Start an orchard 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 orchard. 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 an orchard?
If you are starting from scratch, remember to include five years of living expenses to your start-up projections. Expect to pay $10 to $20 per tree and be planting 100-400 trees per acre depending on the size of the tree. You'll need to spend about $5 per tree per year on pesticides, pruning, and fertilizer. Of course, you'll need to purchase the land in the first place. A small orchard that caters to the farm stand crowd will only need five to ten acres at minimum, but if you're going to make a decent profit, you'll want to consider 50 to 100 acres for planting purposes.
Read our orchard purchasing guide to learn about the materials and equipment you'll need to start an orchard, how much to budget, and where to make purchases.
What are the ongoing expenses for an orchard?
Your expenses will be focused on paying for fertilizer, pest control, and harvesting. You will need to replace some of your trees on a regular basis to maintain the health and vitality of the entire orchard. Payroll during the harvest season will also make a large dent in the checking account.
Who is the target market?
A food distributor for a large supermarket chain will be willing to buy your entire harvest for one price, which guarantees the sale. However, individual customers who pay to pick-your-own from the trees will pay a premium price per pound for the opportunity to explore the rural life for an afternoon. A farm stand can generate income throughout the growing season from your local neighbors.
How does an orchard make money?
Very slowly. Fruit trees require patience and planning before any profit can be generated. Plan to wait at least two years for dwarf variety fruit trees to start bearing fruit and allow up to seven years for larger varieties to mature. You earn a profit by spending as little as possible on the maintenance of your trees and landing a high price when they're ready to sell.
How much can you charge customers?
Retail pricing for fruits vary over time and in different markets. Typical apple pricing runs from ten cents a pound when selling direct to a distributor and up to two dollars per pound when selling retail direct to a single market customer. However, if you hope to sell the entire harvest at your farm stand, expect to see a significant percentage fail to move. In the right climate, olives can generate impressive income when used for their valuable oil.
How much profit can an orchard make?
Expect not to clear a profit for the first three fruit-bearing years as the orchard pays for the trees and maintenance. After that, you will still be making payments on harvesting equipment. As a sideline, a healthy small orchard of five to ten acres can generate $10,000 a year, but expenses must be deducted before you see profit. The profit margin increases for industrial sized orchards where the cost of machinery is shared over more trees.
How can you make your business more profitable?
Diversification can help you increase profit at an orchard. Plant multiple types of fruits and consider in investing in a cider press or jam kitchen to be able to offer multiple products at your farm stand.
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.
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 orchard 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 an orchard 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.
Certificate of Occupancy
An orchard is run out of a large outdoor 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 an orchard.
- 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 orchard will be in compliance and able to obtain a CO.
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.
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 an orchard
While you are waiting for your first crop, you have plenty of time to learn about the different distributors, big city farmers markets, and how other local farms make the most out of their harvest. If you're staying local, you'll want to participate in all the county fairs and agricultural meets. Offer free samples and make donations to churches and local organizations. Come harvest time consider buying billboard space and advertise on local radio and television shows. When selling big, you'll need to contact your buyers a few weeks before harvest to compare pricing and see who might need your truckloads of produce.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
The quality of your fruit will do most of your advertising for you. However, in order to get your name known in the local neighborhood, you're going to need to make appearances in parades, agricultural shows, school fairs, and even by contacting the local grocery stores to get your fruit in front of local buyers. By maintaining your trees you will grow healthy, fresh fruit that everyone will be looking for next year.
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 An Orchard 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?
If you have a love of the earth and a love for growing things, you've got the first requirement. You must also be willing to work extensive hours during the growing season and have patience for years when the crops struggle to thrive. A small orchard should only be considered as a sideline business.
What happens during a typical day at an orchard?
If you own and operate an orchard, you may be expected to:
- Determine which trees are optimal for planting in your region and what products are in high demand
- Plant new trees in the spring
- Prune, spray, and fertilize trees according to schedule
- Be able to determine when the crop is ripe and harvest in a timely manner, reducing loss
- Check trees on a regular basis for disease or infestation
- Seek best prices for your crop among distributors
- Maintain a farm stand during the growing season
- Plan harvest entertainment options for pick-your-own activities
- Apply for any grants or assistance available to farms or orchards in your region
What are some skills and experiences that will help you build a successful orchard?
The successful orchard grower and owner will have a solid background in:
- Soil science
- Agricultural studies
- Understanding of current fruit markets, demand, and pricing
- Basic business knowledge
- Time management skills
- Food handling safety standards
- Proper harvesting techniques
What is the growth potential for an orchard?
Most orchard businesses only consist of a single orchard. You are better off planning ahead when planting a vast orchard, as every hill and valley will affect how well any particular tree will grow. Your property will largely define how high a yield you can expect. Knowledge in tree husbandry, soil biology, and even weather can help you find the right place to plant your orchard and choose the right fruit to earn the highest yield possible.
TRUiC's YouTube Channel
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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 orchard?
You cannot go into this business blind. You need to have an excellent understanding of how to care for the trees. You must realize that you won't see one penny of income for two to five years and plan accordingly. You must know what will thrive in your climate or else risk losing your entire investment. Check the demand for your potential crop before buying the trees that only produce sour apples that nobody wants. Research and patience are needed.
How and when to build a team
Orchards require massive amounts of work in the spring and again during and after harvest. The rest of the year, one or two people should be able to handle the pest and disease checks and run any irrigation. Come harvest time you will be hiring transient workers to operate your machinery and to pick the fruit, or to operate your harvest themed attractions. These workers typically only work for you for a few weeks before moving onto the next farm. Talk to other nearby farmers to find out where they find their crews.
Read our orchard hiring guide to learn about the different roles an orchard typically fills, how much to budget for employee salaries, and how to build your team exactly how you want it.