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 step guide to starting your farmers market. 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 farmers market?
Many farmers markets operate as nonprofits. In fact, in the state of California, food markets can only get certified if they’re run by a government, a nonprofit or a farmer. And since the market will only generate revenue from vendor fees, there’s not usually a large revenue stream. Furthermore, it’s only a seasonal business in most parts of the country.
That’s why it’s important to hold down costs as much as possible. Learn more about typical costs here.
Location rent -- Zero to $6,000 or more. Your best option from a cost standpoint is an open market on public spaces, such as at a park or community area at no cost. If you must rent interior space, such as if you plan to operate your market year-round, the cost can go up quickly.
Employees -- Zero to $15 an hour or more. In most situations, you will act as market manager, with a team of volunteers. But if you must hire a part-time manager, you might easily have to spend a few hundred dollars a week.
Licensing and liability insurance -- $1,000 - $3,500 est. Your licensing needs will vary depending on your state or municipality.
Marketing -- $500 or more. This might include a website and social media, signage and advertising costs to attract customers.
Professional services -- $500 or more. Consult with a lawyer to draw up vendor contracts and make sure you’ve satisfied all regulatory demands.
What are the ongoing expenses for a farmers market?
Hopefully, once you’ve gotten your business started, there won’t be many ongoing expenses. If you can recruit volunteer assistance, you’ll perhaps only pay for a market manager if you hire someone to take on that responsibility.
Who is the target market?
Your customer profiles can vary depending on the audience you hope to attract. If you open for business in an inner city food desert, your customers will be area residents of shopping for affordable groceries. If you’re opening an organic food market, you might appeal to “foodies” who are concerned about nutrition and locally grown produce. And if you open in a tourist location, you might most appeal to out-of-town visitors who are into the experience of shopping at a new location.
How does a farmers market make money?
Your income will be derived, in most cases, from the fees you charge vendors for a place in your market.
How much can you charge customers?
Your vendors might only pay $10 to $20 per day, and you might only be open on seasonal Saturdays. You should start your operation with a minimum of six vendors.
How much profit can a farmers market make?
That will depend on the number of vendors you can recruit and the foot traffic you can generate. If your vendors see continued value in selling in your spaces, they’ll come back.
How can you make your business more profitable?
If you see significant foot traffic, consider open a stall yourself. This is a particularly appealing idea if you are a farmer, but you could also buy and sell such related products as herbs and spices, spaghetti sauces, salsas, etc.
What will you name your business?
Choosing the right name is very important. 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.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your farmers market is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
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.
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 farmers market. 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.
Certificate of Occupancy
A farmers market is generally run out of a large outdoor (or indoor) space. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a farmers market.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your farmers market will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
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 farmers market
Your community-based market should attract the interest and attention of the local media. Seek out relationships with newspaper reporters, radio and television stations and take advantage of any opportunity to be interviewed.
Maintain a strong social media presence and seek out Facebook groups and other groups interested in locally grown or organic foods.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
You must appeal to two separate markets: vendors and customers. Your prospective vendors are area farmers with an entrepreneurial spirit. You can find them by visiting their stalls at other farmers markets or by placing ads or notices in small newspapers serving rural communities. And finally, contact the agricultural departments of area colleges or universities to see if you can post fliers to recruit vendors.
Also, list your market in this USDA directory of farmers markets so interested vendors can find you.
Your signage, word of mouth and the foot traffic you generate are the best ways of attracting shoppers. Hand out fliers that show the days and hours your market is open to encourage their return business.
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 Farmers Market In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
You should understand the appeal of locally grown food, have the mindset to be able to deal with local bureaucracy, and possess the marketing knowledge required to bring buyers and sellers together.
What happens during a typical day at a farmers market?
Your typical day could involve any of the following responsibilities.
- Recruiting new vendors and meeting the needs of current vendors
- Posting to social media and undertaking other marketing efforts to attract customers
- Staying in contact to maintain solid relationships with your local government contacts and volunteers
- Taking on the day-to-day financial responsibilities in maintaining your farmers market as an ongoing venture
What are some skills and experiences that will help you build a successful farmers market?
You must have keen sales instincts and the ability to deal diplomatically with local governments and regulatory agencies. Your first, and perhaps most challenging, task will be finding a location. This is often on municipal land, and you might field objections from retailers, such as supermarkets, convenience stores and other food markets staving off competition. The municipal government might also be wary of an increase in vehicle traffic, noise and mess.
You must also be able to sell your idea to vendors and figure out how to get the word out to customers.
What is the growth potential for a farmers market?
With the popularity of cable food channels, the locally grown food movement, the appeal of organic food and other factors, food markets have seen the addition of more than 2,000 farmers markets nationwide since the mid-1990s. However, several obstacles can impede success, as you'll learn from this USDA web article.
One important limitation is your market’s physical space. It will only hold a limited number of vendors, so your key to growth must be a buildout at your current site or additional locations.
TRUiC's YouTube Channel
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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.
What are some insider tips for jump starting a farmers market?
It’s your mix of vendors that will attract and retain customers. Make sure you have all of the basics covered, including the fruits and vegetables that shoppers expect to find at your location, and then recruit vendors who can sell related but unanticipated products. For instance, the sellers of coffees, spices, flowers, soaps, candles, or arts and crafts could generate additional interest. Live entertainment might also add to the atmosphere. If the musicians can be persuaded by foot traffic to only play for tips, they’ll be no additional cost to you.
How and when to build a team
You might start your business alone and only hire a market manager, or market master, when you can afford the help recruiting vendors and maintaining smooth operations during market days. Volunteers will hopefully help with cleanup and vendor needs.