Start-Up Costs

The following chart summarizes start-up expenses:

Table 7.2 Start-Up Costs

7.3 Source and Use of Funds

To date, the owners have come out of pocket approximately $40,600 or 74 percent of the project’s total costs. The following chart summarizes the source and use of funds:

7.4 Break-Even Analysis

Total fixed costs are estimated to be $18,437. The variable costs (salaries, fuel charges, postage, repairs and maintenance, and supplies) are estimated to be $109.74 per unit (full share). Units are considered full shares for analysis purposes and do not consider half shares. Based on the assumption of $750 as the average share price, the breakeven revenue then is $21,597 or 4 units (shares). This is further depicted in the Table Below and the Graph that follows:

7.5 Projections

7.5.1 projected profit and loss.

Franks Organic Farm’s estimated profit and loss for the initial three years of operations is reflected below:

Table 7.5.1 Pro Forma Profit and Loss

7.5.2 Projected Cash Flow

The statement of cash flow shows the incoming and outgoing cash of Franks Organic Farm:

Table 7.5.2 Pro Forma Cash Flow

7.5.3 Projected Balance Sheet

The following chart depicts the proforma balance sheet:

7.6 Business Ratios

The following ratios are based on the North American Industry Classification System (NAICS) code 111998– All Other Miscellaneous Crop Farming. The ratio analysis compares the subject to industry peers based on similar asset size and revenues.

Table 7.6 Ratio Analysis

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