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 vineyard business. 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 vineyard business?
Because a significant amount of land is required to grow your grape crops, it is important that you do extensive research regarding required start-up capital. Most vintners do not realize a profit for the first three years. Your first year’s budget will be approximately $12,000 an acre. The plants, equipment, tools, pesticides, and trellising are included in this estimate. Second year costs decrease to $1,200 to $1,500 per acre and third year costs will be approximately $1,000 an acre. These figures do not include the cost to purchase or lease land. As a vineyard owner, it is critical that you invest in land that has soil with the right PH balance, proper sunlight, and irrigation. Your land will be one of your highest expenses, so thorough research prior to making any decisions is critical. Purchasing a plot of land in prime vineyard country can set you back anywhere from $100,000 to over $350,000 per acre.
What are the ongoing expenses for a vineyard business?
Managing a vineyard is complicated, with a number of ongoing expenses. In addition to land lease/ownership expenses, your budget should include approximately $8,000 per acre over a three-year period. After the first three years, the crops should be producing grapes, reducing your annual costs to $1,500-$2,000 per acre. Costs include labor, insurance, irrigation, vine cuttings, and machine repair and maintenance.
Who is the target market?
As mentioned, target markets for grape vineyards are not limited to wineries. Since wine grapes are the most profitable, this is the niche that many vineyard owners choose to target. Regardless of which option you choose, be sure to thoroughly research market saturation in your area. Aligning market needs with your passions will make your business venture much more enjoyable and, in turn, profitable.
How does a vineyard business make money?
Vineyards can be set up to process the grapes in-house or to distribute harvested grapes to other local businesses. Before making an initial investment, carefully consider your options. Market needs, coupled with your personal knowledge and experience will assist you in identifying which path will yield the highest profit.
How much can you charge customers?
For a vineyard in full production, recent studies indicate an annual return of $2,500 to $5,000 per acre. These numbers vary depending upon quality and demand.
How much profit can a vineyard business make?
Profits vary depending upon a number of factors. A 35-acre vineyard earning an annual return of $2,500 per acre will see a profit of approximately $88,000.
How can you make your business more profitable?
While the investment and operating costs will be significantly higher, many vineyard owners open their own winery onsite. The increase in annual profits make this a worthy investment. If you own more land than you wish to cultivate, consider leasing acres out to other aspiring vineyard owners in the area. Entrepreneurs with extensive knowledge could educate others on the subject in exchange for education and/or consulting fees.
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 vineyard business 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.
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
In addition, it is important to abide by all federal and state laws regarding the sale of alcohol. More information can be found in the section labeled Liquor Licensing & Food Regulations.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a vineyard 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.
Certificate of Occupancy
A vineyard business is generally run out of a large piece of land. 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 vineyard business.
- 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 vineyard business will be in compliance and able to obtain a CO.
Liquor Licensing & Food Regulations
Businesses involved in the sale of alcoholic beverages are required to obtain a liquor license from the appropriate state or local agency. A comprehensive list of laws by state (including necessary licenses, zoning laws, etc), curated by the Alcohol and Tobacco Tax and Trade Bureau, is included here.
When selling food, you will need licensing from a local health department; all establishments serving food are required to pass a health inspection. Tips for faring well on a health inspections
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 vineyard business
When writing your business plan, carefully consider your target audience and start building those relationships. Attend conferences and workshops, networking whenever the opportunity presents itself. Building these relationships on the front end will ensure you have a reliable buyer once your crops are ready for harvest, as many buyers will add their input and knowledge during the entire crop growing process.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Your goal is to find a select number of customers, based on your crop’s yield, and maintain a long-lasting relationship with those clients. To do so, it is critical that you consistently deliver quality grapes. Crops should be on time and free of disease. This, coupled with strong customer service, will ensure customer retention.
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 Vineyard Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Owning a vineyard is a lifelong dream for many people. Entrepreneurs with a significant amount of capital and a passion for horticulture are best suited for this business venture. Managing a business of this magnitude requires dedication and a love for working outdoors with plants.
What happens during a typical day at a vineyard business?
Managing an operation of this magnitude requires consistent, hands-on care of your crops. Your vineyard’s success is dependent on placement of crops, lighting, water quality, and health of the soil. Since this type of crop can be very sensitive to these outside elements, testing and supervision should remain consistent year round. Management of your vineyard’s crop, however, is just one component. You must also cultivate and nurture relationships with current and prospective customers. This ensures your crop has a final destination once harvesting is complete.
What are some skills and experiences that will help you build a successful vineyard business?
There is a great deal that goes into managing a healthy and profitable grape vineyard. Substantial knowledge in plant production, pest control, harvesting, and post-harvest handling is a must. This, however, is just one ingredient. Your vineyard will require the hard work of multiple staff members. Therefore, your skill set must include employee management, attention to detail, financial management, marketing, and the ability to delegate. In this industry, it is important that you recognize your strengths and weaknesses, building a team of professionals that complement your abilities. Hands-on experience would prove invaluable to your vineyard’s long-term success.
If selling your grapes to wineries is part of your business plan, knowledge of what grapes are best for each type of wine is important. Developing a close relationship with the winemakers you plan to sell to will ensure the right decisions regarding crop maintenance are made. There are a number of educational resources available to aid you in your in your quest for a successful vineyard. Purdue University Extension and the Indiana Wine Grape Council have quality educational programs. Attending conferences and workshops, reading printed publications on the subject, and one-on-one consultations would all prove helpful as you get started on this business venture.
What is the growth potential for a vineyard business?
The wine industry, particularly in the Midwest, has grown exponentially over the last decade. While new wineries continue to open, vineyards have not expanded at the same pace. As a result, demand for quality grapes is high. This has led to significant business opportunities for entrepreneurs with dreams of running a grape vineyard. While grapes grown for wine typically yield more growth and profit, there is still great opportunity in the juice and table fruit facets of the industry.
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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 vineyard business?
Experienced vintners offer the following advice:
- When researching your land investment, the United States Department of Agriculture or the National Institute of Food and Agriculture extension should prove to be an invaluable resource.
- If you are unfamiliar with the various types of grapes, the National Grape Registry offers a complete and detailed listing, as does The Vitis International Variety Catalogue.
- Should you require guidance in selecting a location for wine grapes, The Alcohol and Tobacco Tax and Trade Bureau can provide you with the necessary information.
- You will need to plan ahead when it comes to ordering your grape vines, as grape nurseries grow vines for the next year’s planting season. When placing your order, be sure to specify that you wish to only have one year old vines. This will help ensure you receive healthy, productive plants. Prior to placing your order, make sure the nursery provides you with proper certification.
How and when to build a team
Vineyards of three to five acres can be managed by one person throughout most of the year. You will require additional hands during pruning and harvest season. Farms over five acres will require year round assistance. Each team member must be knowledgeable about grapes and vineyards, able to identify any issues as they arise. Students and migrant workers are a viable option for the more laborious seasonal help. Labor studies indicate years two and three require the largest number of man hours - almost five thousand hours for a 35-acre farm in the second year and a little over four thousand hours in the third year.
For a business of this magnitude, it is recommended that you seek professional guidance. A financial advisor, attorney, and insurance agent can offer you the guidance needed to make informed decisions regarding the management of your enterprise. Many experienced vineyard owners hire a vineyard management company to ensure a strategy for success from day one.