Start an herb farm by following these 10 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 herb farm. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
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 much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
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.
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.
Who 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.
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.
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.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Herb Farm Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your herb farm is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
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?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
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.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
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: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
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.
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.
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.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
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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.
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.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start An Herb 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?
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.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
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 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 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.
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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 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.
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.