How to Start a Business
Starting a Dairy Farm
These tips are written for those of you who hope to start a dairy farm. Read this article before you begin your venture.
Wondering how to start a dairy farm? We take you step-by-step from start to success.
Dairy Industry Trends
The U.S. dairy industry has been shaped by several trends over the past decades. Rising costs and stagnant prices have caused small family farms to give way to larger, consolidated operations. Although there are still opportunities for small dairies, economies of scale are critical for profitability in this ever-changing agricultural sector.
One of the most challenging parts of dairy ownership is the milk price. In 2009, the milk price hovered around $13 per hundred-weight -- a price that was well below the cost of production for many farmers. Although the milk price has rebounded, volatility can make it difficult to create a startup budget and short-term revenue forecast with any degree of accuracy.
Getting Started
Capital requirements are a common obstacle for dairy startup candidates. Unlike beef cattle operations, dairy cattle operations have substantial equipment requirements as well as barn and acreage demands. You can reduce the upfront capital investment by purchasing silage, hay and corn from other operations, but there is no getting around an initial investment in milking parlors (or pipelines), milk tanks, barn cleaners and other physical assets.
The size and scope of your herd is another critical consideration. If possible, you'll want a mix of milk cows and heifers to ensure seamless operations. Each year, a percentage of the cows in your herd will need to be culled for productivity and replaced by heifers that have recently delivered calves -- the herd's next generation of producers.
Entry Strategies
Unless you have abundant financial backing, the best entry strategy is to start small and build your way into a full-time operation. Many aspiring dairy farmers hone their skills and build a herd while working for another farmer, with the understanding that the goal is for the worker to lease a working dairy facility and launch his own operation in a specified period of time.
Family transitions are common in dairy farming, but they also present challenges. The inheritance tax on a full-scale dairy operation can be substantial and the retiring generation is usually depending on the sale value for their retirement nest egg. The end result is that many generational dairy transitions aren't much cheaper than a typical sale.
Best Dairy Farm Business Plans
If you're like most startup business owners, there aren't enough hours in the day to accomplish everything that's on your to-do list. Every task on your list is important, but writing a business plan is one of the things your dairy farm needs to do ASAP.
Now here's the good news: You can minimize the amount of time it takes to write a business plan by buying business plan software. A business plan software solution is an effective tool for time-strapped dairy farm owners who understand the importance of a great business plan.
Properly utilized, business plan software has the potential to transform your business plan from a throwaway business requirement to an integral strategic resource.
Investigate Competitors
Prior to launching a dairy farm in your area, it's a smart move to see how many competitors you have. Try our link below to find competitors in your area. Just enter your city, state and zip code to get a list of dairy farms in your community.
How are you going to successfully complete with existing firms? It's important that you never underestimate the competition.
Find Good Remote Business Advice
If you are seriously contemplating launching a dairy farm, be sure to talk to somebody who is already in the business. Local competitors are not going to give you the time of day, mind you. Why would they want to educate a future competitor?
But, a person who owns a dairy farm on the other side of the country may be willing to share their entrepreneurial wisdom with you, as long as they don't view you as a competitive threat. In that case, the business owner may be more than happy to discuss the industry with you. It can take a while to find an entrepreneur who is willing to talk, but it's well worth the effort.
Want the scoop on finding an owner of a dairy farm on the other side of the country to talk to?
It's not that hard. Just use the handy link below and enter in a random city/state or zipcode.
Competitive Benefits of Buying a Dairy Farm
Pursuing a dairy farm acquisition can be an effective route to profitability for emerging entrepreneurs.
A business acquisition also delivers an established brand - a big advantage in competitive markets. The notion of buying a business to get an established brand can be a savvy business strategy for new dairy farm owners.
Since your dairy farm's ability to compete is largely indexed to your brand reputation, an acquisition strategy significantly condenses the amount of time it will take for your business to become a competitive threat.
Franchising May Be a Better Way to Go
The probabilities on your being a successful business owner zoom upwards if you opt for franchising and leverage their successful brand and track record.
If your goal is to start a dairy farm, it's worthwhile to determine whether buying a franchise could make your life much easier.
The link below gives you access to our franchise directory so you can see if there's a franchise opportunity for you. You might even find something that points you in a completely different direction.
Related Articles on Starting a Company
These additional resources regarding getting started as an entrepreneur may be of interest to you.
Questions to Ask Before Starting a Business
Share this article
Additional Resources for Entrepreneurs