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Oooooohhh this is my happy place. To have a profitable small farming operation you have to know how much you need to make.
But you also have to know what your end goals are so you know what you’re trying to achieve and if it is possible with the land, produce, and livestock you have right now. Because if it’s not possible to reach farm profitability with where you are now. You won’t be able to scale to something bigger. Whether you are a big dairy farm operation or you are backyard farming.
Just throwing a number out there because it seems good and what everyone else is shooting for may not be what you need. But maybe you don’t need that much.
You might be closer to your dream goals than you realize if you only did a little bit of research and expense tracking.
Ready to do just that?
How Much Are Your Fixed Expenses?
A fixed expense is an expense that you have each month that is generally about the same amount, no matter what you do.
This number will encompass the bare minimum you spend to care for your animals or keep your garden growing.
This does not include the things that you want but really don’t need. Let’s say you want to start a garden and sell your extra vegetables. You don’t “need” a $1600 greenhouse or a raised garden bed. You could simply dig up the turf on a space of ground and start with what you have.
You don’t need to buy seeds from a catalog you could buy seeds from Walmart or even the dollar store.
When it comes to animals your fixed expense typically is the feed.
You could count water in there if you want but typically this goes in with your home water bill.
A fixed expense does not mean buying new livestock when you see this cute little animal you want to bring home and you have to pay x amount in order to do so. No, no, no.
Simply what do you have to pay on a regular basis to keep what you currently have alive and healthy?
How Much Are Your Periodic Expenses?
This type of expense generally comes up semi-regularly but not as often. Like quarterly, yearly, or some other period. These are things that you have to buy pretty often but can change based on a lot of things.
This is something like having to buy a medical salve for your animals, fresh chicken coop bedding, or straw for rabbit nest boxes. These are things that you should have about a year’s worth of expenses set aside and if you have to use that money replenish it.
Stop letting your homestead drain your bank account
Know exactly how much your backyard farm needs to start paying for itself!
What Expenses, If Any, Can Be Eliminated
This is likely going to be a possibility if you have animals. Or you are spreading yourself too thin and you need to focus on one project at a time to get that one thing up and running before adding another.
- Let’s say you have chickens and you’re trying to get them to pay for themselves but you have 10 old hens that are not laying anymore or hardly laying at all. You also
- have 20 hens that are laying just fine. Well, that means you have one-third of your flock eating into your profits.
- You have to decide what you are willing to tolerate as far as moochers eating your profits.
Are you going to cull those animals from your flock and add them to the freezer or are you just going to give them away to someone who wants them?
There’s no right or wrong answer but you have to be ready to accept the responsibilities and consequences of your choices if you choose to keep all of the animals that are not producing until they pass naturally.
If you’re trying to get your chickens to pay for themselves and that means you have to earn 1/3 more than you would if you just got rid of the hens that are not producing.
Getting Rid Of The Things That Are Not Serving You
If you are looking at your small farm as a whole I want you to take a step back and look at all the things you’re raising, the garden projects, or even the preserving projects that you’re trying to do. That could be dehydrating meat, preserving vegetables, producing your own herbs, or raising your own meat.
I want you to look at which “thing” is producing the least amount and which one is serving you the least.
When you’re in the season of starting your profitable business you have to be focused. It can be tempting to want to offer all the agricultural products that you see everyone else selling. But you will get a lot further along if you focus on getting one of your farm products selling, producing well, and bringing income (and produce you expect) before adding another.
If you’re stretched too thin you won’t get very far or it will be at a VERY slow pace.
Taking an honest look at the things that are not doing well or the way you had hoped and let those go will give you clarity and help you not feel as stretched thin.
Is It Even Possible To Make What You Need?
Let’s do some math… I know I know that’s not all that fun but knowing your numbers is detrimental to having a sustainable business.
- Total up your monthly expenses AND the rough estimate for the periodic expenses.
- Divide that by 12. Now you have the dollar amount of your monthly expenses.
Keep in mind that you probably will make the bulk of your income in the summer so you need to likely make more than that in the summer months. BUT seeing the smaller amount feels a little less overwhelming.
Look at the monthly expense number. How much produce or how many animals do you need to sell in order to hit that monthly goal? Is it possible to reach with the dollar amount you need with the space or animals you currently have?
If the answer is no, what can you do to increase your products value to charge more? Maybe you need to look at your curing situation again and see what you can cut back on.
If you can hit the goal you need to cover your full year of expenses then that is your first priority. Before any of the money goes into your pocket get your expenses covered.
Did you surprise yourself with the amount you need (or don’t) need to make? Sometimes to hit the goals we simply need to be more intentional with our money.
Don’t let the numbers scare you. If you know exactly what you need to make it is so empowering not limiting. Use that information to guide you in your farm business growth process.