Help me out, please...(homestead business plan)

I'm trying to develop a business plan for our homestead. I've been working on it for a while now, and I think I've refined it pretty well. The part I'm having trouble with is the revenue/net income streams. I would like us to make more than I'm currently projecting, but I'm not sure how to do it.

Paul talks about making $100-200k from a permaculture system. I'm sure people can do it, but I'm not certain that's feasible on a 10 acre farm. I would like to net $40-50k, however. I've no interest in being one of the permaculturists who lives on $14k a year. Or less; I know one family that live on their permaculture homestead and make about $7k a year. That's their entire income! They're on food stamps and have dirt floors. I grew up in that kind of poverty and am not interested in returning to it, no matter the reasons.

But back to our farm. We have 10 acres, most of which is rolling hills. There's a spring-fed pond on the property and we intend on putting more ponds in. We have a baby food forest, but right now it only has a dozen trees and won't yield for another five or six years. We also intend to have a market garden and raise heritage breed chickens, ducks, goats, sheep and pigs. We'll sell breeding stock of the goats, sheep and pigs and also sell pork and eggs. We won't sell the chickens for meat; it's just not worth it for the return you get. I also want to sell flowers and bedding plants. Value-added products would be jams, jellies and soap.

Below are the best prices organic/natural farmers get at the most upscale farmer's markets in the two cities nearest us. The pork price is the average price of all the cuts and the berries aren't organic. I think we could boost the prices of both a bit, probably by $1 per pound or gallon.
Chicken Eggs $4 doz
Duck Eggs $6 doz
Most veggies $3 lb
Tomatoes $4 lb
Mushrooms $7 to $10 lb
Blackberries or Blueberries $15 Gallon
Raspberries $18 Gallon
Chickens $14 each
Pork $3.75 lb
Beef $5 lb
Flowers $5 bouquet
Jams $4/jar

Using these numbers and the yields we expect, plus the maximum size of the operation for two people, I have us grossing about $40k a year and netting just under $27K after expenses and taxes. This is just sightly more than the minimum we need to get by until the land is paid off.

My questions:
First, is this reasonable? I can't see people who are already paying a premium for organic and natural paying us much more just because we do permaculture. Maybe in the Pacific Northwest, but not here.
Second, how can I increase these numbers. I really, really don't want to work off-farm once the food forest is in production. I've considered farm stays, but we would have to invest a lot of money in building a place, etc, and I'm not sure how that would turn out.
Thanks!

Hi Rebecca - What part of the country/climate are you in?

I'm still in the process of getting our property established, so I'm not much help to answer your questions, but I am very curious to see what kind of responses you get!

My plan is for a lot of diversity on the property for our own needs, but when it comes to selling products, to specialize in just a few things. My thought is that if each of us on the property can market two or three types of products that net $5-10K/year, we will be doing quite well. Right now, my thoughts are bees, mushrooms and grapes. As the property develops and I see what does well, I may shift my focus from grapes to figs... I think staying flexible is important, so you can work with what excels on your property without a lot of input/expense.

Best wishes!

MOFGA: The Maine Organic Farmers and Gardeners Association puts out a price report monthly during the growing season. Here is the June 2012 Price Report.

Reasonable prices?
Your prices look to be in the ranges they show. Your $5/pound for beef looks to be a bargain.

Increasing the numbers?
Think bigger.
This is the Dervaes Family Homestead in Pasadena, CA. I understand they pull in $30k/year and produce most of their own food and energy. They do all this on 1/10th of an acre in the city.

It can be done. Looking down the road at replacing one's primary income source can be a daunting challenge. Think of it as how one eats an elephant: one bite at a time. You won't be throwing your doors open to a parade of people who can't get rid of their money fast enough. A little at a time is all you need. While flushing that FT job is a fine goal (it's at the TOP of my list), it may be more reasonable to get your farm going simply at first, bringing things online as you go. This is what weekends are made for. Picking up a hundred bucks on a Saturday is a fine start. This could be a Pick Your Own Berry operation or a booth at a farmers market. Do it again come Sunday, now its $200 for the weekend. For your zone, this is possible. Already this is $10k/yr, a quarter of your stated expectation. From there it's a matter of keeping on going.

If you are doing farmers markets or a farm stand, there will always be those products that have not sold. Perhaps you picked too many tomatoes, or you have a bunch of peppers with little spots. Using these as ingredients for value added goods can have a huge impact, not only on your bottom line, but on the line of products you have to offer. $5/pound for all-natural tomatoes is a fine achievement, but if you can turned unsold
fruit into all-natural tomato sauce, juice, paste, you'll command a premium price to be sure. Have too much tomato sauce on the shelf? Get the word out to your customers that you are having a customer appreciation spaghetti feast on the farm this Saturday at 2PM, feed them the sauce, and a salad made with some of those fresh greens you have growing. While they are there, they can pick a basket of fresh produce to take home, and its only $3/pound.

There's a million ways to make a few bucks with a farm in your back pocket. For $40k, I look at the top 20, and I want to earn $2-3k/year from each of these projects.
1 tomato
2 strawberries
3 eggs
4 goats
5 mushrooms
6 sheep
7 pigs
8 beef
9 jams
10 jellies
11 soap
12 ...

$2-3k/year from just the tomatoes is entirely doable. What do I need? 50 plants/week and some time to make a few batches of sauce.
$2-3k/year from strawberries is nothing.
$2-3k/yr from eggs...I just need chickens and people who eat eggs

If you are growing vegetables, in a wide variety, serving the needs of a family for a week is not so big an issue. If a customer spends $25-30/week and you can offer fresh vegetables every week of the year, thats $1000/year per customer. Now you're only talking about 40 customers. If you have an advertising project that gets you an extra customer every month, you'll be where you want to be in less than 4 years. Another couple of years and you'll add tree fruits to the equation. Perhaps adding another dozen trees each year is in order.

The Dervaes homestead on youtube:
Homegrown Revolution (Award winning short-film 2009)- The Urban Homestead

Rebecca,
One of the principles that we use in looking at our income and expences that you usually do not find in most accounting and business plans is that for every $1.00 that we do not spend but provide for ourselves is the equivalant of my making $1.50 net in my shop. So if I can alter our wood furnace to heat our water in the winter that saves us about $60.00 a month of hot water in addition to heating our home and shop, so the true savings is closer to $90.00 a month. Our garden and live stock provides about 80% of our food budget plus we raise extra animals to sell and we donate meat and produce to non profits for a tax benifit. We work from our shop on the property which helps with our taxes, and we have no commute, hard to measure the cost savings. I guess my point is that there are a lot of benifits and savings that can slip unnoticed in a non-traditional business plan. a large part of our philosophy is outside of the traditional view of a business plan, I guess you can call them soft benifits. We strive to simplify our lifestyle and reduce the need for income, rather than having hard numbers based on a more normal in our culture lifestyle. having an enjoyable life doing what we love is still work, but we do not need the expenses incured to tolerate the old corporate life we used to live.
kent

Hello Rebecca

I have a couple thoughts concerning boosting your income given the information you provided about your farm,

First, I think you could consider finding a neighbor, friend, or family member who has fruit trees of the same variety already in production, it is a common method to graft from established trees onto younger trees to reduce the amount of time new trees take to grow fruit.

Second, I heard many times in my sustainable agriculture classes that products with "value added" ie canned stuff, jams, pickles, sauces, etc. provide much more income than just the raw food. About this idea of value added many areas have local CSA kitchens which you can rent by the hour after your harvest to process/cool your produce.

Well hope these ideas help best of luck to you Rebecca!

Thanks for the replies thus far, everyone! Sorry I haven't been back on here; life's been really busy this week.

Okay, a couple of quick answers; we don't live on our homestead yet, and when we move there full-time we'll have to give up our current jobs because the commute is too long. We'll either have to find local jobs (tough), work from home, or make enough off the farm to make ends meet.

We will be expanding the food forest; we're going to place a big order next month, and the figures I've used have taken that into consideration.

Our primary crops will be fruit, veggies, mushrooms, and flowers. My estimates on what we can sell are based on what I think the maximum work two people can handle is. For example, I'm assuming fifty mushroom logs with four flushes that total two pounds a log. Four flushes is the most you can get per year in our climate, and it takes a good bit of work to handle the logs.

Oh, and the meat prices I used were averages of all cuts and the price per pound of a full pig or cow.

Chicken Eggs 183 dozen $732
Duck Eggs 40 dozen 240
Veggies 3000 pounds 9000
Tomatoes 400 pounds 1600
Mushrooms 100 pounds per flush 4000
Blackberries 60 gallons 900
Blueberries 60 gallons 900
Raspberries 30 gallons 540
Soap 3000
Classes 2000
Apples $5/lb*800 lbs 4000
Peaches $4/lb*100 lbs 400
Cherries $5/lb*50 lbs 250
Pears $4*20 lbs 80
Pawpaws $5/lb*40 lbs 200
Figs $4*30 lbs 120
Jams/Jellies/Salsas/Etc $4/jar *1000 jars 4000
Pork $4.75/lb*100lbs per pig*4 pigs 2137.5
Nigerian Dwarf Goats for breeding purposes $250 each *4 1000
Nigerian Dwarf Goats/for meat or pets $100 each *2 200
Jacob Sheep for breeding $250 each *4 1000
Jacob Sheep for meat/pets $100 each *2 200
Misc Fruit $4/lb*100 lbs 400
Piglets for Breeding $250 each *4 1000
Flowers $5/bouquet *200 bouquets +100 sunflowers +10 bouquets in vase 1300
Bedding Plants/Hanging Baskets $5/each (average)*200 1000

Grand Total: $40199.50
After Expenses and Income Taxes: $26934.75

I'm working to reduce the income we need to as low as possible, but until we pay off the land, it will be significantly higher than it otherwise would be.

Any other input would be appreciated. Thanks again!

All I have is Faith. All I can offer is Hope. I believe you can do this. It is the right thing to do and all the right reasons are out there. I've read through some of your other posts, and you seem to have your head on square. The last thing I want to do is rain on your parade.

However...

Please temper the following criticism with the fact that I only have a few short paragraphs from you about your plans, and I know nothing about your experience and passion, nor do I have any inkling as to how far along your place has come so far. You are quite serious about this so I'll shoot from the hip.

From your posts I see you refer to your maximum effort being sufficient to produce a satisfactory income. Moving to this homestead you will, in effect, be starting from scratch, with no employment income. You will have a mortgage on the property, and although low, you will still have some bills associated with living in a modern industrialized society. I'm not going to ask about your financial position, that's none of my business. In my experience, this project will be difficult to put together in a short time. What's more, I see no reference to contingency plans in event of troubles, of which there will be many.

In your latest list, you show an income of 40k, but in your first post you claim these fruit trees will not bear for five or six years. You've got 1000 pounds of product accounted for, plus jams and jellies, but none of this potential will be immediately realized. I must also question $5/pound for apples. That's about a buck per apple, seems pricey to me. Have you accounted for the time lag from starting a project to achieving a marketable product in your projections?

Fencing for livestock, establishing orchards, preparing the growing areas, making soap and jam, driving to town...there's a great deal of time demand. Making the jump into a new lifestyle can sneak up on you, bringing surprises you may not foresee which consumes time like a fat man at a pie eating contest. In the event you are distracted from your plans or progress is put on hold for an extended period, will it break your plan?

3000 pounds of vegetables seems, to me, an awfully small amount. What part of the world are you in?

I don't see beans/peas/peanuts/legumes in your list.

Classes? I'd be interested in more information here.

Hey Ken,
Thanks for the input!
A couple of responses:
-These are end projections; i.e., what the farm will make when everything is up and running. I also have year-by-year projections that show how it will hopefully build. I'm also worried about the time and lifestyle demands.

-I'm aware of the need for transitional income. My partner wants to go back to school for her Master's around the time we move, and her stipend should cover most of our expenses for the first few years. You have to have at least a lower-level graduate degree in her field to do much. I also have a small arts and crafts business that I will probably continue for the first two years, and possibly beyond that if we need the money. I also want to have a significant amount in savings when we make the leap.

-We're not planning on moving for at least another two years. Most of what we need is already in place, and all the berry bushes and mushrooms will be bearing by the time we move.

-I didn't put in contingency plans here because I was trying to save space. If necessary, I will reactivate my teaching license and go back into the classroom (perish the thought, but you do what you have to.) As for the classes, my partner has a PDC in addition to being an environmental scientist, and she eventually wants to teach permaculture and environmental classes on the land. There are several different things my partner can do, even if she has to travel to the swamp in the summer to do biodiversity studies.

-Our mortgage, when we're not paying it ahead, amounts to $200 a month. It'll be paid off in 2023 at the latest.

You think 3000 pounds of veggies from a market garden is low? The estimates I've found have been all over the map. I was also assuming half the theoretical yield from the food forest. I'm trying to be conservative.

Thanks again for your help!

I haven't seen any mention of hay. If you don't live in a moderate climate where you can just keep up the rotational grazing, then you will need to have at least a small hayfield.

Not sure if you are still watching this thread but here is a couple questions I would ask.

Are you looking to direct market to anywhere?

I will give you a few examples:

A friend makes Jams and she makes a little more interesting types like Napom which is pomegranite and habanero. She sells her Jams for $8 and $12, while she does do some major farmers markets, she also has a email list and people buy ahead of time and come pick up at the various markets. We are up in Canada and food is not as low price in the US but I think if you dress it up a little, you should do better than $4.

For the beef, we buy from a farmer friend and he sells full 1/4's at $3 plus butcher price/lb (butcher price is from 60 - 80 cents/lb but many dont want that much at a time, so he sells some choice cuts to people and some steaks are $8-10/lb. It would involve having a couple extra freezers and higher electricy bills to keep the meat a little longer but the same is done with pork.

My mom makes home made chocolates and turtles. She does not make a good rate on her per hr necessarily but at $25 for 1.5 box we sold out 100 boxes in a few weeks and have to plan to make more next christmas. Her costs on the materials to make enough chocolates for those 100 boxes is about $450 and then a lot of hrs but we have been helping her and doing it at night while we visit and watch movies, so good family time.

Rebecca Brown wrote:I've no interest in being one of the permaculturists who lives on $14k a year.

Funny you mention that amount... in our projections, that's exactly what we think we would want to earn in a few years' time (when everything is up and running). Well, 12K in euros, that should be about the same.
However, by then we would be living in a mortgage-free house, not paying any bills for energy or water - the only big (variable) costs are fuel for the car (and occasionally, fuel for the generator or for cooking) and the vet. Of course there's always repairs, replacements and new investments as well; we do believe we can live comfortably for €12K and are set on proving it Until we're able to support ourselves (grow all of our own food, especially) thankfully I have a job I can do from the comfort of our own home most of the time.
We used to live in the big cities (Amsterdam, Brussels and Antwerp) and I would have laughed at you if you'd told me I could live off an amount like that; we loved to eat out or get our food delivered after a hard day's work, go to concerts and movies, and have nice / good stuff for our home. We weren't big spenders, but still spending a lot of money just because that's what you do when living in the city. We noticed that moving to a rural / remote area really changed the way we're spending money: we're wearing working clothes most of the days (so no need to spend money on several new outfits every year); our cultural world is now reduced to farmer's and artisanal markets mostly (quite inexpensive), and last summer despite having several volunteers and guests staying with us most of the time, we rarely had to go to the shop (except for dog food - we're not producing our own meat yet). We've also been bartering a little already; it seemed weird to us at first, but now it feels quite natural to swap stuff / services / labour time.

I do understand you won't be able to live on $12K a year if there's a mortgage to be paid off and lots of investments still need to be done, but also hope you can see that not everybody living on that amount necessarily lives in poverty

(I do love some of the ideas in this thread though, getting a lot of inspiration here!)

Lots of good thinking in this thread. I didn't see much about seedlings. A seedling nursery is easy to eastablish and produces within 2 - 3 weeks. In Australia a punnet of 4 tomato plants of very boring breeds sell for $5. What's the profit on that lot? Flower boxes - simple stuff like pansies and petunias make great gifts and can be sold from your boot at a supermarket car park. Made from old fence palings (free) and "distressed" tinted (hugely watered down paint rubbed on with a rag) planter boxes filled with petunias will sell for $25. A bit of mass production and you can knock up 200 of them in a weekend. That's $5,000. Get a bit arty with a custom made "branding iron" and burn a leaf pattern or some such into them and you'll sell out real quick.

Flowers were mentioned. Great. I saw mention of a $5 a bouquet (wow if I spent that on a bunch for my wife she;d throw them at me!) And a pessimistec figure of 200 bunches. Gosh! Are there only 10 people in your town? Knock that up to $15 - 20. and go door knocking. A lot of people will order 2 or three bunches a week. Drop them off when you go into town. I'd do the numbers on 30 customers spending $30 a week. There's your first $45,000 per annum

Bulbs are great mate. They reproduce well and are pretty easy to look after. I once saw a lady with NOTHING to sell but a few photo albums of Bearded Iris pics - she had a queue of people filling in their order sheets and PREPAYING for the next season. Specialising in one type of plant is always good as you get accolades like an expert. Go all out on say Bearded iris, buy 20 each of 30 varieties. You'll pick them up for $3 each and then every year sell half the new lot. Check the net - even ordinary ones sell for $10 a bulb. Allow 2 years to build up stock then book your Carribean Holiday. You get to sell the blooms AND the bulbs - what a beauty!

Consider selling babies. Chickens and ducklings are always popular. Most town kids have never seen baby animals let alone held one. Day old chicks sell for about $5 each ... thats a pretty good return on a bit of electricity to power an incubator. Sell a bit of chick food too. Offer to take back chicks once they have grown too big to be a pet and are unwanted then sell them back as Point of lay pullets. These sell for ridiculous prices - $25 plus in Australia and still need to be fed for 2 months before you see the first egg. Offer your expertise to design an integrated vege / chook garden and sell every component - design, construction, seedlings, chickens. Some people might like to hatch their own chickens - you could rent out your prize rooster - $30 a week. Of course you'd have to be happy living off immoral earnings!!!

One way of selling is to crash a yard sale. These are often very well attended and if you add a sign or 2 with your special something the yard owners will love you for bringing extra customers.

Drinks: They are mostly water. That shouts profit to me. I live in Thailand now. Fruit based drinks are really popular, healthy and delicious. Rosella (here its called Grab Jiep) juice drink is easy. Ginger tea is extremely cheap to make, a bit exotic and 100% delicious. Lemon and honey with ginger juice is great and people tend to think it is health giving. A tiny taste will often result in a $10 sale.

Schools are easy to market to. 1000 customers all inside one fence with just one or two gatekeepers. Perhaps you could arrange an excursion for the kids where they learn / see/ and do. Imagine kids making seed balls and taking them home to mum and dad inside the little bag you have a note offering your other goodies.

P&F groups are always trying to make money. Grow up a set of 12 potted plants, arrange with a few mums to sit outside the school with the plants as samples each day for a week taking orders as the parents bring their kids to school. Trust me .... this is easy money! I've done it and never grew a single plant - I just went to growers and chose from their stock.

Hope you make squillions and live long enough to spend it.

Have you thought about bees ?
Top bar hives and warre hives are easy to make
Use honey in your product s adds extra $$$$

David