Advice wanted: LLCs, Loans and Crowdfunding

As some of you know from a former thread, I am working out the idea of starting a permaculture-centric greenhouse/garden center. It is proving to involve a daunting number of things to consider and a lot of planning well in advance. Between liability issues and risk mitigation, setting up an LLC seems to be the wisest choice. Beyond that, it gets fuzzier.

First is the fact that my wife and I have decided that we don't intend to stay in Texas as it isn't a good fit for either of us, but where we are moving is still up in the air aside from 'The Eastern side of the country' as a general direction. I love Tennessee, though somewhere like New Jersey would be better for her career after she finishes college. Obviously we can't finalize any plans until we know where that location is. With that aside though, there are some pretty major considerations.

I am of the mind that I would much prefer to find a way to do this debt free or only holding debt for a limited period of time. This means keeping the loan small or else funding through means of something like Indigogo or Kickstarter. Considering the cost of land, seeds, startup materials, building, and advertizing I am feeling like I just don't know that I can muster the volume of support needed to fund it through a Kickstarter style campaign. On the other side, I am wary about banks and their willingness to loan out funds at a reasonable rate of interest for something this unconventional. Lots of greenhouses start, only a handful manage to stick around for very long though. Trying to convince a man in a suit that I can make a go at something without using all of the 'technological advancements' is going to be a hard sell even with a top notch business plan.

I suppose I am floundering a bit. I know what I want, I just don't have the business experience to make it happen without throwing my own money behind it. I wouldn't mind doing that if I had any money to throw. Those here who have experience with crowd funding, LLCs and securing loans and who are willing to offer advice, I could use your insights.

LLC's take WAY more time than you think they should (YES I used the word, Paul), but they aren't hard--just typical government red tape complications. You need your LLC 100% done before you can start with bank accounts, taxes etc. I think it was 3 months from turning in the first paperwork to being able to take money as a business. We could do things in parallel, like set up websites and make products. We used legalzoom to set up most of the LLC. It is OK, but they nickel and dime you (the as low as price is MARKETING). If you find a good tax attorney, they are probably a better deal. I would not want to do in order to move a business across state lines.

I would look carefully at the business-friendliness of potential states as part of your search criteria. As well as the market potential and shipping logistics (it can be a problem out in the boonies).

Run out a realistic business case for input cost to get to where you want. Then you have to decide how to get the money: Save first, Loan and hope to cover it, or incrementally build the business.

R Scott wrote:LLC's take WAY more time than you think they should (YES I used the word, Paul), but they aren't hard--just typical government red tape complications. You need your LLC 100% done before you can start with bank accounts, taxes etc. I think it was 3 months from turning in the first paperwork to being able to take money as a business.

I don't recall it taking that long to set up my LLC, it may vary by state. Once set up, it probably takes half an hour/year to pay the annual registration ($26) and file the annual report.

Reading your post I am assuming you intend more than homesteading . . .

1. Make sure you ALWAYS maintain the separation b/t the LLC and your personal finances. Look up the legal doctrine called "piercing the corporate veil."

2. Go to an Ag lender. Do not try to deal with a regular bank. And find an Ag lender that is experienced with Farm Service Agency Loan programs through the USDA. I understand your aversion to debt, but debt in furtherance of a business enterprise is not always a bad thing. You will need to realistically assess your income and cash flows and match them up with the debt/equity structure.

3. No reason not to try a kickstarter to get your equity or operating capital together, esp if y'all have large social networks. Look up Paul Grieve with Primal Pastures to see one of the best I have ever seen. He also has some interviews floating around. But they are a lot of work.

4. NJ is hyper expensive. Great access to markets, but extractive property taxes. PA land a better bet? Of course nothing will beat TN AL NC SC, and GA in many places (although GA mountain land is way to high price now, IMO). Anything on the I-95 corridor north of Richmond is going to be pricey by comparison.

Cj Verde wrote:

R Scott wrote:LLC's take WAY more time than you think they should (YES I used the word, Paul), but they aren't hard--just typical government red tape complications. You need your LLC 100% done before you can start with bank accounts, taxes etc. I think it was 3 months from turning in the first paperwork to being able to take money as a business.

I don't recall it taking that long to set up my LLC, it may vary by state. Once set up, it probably takes half an hour/year to pay the annual registration ($26) and file the annual report.

It depends a lot on the state (it was 6-8 weeks waiting on the state for me), and I included the LLC, tax ID's (multiple), commercial bank accounts, and e-commerce site.

You also need to look at state law for where and what you want to sell, and potentially federal regs if you want to sell across state lines. Raw milk is one that gets a lot of focus, but there are crazy little rules and regs for almost anything--especially about what is considered farm crop vs. value-add/processing--that one gets a lot of people.

And you are trying to balance both your needs and her job opportunities--something will have to give so make sure you look at the whole picture and your realistic goals when you decide.

The business side of things like this is completely beyond my comprehension (I am an artist, organic gardener, naturalist, homesteader, etc. but NOT a business person) however this topic interests me a lot. I was wondering -- for those of you who seem to know this stuff -- how does Missouri (specifically SW MO near Branson) fare as far as costs, probability of funding and selling opportunities go? I have long wanted to do something similar and have NO idea where to start or if it is even feasible. I would welcome the opportunity to go into some sort of partnership with someone who knows business if I could deal with the growing side of things.

Deb, you should contact either your Secretary of State or Department of Agriculture. Either should be willing to help a new farmer set up business or give good directions.

D. Logan wrote:As some of you know from a former thread, I am working out the idea of starting a permaculture-centric greenhouse/garden center.

By greenhouse/garden center do you mean selling plants to the public for their gardens? Not a greenhouse operation to grow food.

I think one key to success is figuring out how to deal with the seasonal cash flow of that business model. There's an operation in our very tiny county that is only open from April/May to the end of June. They closed on Monday, not even open 4th of July weekend. Wherever you go, there will be a burst of activity with spring fever, and if you are lucky, a rebound for fall planting. Coming up with ideas on how to ride out the summer and winter slow periods would give you a decided advantage. In fact, I would have the length of planting (not necessarily growing) season be a factor in deciding where to go. Some place where people buy their heirloom tomatoes in March would be far easier than here where they don't think of planting until Mothers Day.

Let's say you wanted to move to a fairly urban area and target the exploding market for edible perennials. Now we are talking bare root sales in winter Maybe some design consulting in the summer? Depends on your interest and skills.

How are your education and PR skills? You can start a webpage on edible gardening in "my region" and/or write some columns for the local rag and/or get yourself invited to speak on the radio (what to do in the garden this month). How are you at shameless self promotion? If you are light on these skills, you can start practicing them now before you move. Teach that grafting class for your local adult learning program. Offer to speak about edible perennials at the next Earth Day or county fair.

You probably could launch this business out of your back yard if you started with the edible landscape design and grew it organically (bad pun intended). Grow the nursery stock for your clients, sell extras at the farmers market and when you need more space, you'll have a track record to get the financing. But there are a million ways to start. Start!

One product I could see doing really well in a permaculture-oriented garden center would be the pre-guilded fruit tree. As in a dwarf fruit tree for an urban environment, plus a dozen or so plants to go with it. Most people are intimidated by the design factor, you could show them how it all goes together. It would take a bit of education and a sample planting design, but where folks might buy one tree and three plants, you could really increase the volume of that one sale. High Country Gardens catalogs do a really good job of this marketing strategy, with beautiful watercolor sketches of the flowering colors.

Ann Torrence wrote:

D. Logan wrote:As some of you know from a former thread, I am working out the idea of starting a permaculture-centric greenhouse/garden center.

By greenhouse/garden center do you mean selling plants to the public for their gardens? Not a greenhouse operation to grow food.

I think one key to success is figuring out how to deal with the seasonal cash flow of that business model. There's an operation in our very tiny county that is only open from April/May to the end of June. They closed on Monday, not even open 4th of July weekend. Wherever you go, there will be a burst of activity with spring fever, and if you are lucky, a rebound for fall planting. Coming up with ideas on how to ride out the summer and winter slow periods would give you a decided advantage. In fact, I would have the length of planting (not necessarily growing) season be a factor in deciding where to go. Some place where people buy their heirloom tomatoes in March would be far easier than here where they don't think of planting until Mothers Day.

Let's say you wanted to move to a fairly urban area and target the exploding market for edible perennials. Now we are talking bare root sales in winter Maybe some design consulting in the summer? Depends on your interest and skills.

How are your education and PR skills? You can start a webpage on edible gardening in "my region" and/or write some columns for the local rag and/or get yourself invited to speak on the radio (what to do in the garden this month). How are you at shameless self promotion? If you are light on these skills, you can start practicing them now before you move. Teach that grafting class for your local adult learning program. Offer to speak about edible perennials at the next Earth Day or county fair.

You probably could launch this business out of your back yard if you started with the edible landscape design and grew it organically (bad pun intended). Grow the nursery stock for your clients, sell extras at the farmers market and when you need more space, you'll have a track record to get the financing. But there are a million ways to start. Start!

Greenhouse as in selling plants to the public for their own gardens. I had the luck of working closely with the owners of a greenhouse where I was employed for two years. They did everything on a careful budget and were great at finding ways to save money and make extra without being unethical. They only closed for about a month and a half of the year despite having Pennsylvania weather. While I disagree with some of their techniques due to an aversion to things like roundup and such, there is much I am able to draw from their business model that would make good economic sense. I would like to think I am fair at PR and self promotion. You make some good suggestions here and I will have to deliberate on them further for sure! As for the pre-built guilds, that was something I had already been considering, but it hadn't occurred to me to make artistic renderings of those guilds in action. Smashing idea! Thanks!