Start an herb 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 step guide to starting your herb 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 initial 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. Skip on ahead to the Business Overview for more detailed answers to all your questions.
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.
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 herb farm is sued. 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.
STEP 4: Open a business bank account
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.
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.
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.
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.
Select your state below for an in-depth guide on completing each of these steps in your home state.
In 2016, for the first time, Americans spent more money eating out than on groceries. During the same year, we paid more than a staggering 110 billion dollars for food in this country. Whether we are cooking at home or going out to eat, it is clear we love to eat and we are willing to pay for it. Entrepreneurs who are interested in farming can earn a good living by supplying fresh culinary herbs to restaurants, retail stores, and directly to consumers.
Who is this business right for?
Starting an herb farm is a great business for anyone who is interested in farming. One of the great things about herb farming is owners do not need acres and acres of land or even operate their herb farm full-time to be profitable. A small herb farm makes a wonderful part-time business for stay-at-home persons, a retired couple, or even a dedicated high-school student.
What happens during a typical day at an herb farm?
Most herb farmers spend only a couple of hours a day taking care of their herb farm business. Since the majority of herb farms stagger the time they plant their herbs, there is never a lot of planting or harvesting to do at one time. This gives them more time to water, weed, and make sure their herbs are growing well. The majority of an owner's time is spent on packaging herbs, marketing to find new customers, and selling the plants.
What is the target market?
There are three types of customers for herbs: restaurants, retailers, and consumers. Selling directly to consumers is the most profitable, but also provides the least steady income. Retailers typically offer the lowest per pound price, but are often willing to buy out an entire harvest. Restaurants usually offer a better price than a retailer, but less than a consumer.
How does an herb farm make money?
Herb farms make money by selling culinary herbs to wholesalers, restaurants, and consumers.
What is the growth potential for an herb farm?
While herbs currently only make up between two to five percent of produce sales in grocery stores across the country, that number is growing. The public's hunger for fresh and healthy food options has increased the demand for fresh herbs over dried herbs.
What are some skills and experiences that will help you build a successful herb farm?
A green thumb helps for starting an herb farm, but it is not essential. Growing herbs is easier than most people think, and it something owners can easily learn. Perhaps more important than having farming skills is possessing marketing and general business knowledge. Owners who are interested in selling directly to consumers should have a passion for herbs which can inspire customers.
What are the costs involved in opening an herb farm?
Another great reason to start an herb farm as a new business is that there is such a low economic barrier. Some herb farmers purchase a large plot of land and build greenhouses to extend their growing season, but it is not necessary. A few hundred dollars is all it takes to buy the tools and seeds to start small an herb farm. But for those who want to earn a full-time income from herb farming, the startup expenses are a little higher.
Potential herb farmers who already own a piece of land can avoid the biggest expense, land. For those who do not have a place to plant, it is almost always cheaper to rent than to purchase land. Many commercial landowners have vacant land and may rent it for a very low price. Herb farmers who are interested in having their products certified organic need to be a little more choosy when finding a place to plant.
After finding land, the next largest expense is purchasing supplies. Thankfully, very little in the way of equipment is necessary to grow herbs on a small scale successfully. A few hand tools, containers and perhaps a greenhouse or poly tunnel to extend the growing season. Herb farmers who do not have access to quality soil on their land, should invest in high-end potting soil, compost and fertilizer.
A few hundred dollars can buy all the seeds and cuttings for an entire growing season. Heirloom seeds often cost less than popular hybrid varieties, but they can take more time and care to grow. However, many people swear by the superior quality and taste of heirloom herbs and vegetables.
It is possible to start a profitable small-scale herb farm which doesn't require purchasing or renting land for less than $2,000.
Where can I 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.
What are some insider tips for jump starting an herb farm?
A potential herb farmer needs to know her market before doing anything else. They should find out the price people are willing to pay for certain herbs to determine if the local market makes herb farming worthwhile in the first place. New herb farmers should check out local farmers' markets to see if there are any spare booths available if they want to selling directly to the public. They can speak with owners of local supermarkets and restaurants to ask they are interested in buying herbs from a new supplier.
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Growing Your Business
How to promote & market an herb farm
Herb farmers may want to focus their marketing campaigns on the health and ecological benefits of locally grown herbs.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
While many customers may purchase herbs once because they are a local product, if the herbs aren't fresh and delicious, no one will want to buy them again. Herb farmers need to ensure they never sell any herbs which don't look or taste great.
How and when to build a team
You may want to hire help early on for selling or cultivating your herbs. It is difficult to manage all of the jobs on a large farm alone, so a part-time helper can allow you to focus on the business aspects of the farm. Many farmers hire drivers to deliver herbs to their commercial customers. Most of these jobs pay at, or slightly above, minimum wage.
Federal Business Licensing Requirements
There are federal regulations regarding what can and cannot be added to, sold as, and processed with food. Attached is a resource from the Food and Drug Administration detailing the process of starting a food business: How to Start a Food Business
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate an herb farm 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 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.
Maintain Personal Asset Protection
Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
Two of the simplest steps that will protect your business, and yourself, are to:
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.
How much can you charge customers?
The prices consumers are willing to pay depend on the location and the type of herb. Certain herbs do typically bring in more profit than others, such as basil, catnip, lavender, chives, and cilantro.
What are the ongoing expenses for an herb farm?
Ongoing expenses are all the consumables like seeds, fertilizer, potting soil, containers, compost, and utilities. Herb farms need to pay the cost for the land and labor every month, in addition to any packaging and transportation costs that may be involved.
How much profit can an herb farm make?
It is well within the reach of a herb farmer to earn over $30,000 per acre of land each year by choosing high-priced and popular herbs.
How can you make your business more profitable?
Owners of herb farms can greatly improve their profits by creating value-added products from their herbs. Dried herb pillows, herbal teas, soaps, and candles are all high profit items which are easy to make and sell well. Herb farms who are able to get certified as organic can charge more for every product they sell.
Some herb farms make extra money by hosting events such as weddings or vacations. However, this type of side business would require that your land be suitable as an event venue, and you would also need to have a small team to handle bookings, set-up, and other aspects of hosting parties.