Start a christmas tree farm by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your christmas tree farm. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a christmas tree farm?
The primary startup costs associated with opening a Christmas tree business are:
- acquiring land (at least 10 to 20 acres)
- preparing soil
- purchasing seedlings
Business owners that already have suitable land and a tractor can start up a tree farm for relatively little, as they can use their own land and prepare it themselves.
Owners that don’t have land can keep their initial investment low by purchasing acreage in a rural area where land is cheap. Alternatively, they can enter a sharecropping agreement with a landowner. In such an agreement, nothing is paid initially for the land, but profits are split. In an interview on PTMoney, Gregory Bartels, who has 40 years of experience in the industry, says 50/50 agreements are common.
Owners that don’t have their own tractor can hire a farmer to prepare their soil for them. According to Bartels, farmers generally charge about $1,000 to prepare 20 acres.
Investing in seedlings costs more than planting seeds. Business owners should plan on this expense, though, because seedlings shorten the time to harvest by about 2 years. Seedlings cost around $0.35 each, and business owners should budget for planting 200 per acre each year.
What are the ongoing expenses for a christmas tree farm?
The ongoing expenses for a Christmas tree business include the costs of purchasing seedlings (200 per acre per year). For a ten acre farm, with seedlings priced at $0.35 each, 200 seedlings per acre per year should only cost $700 per year. Mowing and weed control are additional expenses, but these costs are relatively low for most business owners.
Who is the target market?
Christmas tree farms may sell trees to individuals, wholesalers, or nonprofit organizations, and many farms sell to all three types of customers. Of these three:
- Individuals will pay the most, but most families and businesses will buy only one tree.
- Wholesalers might purchase quite a lot of trees, but they frequently pay one-third of their retail price.
- Nonprofit organizations are often a happy medium, paying above-wholesale prices for several dozen trees that they’ll sell as a fundraiser.
Additionally, Christmas tree farms can sometimes sell one or two large trees at much higher rates than most individuals, wholesalers, or nonprofits will pay. Local governments and a few businesses might be willing to pay several hundred dollars for an especially tall tree. Most farms only have a few (if any) of these sales, but even just one or two sales like this can significantly boost a farm’s annual income.
How does a christmas tree farm make money?
A Christmas tree business makes money by selling Christmas trees. Trees may be sold already cut (precut), or they may be cut down by the individuals who purchased the tree (u-cut).
How much can you charge customers?
The average price for a u-cut tree is about $46. Pre-cut trees at retail locations sell for significantly more.
How much profit can a christmas tree farm make?
With 200 trees per acre ready for harvesting each year, a u-cut tree farm could theoretically bring in $9,200 per acre annually. Most farms don’t generate this much revenue, though. Many max out their profits between $15,000 and $20,000 because there is a limited demand for Christmas trees in any one area.
How can you make your business more profitable?
Christmas tree farms can add additional revenue streams and increase profits by growing other plants (e.g. pumpkins) and offering other products. In addition to Christmas trees, many farms also sell wreaths. Wreaths can be sold for up to $100, and it’s possible to make six to eight in an hour.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your christmas tree farm is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a Christmas tree business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Labor Safety Requirements
It is important to comply with all Occupational Safety and Health Administration requirements.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a christmas tree farm
The internet makes it easy to promote and market a Christmas tree business. Ads on Craigslist and social media can be used to target potential customers in the area. Additionally, most states have extensions or Christmas tree associations that maintain directories of tree farms in the state. During your business’ early selling years, you can attract new customers by offering coupons or special deals on trees. This tactic will attract them to your business, and their satisfaction will lead them to promote your business to their friends and family.
How to keep customers coming back
A Christmas tree farm can set itself apart from others in the area by planting a pumpkin patch. Selling pumpkins around Halloween will help generate visibility for your tree farm. This exposure to your Christmas tree farm will make them more likely to return to purchase one of your trees during the Christmas season.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Christmas Tree Farm In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Anyone who enjoys working outdoors and with their hands might enjoy owning a Christmas tree business. Tree farms don’t require a tremendous amount of work, but most of the work involves tending to, cutting, and delivering trees. All of these tasks involve hands-on labor.
What happens during a typical day at a christmas tree farm?
A Christmas tree farm is a highly seasonal business, so the day-to-day tasks of a business owner vary greatly with the season:
- Spring is the time for preparing soil and planting trees.
- Late spring and early summer is the time for trimming trees (which is done once per year).
- Summers are spent mowing between rows and applying weed control chemicals as necessary.
- Late fall and early winter are the time to cut and sell trees.
When selling trees during the Christmas season (primarily Thanksgiving to Christmas), business owners often work long days. Because the season for selling trees is so short, as much time as possible is devoted to cutting trees (for precut), helping customers cut their own trees (for u-cut), and bagging and transporting trees.
What are some skills and experiences that will help you build a successful christmas tree farm?
In order to successfully grow Christmas trees, it’s necessary to be familiar with the agricultural practices that work in a particular region. Business owners that haven’t previously operated farms of any kind should consider taking local agricultural classes and working on a nearby farm for a season. Talking with as many area farmers as possible can also provide insights that come from years of growing crops in the region.
What is the growth potential for a christmas tree farm?
Most Christmas tree businesses serve a local geographic area. Managing multiple areas in different regions isn’t viable, and transporting fully grown Christmas trees long distances is expensive. Many farms will transport trees to a retail location in a nearby city, but it rarely makes financial sense to ship trees across several states (especially since there are tree farms in all 50 states, including Hawaii).
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a christmas tree farm?
When designing the layout for a Christmas tree business, it’s important to not forget about accessing the trees once they’re grown. There should be strategically located loading areas, and access points should be located every 12 to 15 rows.
Although a single acre can support 1,500 trees, most tree farms only plant 200 per acre each year. Trees take around 8 years to reach 5 to 7 feet high, which is the most popular height for Christmas trees. (90 percent of trees sold are in this range.) Staggering plantings helps ensure a stable income once a farm is established.
Because it takes eight years for trees to mature, business owners should budget for eight years without any income. During this time, they’ll need to pay for mowing, weed control and more seedlings.
How and when to build a team
A single person is able to manage a small Christmas tree business for most of the year. During the Christmas season, business owners may want to hire laborers so they can maximize the number of trees they are able to sell.