Capitalizing a Farm Start-up

Courtesy of James K., Virtually Green, San Francisco, CA
If your SPIN business is short of capital for start-up you might consider finding a partner who does have money. A partner can help you keep going when you encounter difficulties, can help with the farm work when you’re sick or are out of town for some necessary reason, and can make the whole experience more social than solitary.

One of the main reasons why many businesses fail is they’re undercapitalized at the start and have no margin for error financially. Another reason for failure is that the challenges and stress of starting up and operating the business startup can be too much for some people to do alone.

One capitalization option is to seek out the help of a small farms assistance organization. Here in California we have California FarmLink. It helps small farmers get started, including matching grants of $3 for each dollar a wannabe farmer raises to cover startup costs. It also helps with farm business planning and farm operations. Many other states also have FarmLink chapters.

As for funding a SPIN start-up by selling CSA shares, I’d recommend against that. It commits you to delivering a set quantity and quality of product on a set schedule, which a new farmer could find difficult to fulfill. Once you’ve taken the CSA deposit you’re on the spot and have to deliver with not much room for mistakes.

Even for a well capitalized SPIN farm start-up I recommend against doing a CSA the first year, especially if you’re new to operating a small farm business or SPIN. I’ve seen a number of first-year farmers crash and burn because they couldn’t handle a CSA their first year and ended up disappointing both their CSA members and themselves.

Selling at a farmer’s market the first year is safer for a first-year farmer since the types and quality of produce you are harvesting, as well as quantity of it, is likely to vary widely. You sell what you have without having to meet any inflexible quotas for produce type and quantity that CSAs commonly impose.