So we're now in our fifth year of farming and
one of the questions I find that I get the
most is where did I get the money to start
my farm?
You know, for many folks who have the dream of
starting a farm of their own, the need for capital
to get your farm started often seems like this massive
obstacle which is just absolutely impossible to overcome.
And so I wanted to put this video together as
just a down and dirty guide to show folks the
six ways that I feel like you can actually get
money to start your farm.
Some of these methods I've used myself personally.
Other methods are things that other folks have used.
Some methods I would recommend.
Other methods I would strongly advise against.
But I did want to make this video as a
guide for all of you 'cause I get so many
comments and messages and emails from folks asking this very
specific question.
And so I wanted to kind of pull together my
best information.
Also at the end of this video, I'll leave a
playlist of other videos that I've made about how much
money we've made on our farm, how much money it
costs to start our farm.
Like all of those details, I'm not going to get
into that today, but I did want to give you
the basics on how to pay for your farm.
So like I said, I think there's actually six ways
to get money to start a farm.
And method number one is the one that I've most
heavily personally relied on.
And quite simply, that's dipping into your own personal savings
and paying for your farm stuff, whether it's buying land
or equipment or resources or building materials or animals.
I would say that the majority of the money that
we used to start Gold Shaw Farm came from my
personal savings.
You know, I worked a number of jobs over the
years in the city, and I was very lucky to
make a good income from those jobs.
At the same time, my wife and I live pretty
frugally and we don't have children, and so our expenses
are relatively low.
The combination of those things let us have a really
aggressive savings rate.
And so when we bought our property that actually is
our farm, you know, 100% of that money was paid
for by savings.
Eventually, we sold our house in Washington, DC.
That also contributed to the nest egg that we had.
So to be wicked transparent for many folks who are
watching these videos out there and wondering how are we
able to afford to do what we do?
A big part of it is rooted in that, you
know, furthermore, not having debt and having those low expenses
meant that the ongoing run rate and burn rate of
the farm and our lifestyle associated with living on the
farm was also wicked low.
Now, that's not to say that that's something that everybody
can do, but it's something that we very specifically did.
But all of that said, I think relying on personal
savings as one part of your farm funding puzzle is
actually important.
Number one, it's going to mean you have a greater
personal equity stake in your farm #2 it's going to
mean that you just actually have like skin in the
game and you're invested in it.
Now, my own personal bias would say that if you're
starting a farm with somebody else's money, I don't think
you're going to treat how you spend some of that
money with as much care.
It's just simply human nature.
You spend your money way more carefully than you spend
other people's money.
Now, that's not to say that I think that you
can't start a farm with somebody else's money.
We'll get more into that later in this video.
It's just that I personally think it's important to have
a portion of your startup funds come from your own
pocket.
I think the other thing to note, and I and
I mentioned this in the video about how much it
cost to start our farm.
Your farm startup costs don't necessarily need to be as
high as you think they need to be.
So for example, you don't actually have to buy a
farm to have a farm.
I know many a successful farmer who has rented land
and that's how they pay for what they do.
And by renting that land, they're able to get their
farm business going without the massive and sometimes stifling cost
of owning the land.
You know, if you look at what's happened in the
real estate market over the last few years, you know,
that's something that could easily price out most farmers and
keep them from getting started.
When I actually think that the most important element for
starting a farm is starting your farm.
I've found that you learn so much by doing and
being on the land and working with the animals or
working with the plants that you're working with.
And so to get started in doing something I think
is more important then doing nothing, working constantly and just
dreaming of one day hoping to start a farm.
The sooner you can dip your itty bitty toe in,
even if it's just growing stuff on your back porch,
the faster you're going to be able to get up
to speed and have the ability to scale up.
And one of the things I'm personally finding is that
scaling up is one of the long term important elements
for being able to have a successful farm business.
So the 2nd way that you can get the money
you need to start your farm is to use loans.
You know, loans can come to you in a variety
of forms.
They can come from a bank, they can come from
the government, they can come from friends and family.
But regardless of their source, the premise of a loan
is obvious, right?
Somebody gives you money, you got to pay them back
that money, and usually you got to pay them back
that money with interest.
When it comes to starting a farm, I personally am
not a big fan of loans, and let me explain
to you why.
So when you're starting a farm, you're starting a small
business.
And in starting that small business, you're essentially operating on
a very narrow tightrope.
You are going to be fighting to survive.
You're going to be fighting to keep your head above
water.
You're going to make mistakes that are going to cost
you money.
You're going to make mistakes that are going to blow
up your business plans for folks who might be trying
to start a farm without a significant agricultural background.
You're going to have this steep learning curve.
You're going to be fighting things like nature and animal
sickness and pests that could affect your crops.
Like there is so much that can go wrong with
a farming business plan.
I feel like the last thing that you need when
you're starting a farm is the additional pressure of having
to make loan payments and having to deal with interest.
I mean, look, if you're an experienced farmer and you're
starting a new business and you want to take some
loans, I get that.
Also, if you buy a property as your home and
you're going to use that property as part of your
farm business and you need to take out a mortgage
to buy that, I understand that as well.
But I also see a lot of folks who will
try to start a farm by taking out a bunch
of loans or maxing out their credit cards.
If debt is your primary source for starting your business,
I think you are precariously walking on that small business
tightrope and I just don't feel like it's going to
go good for you.
And again, I don't want this to be misconstrued to
say that there aren't people who might have been successful
by floating things for a month or two with credit
cards or doing things like that.
My point is just simply, yes, it is a mechanism
you can use to fund your business.
Yes, for more mature businesses, taking out debt and using
debt as a way to structure your business operations and
manage things like depreciation, they can totally make sense.
But if you're a newbie farm and you're just starting
out and you have dreams of one day having a
farm and you decide to use a loan as a
way to get that farm going, I think you're just
stacking the deck against yourself.
And that goes too for like borrowing money from friends
and family because your chances of being successful are relatively
low.
If you're not successful, you could damage those relationships, and
I'd argue that sometimes the damage to those relationships is
actually more of a drawback than just having your farm
business itself fail.
So yes #2 is you can use loans, but I
also strongly caution you against it.
Now the 3rd way that you can get money for
your farm, then it's the one that most people have
the most questions about is by using grants.
You know, many government agencies as well as nonprofits out
there, as well as even some for profit organizations all
have grants that they're willing to offer to new farmers.
Like this money can be in the form of grants
for specific equipment, grants for specific farming practices, grants for
new farmers, grants for farmers from a variety of backgrounds
and cultural heritages.
You know, there is a fair amount of money out
there and available for folks if they're interested in it.
But I will admit that personally, I'm not a massive
fan of grants because I find that grants often come
with a lot of strings attached.
Now I know I'm coming from a place of some
extreme privilege in being able to say that, right?
Would you look at that plastic feed bin just broke?
Bring that back down Because a lot of grants might
require you to check in and give updates on progress,
which is perfectly reasonable.
They also might require you to build certain projects and
do them in certain ways.
Often times the grants will also have requirements like it's
matching funding, so you have to have at least half
the money to do a project, for example, like, you
know, doing some repairs around the farm or fencing projects
or the grant provider will require you to put up
all the initial funding and then they will pay you
back at the end.
All of those things can be barriers for folks who
might want to use grants.
And then I will also say for me personally, navigating
the complexities of the application process and the selection process
and doing that stuff right is an absolute art form.
And the people who can do it well are amazing.
And they, they really have my awe.
But for me, it's something I painfully, painfully struggle at.
And so I've never actually used a grant here on
our farm.
You know, a couple of years back, we actually applied
for a grant to fix up our barn.
You know, the barn is like 130 plus years old
and it has needed some repairs and it's not necessarily
something that fits into my business plan for the farm.
But the state of Vermont actually has a fund for
helping fix up old barns.
And even though we were awarded the grant, we ended
up not taking the opportunity to use the funds for
the grant.
First off, when we actually tried to do the repairs,
it was like right in the middle of COVID and
like the initial lockdown, so we couldn't find anybody to
do the work for us.
And then second, the next year when I tried to
go do the work, I actually felt really guilty about
using state funds to pay for my private property here.
I will admit I I personally have a moral objection
to, you know, taking tax dollars and using them to
enhance somebody'd private business enterprise.
Yeah, I guess you could make some sort of sketchy
argument that it helps the greater good, but I will
profess to be the type that will say that I
don't think it's necessarily government's place to be making those
decisions and redirecting my dollars or your dollars or whoever
else is paying those tax dollars to do something that
could be considered a vanity project by some.
And so I've actually done all of our barn repairs
so far by using our farm money to do that.
Again, I know I come from a place of some
extreme privilege to be able to do that, whether it's
thinking about my financial wherewithal that I accumulate prior to
starting the farm or the success we've had on our
farm with things like social media, which has also helped
fund a lot of our enterprises and I'll talk more
about later in this video.
So I guess here on Gold Shaw Farm, we can
either say that we proudly or stupidly, depending on your
perspective, have never ever taken grant money to get the
farm going.
But that's not to say I think it's necessarily a
bad thing for others to think about.
I think there is a lot of opportunity out there.
There's a lot of ways to pay for key infrastructure,
like, for example, fencing, you know, so somebody thinking about
starting a farm, I would not discourage them from thinking
about potentially using grants to get the money to start
that farm.
The only other caution I would OfferUp is recognize that
it's not as easy as you think.
I remember when I was a city dweller and still
dreaming about starting this farm, I was like thinking, oh,
I could just, you know, get grants to start my
farm.
It's like this magical pool of money that's out there.
And I would caution people against making those assumptions in
their business plans.
If you can leverage a grant to help further your
operation, awesome, Mazel tov, good for you.
But I think it's very unwise to think of it
as a guaranteed pool of money that's going to be
there for you.
And then number two, I think it's unwise to make
any assumptions without doing significant research in work and understanding
what the actual specific grants are.
Do not think about this amorphous pool of grant money
goes through and inspects all the cattle.
Toby, what are you doing?
You know, another method that's out there that you could
use to start your farm is something known as crowdfunding.
You know, that's where you use a platform like Kickstarter
to get a bunch of people interested in your operation
and you offer them some sort of value.
And in return for that value you offer them, they
give you money.
You can use that money to help support your farming
operations.
And in a lot of ways, I'm actually very negative
on using something like crowdfunding to start your farming operations.
When it comes to farms, I feel like it's a
great deal for the farmer, but it's not a good
deal for the funder.
Like I personally only feel it works if you, as
the farmer, offer tremendous amount of value to the people
out there funding your project.
If you do not do that, you are just simply
asking for a handout.
And look, I get that everybody needs a little bit
of help every once in a while, but I think
you need to be careful about basing your entire business
model on handouts.
Now with that disclaimer said, I will say that a
certain part of our farms business model actually takes from
crowdfunding.
You see, I've been pretty upfront about how we use
the revenue that we generate with social media to fund
our farming operations.
So for example, this video of mine that you are
watching right now is running online in the online video
platform that's running the video is putting advertising up against
it.
And so you as the viewer of this video are
also viewing some of that advertising.
Those advertisers pay both the platform and me money.
And then I take that money and I use that
for our farm.
That is a very non traditional way to fund a
farm.
But I do see it almost as a form of
crowdsourcing because just by simply watching, I'm giving you the
viewer something.
And then by taking your time to watch, you're giving
me the farmer something that comes in the form of
money.
When it comes to an exchange like that, I feel
good about it because you could just simply choose not
to watch my videos and then you're choosing not to
give us money.
And so to me that feels very fair.
And so I have no moral qualms or ethical hang
ups when it comes to a form of crowdsourcing that
looks like that.
What I would struggle more with is like saying, hey,
I want folks to crowdfund me and give me money
to plant a whole bunch more trees and put in
a whole bunch more infrastructure.
Unless I was giving you like a share of the
nuts that my trees produce as a part of the
exchange, I would feel like I'd be short shifting you
in that exchange.
I think the only other way that I could reasonably
foresee me doing crowdfunding is like in two specific instances.
One, which is pretty much imminent right now, I'm getting
ready to publish a book and if I end up
going the self-publishing route, I will probably set up a
Kickstarter to fund the actual printing and publication of that
book.
Again, I feel absolutely a OK about an exchange like
that.
You're giving me money, I'm giving you a book or
special things associated with the book and it's a good
deal.
There could be other examples where I was starting a
new business here on the farm and I would crowd
fund sorting elements of it, but I would want to
make sure that I was giving value to the investor
and that everybody felt like they were getting a good
deal here.
You know, the only other thing I would say on
crowdfunding is there's a very common farming business model known
as a CSA or community supported agriculture, which is effectively
crowdfunding.
That's where somebody is paying a farmer up front, say
a couple $100 and then they have a commitment from
the farmer to give them whatever their farms producing over
a period of time.
It's a very popular model when it comes to farming
because the farmer gets the upfront capital that they need
to get their farmer and operation going, and then the
consumer gets to benefit from success that the farmer has
by getting that produce or eggs or meat or whatever
it is in return later in the season as it
becomes available.
Sometimes people don't think about that as crowdfunding, but I
personally see it as crowdfunding.
And again, that's a situation where I see crowdfunding as
a good deal for both the farmer and the consumer.
And so I do think it's a very reasonable way
to approach funding your farm.
Now, the 5th way that you could fund your farm
is by taking on investors.
And when I say taking on investors, I mean very
specifically, you are essentially giving an equity portion of your
farm business to somebody who's essentially buying in to your
farm.
While structurally investors can look more like a crowdfunding type
of situation, when it comes to the risks and challenges
of investors, I think it's actually a lot more like
taking a loan.
You have more people you have to answer to, you
have a lot more pressure that you have to perform.
If it's coming from friends and family, you could be
risking those relationships.
And so particularly for a beginning farmer just looking to
start out, I think investors could work, but it would
not be the way I would personally want to go.
Again, as a beginning farmer, you're going to have so
much you need to focus on having to appease investors
and make money for them.
I don't know if that's something you'd want to take
on as well.
That said, for some people in certain contexts, it could
be the perfect situation.
So please don't let any of the advice of this
video serve as the be all end all.
This is just simply my perspective on what could work
or what couldn't work, as well as the strengths and
weaknesses each method could have for you.
Now the final method I want to talk about is
called cash flowing, and this is one of my favorite
methods for starting a farm.
So cash flow is essentially taking the money you have
from your farm business and using it to pay for
additional parts of your farm business.
You know, when Gold Shaw Farm first started, you know,
one of the first businesses that we got into was
raising ducks.
We ended up getting 40 ducklings from a hatchery and
the plan was that by the end of that first
season, we would take most of the drakes or male
ducks and call them and sell them for meat.
That way we would be paying for all of the
upfront feed costs that we'd outlay to raise the ducks
from being ducklings to adult ducks that were laying eggs.
And so the startup costs for the duck operation were
actually funded by the duck operation.
By just being smart with my cash flows, I knew
that I was going to have this initial cash outlay
when I first bought the ducks all the way to
when I slaughtered the mail ducks.
But doing that smart planning helped me stay pretty much
break even when it came to the duck operation.
And as I was getting it started, and remember, I
was doing all of that long before we had a
large social media file, I just Simply put out an
ad on Facebook and Craigslist and ask people in my
local area if they wanted to buy duck meat.
And that's how I found my customers.
So remember, it doesn't have to be hard.
You know, another example of cash flowing is pretty much
how I raise my goslings.
You know, I sell my eggs as some initial things
that happened early on in the season to help pay
for my geese.
Then I'll sell live birds as they're this age.
And then once I go to harvest them in the
fall, I'll sell those as well.
Each one of those moments creates an opportunity to drive
revenue for my farm business.
And they all stack on top of each other.
So if you're looking to start a farm, I think
it's a very reasonable way to think about stages of
growth for your farm.
You know, I pretty much always dreamed of having cattle
on our farm, but I knew I needed to build
up skills and I knew I needed to build up
the farm business before I'd be ready for it.
You know, in 2018 when we started our farming operations,
we weren't in a position to pay all the money
required for the cattle.
By wading and maturing, we were actually able to be
in a better financial position to pay for the cattle,
not from our own pockets, but from the pocketbook of
our farm business.
So in some ways that might be my long winded
way of saying that you should really think about starting
small and growing your business.
Don't cannonball into the deep end of the pool.
Give yourself the opportunity to build up and let your
business pay for your business.
And you know, even if that means having to have
a day job to support your farming operations, there is
no shame in that.
And I've seen this statistic out there from the USDA
that like 90% of family farms have to operate with
off farm income.
You know, for the first four years of our farm,
I actually had to have a day job and it
really wasn't until January when I finally quit and started
working from the farm whole time.
So please, as you're thinking about your future business plans
and your farm start up plans, don't feel like you
have to go whole hog.
Now, as you've gathered, as I've gone through all six
of these items here, you feel free to go back
if you want to screenshot it.
And I know I've hinted at this throughout the video,
but for us, we've really relied on three things to
help fund our farm business.
We relied on personal savings, we relied on crowdfunding by
way of creating social media content, and then #3 we
have used cash flowing to help drive the growth of
the business.
I'm not saying that those are the right ways to
do it, I'm just saying that's how we've done it.
I think there are a ton of different options you
can go for for how you start to farm your
farm.
So much of it depends on your personal business situation
and financial context.
You shouldn't be basing it off of just some dude
you see on YouTube.
But if you want to learn more about how we
started our farm, check out this video playlist right here.
Give you lots of thoughts and ideas and see where
we've succeeded and where we've failed.
Thanks for watching everybody.