5 Mistakes That Cause Small Farms to Fail

(and why you should consider transitioning)

In the previous article we discussed a different method of how you can start your journey into farming that allows you to experiment, make mistakes and learn on your own pace. (If you haven't read it yet, click here)

Remember the “all or nothing approach?”. It’s simply too risky for most of us.

By transitioning into farming you’re allowed to start your farm whilst not being entirely dependent on the revenue from it.

Nothing is worse than the stress of leaving your job behind wishing you’ll be able to make a living from the farm immediately. That’s a huge pressure and weight on your shoulders.

Definitely if you have to support your family and yourself.

And I don’t know about you, but I have 2 beautiful daughters and I don’t like to put myself in the position of “all or nothing”.

This is not a game.

Put yourself in a position of strength.

Starting your farm is a journey and it should be approached like this.

Remember: Most new farmers don’t start making a living off their farm until YEAR 3.

Simply because of the lack of experience, skills and general know-how of running a farm commercially, it’s best to approach it in a way that gives you the needed time to experiment, make mistakes and learn, before being entirely dependent on it.

In roughly the first 4 years of my farming career, I worked in over a total of 10 different farms. Each farm was different in a different location and with a different business model.

These farms were located in New Zealand, Australia, Canada and Europe, and in that time I really had the privilege to analyze and observe their businesses.

I got to see first-hand why some of them were thriving and why some of them were having a hard time or completely failing.

Through those experiences my wife and I have had the chance to start our farm with a great foundation in place. It allowed us to avoid many of the common mistakes made by new and even experienced farmers.

This in turn allowed us to, pretty quickly, start making a comfortable living on our small farm.

Though, even with the experience we had, we definitely made some mistakes with establishing our own farm, and my goal with this article is to help you avoid those in your journey.

The 5 five mistakes I’m about to share with you are not structured in any order of importance. I strongly believe that in order to start your farm on the right foot and to increase the success of your farm early on, you have to pay attention to every single one of them.

As I’ve covered in the previous article, there’s this big misconception that when you start a farm, it’s either all or nothing. You either go all in, or you decide to not pursue your dreams.

Just as important it is to understand that that’s just not true (you can start your farm on a very small-scale, on the side, with no worries or stress…), it’s just as important to realize that your farm is a business.

Not a hobby.

And this is where I see a lot of people go wrong.

Mistake #1: Not approaching your farm as a business

Too many new farmers start out their farms with huge ambition and large dreams of changing the world (nothing wrong with that).

They want to provide their community and themselves with high quality food that’s being produced in a sustainable manner.

But know that if you decide that you want to do this for a living, you need to make an income out of it.

This means that you have to get out there and do the ground work.

It means that you have to start analyzing the markets in your area.

You need to identify the possibilities.

You need to create an initial investment cost analysis.

You need to create a production plan that is in line with your financial target as well as the local demand.

It means that you have to put your alarm get out of bed whether it’s raining or sunshine and do what’s necessary to get things done.

You get the point.

I find that too often we romanticize about farming. It’s too often displayed as only fun and pleasure (although they are part of it). But getting a farm up and running is tough work.

And you need to be consistent and have a good motivation to make a farm work.

There’s no time for you to slack when you’re going to start a farm.

The first couple of years can be overwhelming with the steep learning curve farming brings.

And I’m not telling you this to scare you off, but to simply give you a reality check.

A farm is a business.

And at times in the beginning, it’s going to be chaotic.

But know and understand that that’s totally fine.

If you make a mistake, learn from it.

If you fall down, stand up.

If you fall twice, stand up twice.

Be flexible and persistent.

Once you reach a certain stage of control, after your initial years, and you start streamlining the day to day tasks on the farm, you start to confidently make good decisions and you start to make a viable and comfortable living of your farm.

There’s probably no better way of living than the lifestyle farming offers.

Being able to work for yourself or as a family, experiencing the change of seasons, outdoors with the flow of nature, honestly, all the hard upfront work will have been worth it.

You will look back at those initial years with a smile on your face thinking, “if I would have quit the day it became hard, I wouldn’t have had the life I’m currently living right now and would still be working the same 9 to 5 job, day in, day out”.

At least, that’s what I thought.

Approach your farm as a business. Live from day to day, and enjoy the journey.

Mistake #2: Not planning the revenue

Directly tied to not approaching your farm as a business, people often make the mistake of not planning the revenue of the farm.

Just starting out and growing some crops that you like (or that you think are in demand without verification beforehand) and without looking what you will actually need to earn in order for you to reach your farming goals is a good way of setting yourself up for failure.

I mean, it’s fine when you’re doing this as a hobby and you don’t have the intention to make a living out of it, but if you want to start working towards making a living on your farm you’ve got to actually plan the revenue on your farm.

It seems obvious for many, but is too often forgotten.

Plan your revenue at the beginning of each season.

How?

Working backwards.

I know, kinda vague.

But let me explain.

When you decide to farm commercially you need to work backwards from a goal. A financial goal in this regard.

Because of the fact that your first years are NOT about optimizing profits, but more about gaining experience and installing your farm bit by bit, you can set your initial financial target quite low.

And this goal will differ for everyone.

You might want to start with an additional $2000, $5000 or even $10,000…

It doesn’t really matter.

As long as you set yourself a goal you can work your way backwards and develop a production plan that is in line with the local demand as well as this financial target.

But you might be wondering… “If I don’t have to make a living from it, why even bother setting this goal?”.

And it’s quite simple really.

This approach is going to prepare you for when it ‘gets real’.

I don’t if you’re familiar with the saying ‘throwing spaghetti at the wall’ – meaning ‘to make a large number of attempts or guesses with the expectation that at least some of them will be correct or useful’, with farming we don’t do this.

We plan our success.

And this means that we need to work back from a financial target that we want to reach.

Once you have a financial target set out for yourself, you can now break it down into a production system to reach this target.

The higher the goal, the more you need to produce, the more land, skills and experience it requires.

The lower the goal, the easier it becomes to reach it.

Pretty self-explanatory.

But how does this work?

You need to do a market research to identify what is in demand.

Let’s say that for example you set a goal of $5000.

Can you reach this financial target with just growing lettuce heads?

Maybe.

Let’s say a lettuce head sells for $2 a piece.

This means that you need to grow 2500 lettuce heads to reach your required target.

But it wouldn’t be a great strategy to put all of your eggs all in the same basket so to speak.

It might be better to break down the $5000 by 20 different crops and grow a bit of all of them to reach the target.

The key is to establish a financial target, identify market demand, and develop a production plan that can nearly guarantee you’ll reach this target.

And just as it is important to work your way backwards from a financial target, it’s just as important to focus on revenue generating activities and try to not do too many things at the same time.

Mistake #3: Not focusing on revenue generating tasks

And a mistake I’ve made myself when I started out.

When we started farming we just had spent several years working on many different farms. On top of that we also took courses in permaculture, food forest production, annual vegetable production, and we were also interested in things like aquaculture, pond building, honey production and a whole bunch of other stuff.

And so when we had the opportunity to get a piece of land, we were trying to do as much as we possibly could without ever considering the business side of things.

We thought we were just going to sell some of the surplus we were going to get and all will be fine.

As you can imagine this didn’t quite work out.

We quickly had to re-evaluate the way we were doing things and at that moment we decided to go all-in into market gardening.

The idea was that once we had started earning a living from that, we could then, and only then, decide to include other income generating farming activities, or activities that might not necessarily generate an income, but is more in line with our ideology.

Once you start out you have to focus on the things that make you money.

Not the things that waste your time and will never generate any form of income.

Right now, all the decisions we make are based on a couple of ‘rules’.

Before we do anything, we always ask ourselves: “is this going to generate an income, is this necessary, or is this going to be an unnecessary expense in terms of time and money?”.

By having a couple of guidelines we follow, every decision we make is to further optimize our production, to further optimize efficiency and ultimately our revenue and profits.

Although when you transition you have more room and flexibility to experiment with things, it’s recommended to stay focused on your goals and focus on the work that will give you the greatest return on your investments (both time and money).

We learned that lesson the hard way.

Another mistake I see people often make is not investing in the right tools, equipment and infrastructure from the start.

Mistake #4: Not investing in the right tools, equipment and infrastructure from the start

Direct seeding your crops by hand or watering your production manually with a water hose is not viable when it comes to commercial scale farming.

If you want to make it work and  you want to increase the efficiency, practicality and ultimately your profitability, you need to invest wisely in the right tools and setup.

Keyword here is invest wisely.

You don’t need to start out with the craziest infrastructure or all the tools in the world.

In fact, if you follow a method of growing annual vegetables in a way that mimics nature, you can not only reduce your workload and increase your profits, but also reduce your upfront investment costs.

Simply because you don’t need many tools (contrary to what many farmers make you believe)!

But I don’t want to give away too much here because I’m going to cover this more extensively in the next article, so stay tuned!

What I can share is that it comes down to this: start out with just the basics, start generating an income as soon as possible, create a revenue stream and cash flow, and from there, with the experience you gain, you can start investing in larger things (like high tunnels).

Mistake #5: Not analyzing and evaluating the data on the farm

This is probably one of the more boring parts of farming (and also one of the most important).

When it comes to running a commercial farm: know your data.

You need to know that the tasks you’re doing are actually worth it.

How long does it take you to prepare a bed and seed it?

How long does it take you to seed a tray?

How long does it take you to harvest 20 pounds of salad mix?

How much did you sell of it this week?

Did you have enough or were you short on production?

What was the DTM (days to maturity) of a specific crop in January? or in September?

You get the point.

The more you analyze your data and keep records of everything, the better you’re equipped to start optimizing your farm towards profitability.

The more you keep records, the better you can make decisions that are data driven, and not guesswork.

A lot of the success of a farm comes down to this specific skill.

Knowing exactly how much money is coming in and how much money is going out.

Knowing the changing days to maturity during different times of the year, so you can plan your production to increase your revenue.

Planning, data gathering and then optimizing your plans with the data is a must to reach some sort of farming success.

You can’t just ‘go with the flow’ and keep doing what you’re doing without knowing what works and what doesn’t.

Keep simple spreadsheets.

From revenue to expenses and from yields to days to maturities.

Having basic spreadsheets in place will allow you to analyze your farm.

It will allow you to see what’s profitable and where you’re losing money.

Simply because we tracked and analyzed the data on our farm, we were able to see that some crops were not as profitable as we initially thought they were. After seeing this we were able to remove those crops and replace them with crops that were more profitable, allowing us to increase our profits and revenue on the farm.

This is just a small example of what you can do once you track and analyze your data.

But, I know, not everyone is a fan of spreadsheets (I sure am not !) so my biggest recommendation regarding this is to keep it simple.

Don’t make complicated spreadsheets.

You want to make this process as simple as possible for you so that you will actually take action on this.

Even if it’s a little notebook it’ll be all fine.

It’ll be extremely helpful to have your own data so that you can make decisions that are data-driven, and not by guesswork.

This will allow you to improve your farm with every growing season.

And those are the 5 major mistakes that can ruin your farm dreams.

But that’s not all.

In both the previous article and this one I’ve mentioned that there is a method of growing food that will lower your upfront investment costs, that will reduce the amount of labor on your farm, that allows you to grow superior vegetables and that allows you to be more profitable.

Sounds too good to be true?

Let’s find out...

Click here to continue to part 3 -->