Jenny (00:28)
This episode might be a little controversial, but I hope not because I'm just going to be sharing my experience and what I think worked really well for me. But we're talking about my top five tips for debt free flower farming. Now I started my flower farm with no debt. I have never taken out a loan for my business and I probably never will with the one exception of our mortgage. So we live and farm on the same property. When we bought our property,
We bought our house, which came with about 24 acres, and then we started a farm on that property. So I feel like that was us buying our home. And then I started a business on the farm that was also our home. So I don't know if you want to count that and taking on debt or not, but we were buying a house to find a place to live, not necessarily to start a farm, but things just kind of ended up working out that way. So I.
took a small sum of my own money to start my business instead of going the route of taking out a business loan to buying what I need and, you know, keep paying myself at first. So I had a full-time job working for the government when I started my farm and I started as a side hustle and just slowly grew it on the side until I got it to the point where I knew I could replace my income with the farm. So I quit that job and started farming full-time, but.
I did not feel comfortable taking out a loan to do that. So I just took a small sum of my own money to buy my first seeds and a greenhouse, which was a used frame that we put up ourselves. And then all of the profits I made from the business, I took those and reinvested them back into the farm for a few years. So after the first year, probably I didn't put any more of my personal money into the business.
I just took whatever profits the business made and reinvested them, which meant that I didn't pay myself at first. So if I were to start all over again, knowing what I know now, I would have paid myself at first, probably not much, but I would have made it a priority a lot sooner, but I was really desperate to get my business off the ground and, I just really wanted to make it work. And so I was okay with not paying myself at first and just living off of my salary from my full-time job.
So that might be different for you. might be in a different situation, but I just know that, you know, instead of taking out a loan, I wanted to start my business debt free because I had this other job that I could sort of live off of, even though I wasn't making a lot of money. And I was really afraid of going any deeper into debt because I had just bought this house and this property, which we got a steal on. mean, it was,
really a really good deal that we fell into. So that was really great. And I don't want to discount taking out loans or debt because for some people that might be the right answer. Just for me personally, it definitely wasn't. I don't like owing people anything. And I just feel like debt is kind of like a little black cloud over my head. Plus I just, I didn't have any money when I started my flower farm. I really didn't make a lot at the job I was working in.
And I just didn't feel comfortable taking on that more debt. So this is what I wanted to do. So today I have my top five tips for you on how I managed to start my flower farm and within just a few years make it, you know, it's been profitable from the beginning, but really profitable within a few years without taking out loans or going into debt to get started. And I know that this is not the norm for a lot of agricultural businesses.
People just go and take out these massive loans and hope that the business succeeds and hope that they can pay it back. But that was way too scary for me. So I'm going to go through my top five tips for you and just talk a little bit about them. And my most important tip is the last one at the very end, which is the biggest thing that made the hugest difference for us in our business. So my first tip for you in starting a debt-free flower farm.
or to keep going debt free with your flower farm is to keep your costs and overhead low, as low as possible. So again, your first tip is to keep your costs and your overhead low. What I mean by this is don't just go out and buy like a $30,000 high tunnel at first, unless you actually know what you're doing and you can make money back on it.
You can also take advantage of programs like the NRCS equip program where you can apply to get some funding for things like high tunnels. But what I'm trying to say here is you should buy like use stuff. Like you don't have to buy a lot of stuff brand new and have your costs be really high. You can do a lot of DIY stuff for cheap.
Now, for example, with our first greenhouse, we bought a used frame off of Craigslist and put it up ourselves. I just had to buy new plastic and a couple of other supplies for it. So I didn't go out and buy things brand new and pretty much everything we did with the farm. We did that with, so we kept our costs pretty low in that respect. I also didn't hire a lot of like.
other people to work in the business at first. I did a lot of it myself, even though I worked a full-time job, I didn't have any money to pay for like business consultants or like a social media manager or things like that, or even just like labor to help on the farm. But I did have some time because at the time I was not single. I was with my husband, but we weren't married yet. Uh, we got married shortly after I started the business, but I didn't have any kids.
or really any like huge responsibilities. And so every morning before my full-time job, I would get up and work on the flower farm stuff. And then after my full-time job, I'd work on the flower farm stuff and I'd work on flower farm stuff over the weekends. And so that time I put into the business was really just like a ton of sweat equity. And so I didn't spend a lot of money on like,
just hiring people to work in the business or on outside labor at first, I waited a few years until I knew that the flower farm was gaining traction and that I really needed some help. So I never want to tell people not to hire help, but I do think that you need to be careful about what you spend at first. And the other part of that is like supplies and materials and like plants and stuff. Like you don't need to buy the most expensive P and E varieties.
unless it's really a part of your marketing and it's like really going to set you apart in whatever your business is. But for most flower farmers, like the average flower farmer, you don't need that. You know, I, I don't think that my customers could tell the difference between some of the really expensive dally varieties and then like the cheap ones. You know what I mean? I also delivered flowers in my Honda CRV until I could just justify buying a van for the business.
So I kept my costs and my overhead really, really low at first. I also did my own website. I learned through YouTube and taking some online classes, how to start a Squarespace website and how to design it myself. I learned how to do email marketing without paying like a email marketer to do that kind of stuff for me. So I put a lot of intentional effort into.
Upleveling my business skills and learning how to do things myself so I could run my business without hiring other people to do it for me. And just keeping those costs and that overhead low made a huge difference in freeing up money for me to purchase things that really made a difference in the business. Things like some key infrastructure, like irrigation, some cheap hoop houses that we bought and
probably the biggest thing was investment into my own education as a business owner. So taking some classes on like marketing and bookkeeping and sales and stuff like that. So that's my first tip for you is just to keep your costs and your overhead as low as possible. Like please just don't go out and just spend a ton of money on like things that you think that you need just by what you know that you need and try to get by with as little as possible at first. Obviously you don't want to
You know, affect the quality of your flowers or anything like that. But so you have to make a judgment call there, but keeping those costs low. My second tip for you is making a budget and sticking to it. I'm always shocked at the amount of people who start businesses and they never create a budget. don't know. I know that it sounds like common sense, but it can just be something that gets overlooked when you're first starting a business, or even if you've been in business for a long time, but.
Sitting down and making a budget and deciding where money is going to go at first and then sticking to that plan as best as possible is going to make a massive difference in the profitability of your business. So you don't have to go out and take out loans and get outside funding. You're going to end up keeping more of that money for yourself and for the business. And so I plan my profit first.
I generally project what I think I will be able to make over the season. And obviously like, if it's your first year in business, you have no idea. So you just kind of have to like make a goal and go with it. But after a couple of seasons, you'll have like a pretty good idea of what you think you can accomplish. So I make that projection and then I plan what I'm going to make in profit. So what I'll pay myself and then what the business will keep as profit for either reinvesting back in the business or keeping to save for emergencies or something like that.
And then whatever's left over is what I budget within. So I just think that so many people just overspend and like at first, when you're starting a business, if you've never flower farmed before, if you've never run a business before, you're probably going to waste money just on accent because you don't really know what you need and you probably going to buy some things you want to test out and then they don't work or whatever. And that's going to happen no matter what. So you can't like beat yourself up over it.
But sitting down and making a hard budget is just such an amazing and simple tool to make a plan for the profit that you're going to keep and either reinvest into the farm or pay yourself or whatever. Now will say that for the average person, I think that sticking to a budget is really, really hard. I know it can be really difficult for me and my business when I'm trying to still keep my business really profitable.
but hire more labor and lean on that labor more as my business matures. Sticking to a very profitable budget is really difficult because I have to make some really hard decisions as a business owner. I think it's so much easier to just spend more money on your operating expenses and like buy whatever you think you want or buy whatever you think you need and hire more people when reality, the reality is like,
I need to run my business based on the numbers because that's why my business exists. If I just wanted to have a flower farm because I loved growing flowers, then I really just should have kept it a hobby. You know what I mean? And I think a lot of people find that out as they get into flower farming that they really don't want to make a business out of it. They just want to have fun growing flowers and that's 100 % okay.
But what I'm here for, and what I'm telling you is if you're the kind of person who wants to have a profitable business, flower farming, and you want to pay yourself well, and you want to have profit, then you need to make a budget. And this is something I teach inside of six figure flower farming. My online class is how to do this and realistic budgets and realistic things to shoot for. Like, for example, we generally budget 30 % of our expenses for labor.
10 % of our expenses for seeds and like tubers and bulbs and stuff like that. So things like that. But if you are not sitting down and making a budget and at least making a plan to shoot for, you're shooting yourself in the foot. And of course there will always be some level of unexpected expenses that come up, but I budget for that too. And so I've learned how to do that over the years as being a business owner.
And I think it's just something that you need to think about when you're starting your business. So to summarize tip number two, make a budget. Budget for your profit, decide what your profit is going to be in first, and then budget with whatever is leftover for your operating expenses after that. Now, tip number three, this is probably going to answer some questions you might have based on tip number two. So number three is to make a three to five year spending plan.
So I said, I made that little comment because if you're someone who's listening and you're kind of just starting out on your flower farming journey, you're going to have a lot more expenses, like startup costs at the beginning of your flower farm than, you know, five or six years in. Because when you're first starting out, you need things like a studio or, know, a place to make your flower bouquets and process flowers. You hoop houses, maybe depending on your business, irrigation systems.
You might want to be investing in plants or perennials and just buying basic stock and inventory. And you're going to be buying equipment and tools like, you know, maybe tractors, probably not if you're starting small scale, but hand tools like broadforks and collinear hose and wire weeders. And all those things are not super expensive per se, but they do add up quickly. And so when you're making a budget at first,
It can seem like you're really not going to be profitable because you have all of these things to buy, but you have to look at it in a way that you're like building equity in your farm and you're building your farm and you're scaling it as first.
So the solution to this is to make a three to five year spending plan to make a list of what you need to buy. So at first that's probably going to be a lot of infrastructure like high tunnels, your studio, irrigation system, greenhouse
Make a list of what you need to run your business. Not what you want, not what you think you want, not what you think you need, what you absolutely need for your business to run. And in most cases, that is pretty simple for a flower farm. You probably need seeds or plants, a piece of land or your backyard or your front yard, a rototiller and some water. Like you don't need to overcomplicate this.
just make a list of what you need. And that should be your priorities as to what you'll spend your money on at first. Then make a list of what you want and what would make your life easier and what would contribute to the efficiency of the farm and what would make it better and make a list of those things and what they cost and make a plan as to when you will buy those things.
So when we're making these two lists, we're going to research what it costs. So you actually know what you will spend when you go to buy it. And then you'll plan out exactly when you will buy them. So this could look like your first year in business, or, you know, if you're already into business a few years this year, you will buy a new propagation greenhouse and maybe that'll cost you $5,000. And then next year you will invest money into a new irrigation system. And then the year after that.
You're going to build a studio or a barn or something like that. So this is forcing you to sit down and really make a plan to buy what you need to operate the farm instead of just falling into the trap of trying to buy it all at once and thinking that you need to go into debt because you don't need to. Something that I did when I first started my business is that I made a spending plan. I'm
Did exactly what I'm telling you right now. And on that list of things that I needed down the road, I didn't need it at first, but down the road, I knew I would need a studio. So a place to process our flowers, a place to work, because in the beginning I just did it in my garage and it just was not conducive to an efficient farm and wasn't great for my employees or me. So that was going to cost a ton of money. And I knew that I knew it was going to cost me at least $60,000. And this was pre COVID. So then when COVID hit.
It was a lot more, but I knew I needed to save a lot of money. So I made a sinking fund and all that is, or all that means is that every year I would set aside as much money as possible into a savings fund that eventually would be used to build my barn. So that's exactly what I did. So I probably saved her probably five years before we started the barn build project.
And then we didn't actually do it all at once. We ended up building the barn kind of slowly. took us about a year and a half to get it all completed because we DIY'd a lot of stuff. We did some of the work ourselves. And then we also just kind of searched around and got the best deals possible with contractors and workers that we hired and with materials and stuff like that.
And so by doing things this way, I never had to take out a loan for this super expensive project that I needed to happen for our farm. So you can do the same thing. Just sit down and make a list of what you need to buy and make a plan as to what you'll budget for those capital expenditures every year for the next three to five years. And something that I want to add into this one is I think that taking your profits and reinvesting them into your farm is
really a great way to do it. You can definitely prioritize paying yourself from the beginning, but if you can manage to live off of like another job or something for a while, I think it's a good way to go. Building a farm can be expensive and it does require plenty of investment and infrastructure, like all the things I've just been talking about, like coolers and storage areas and tools and systems. And investing in these things upfront,
Like as soon as you can, we'll relieve headaches in the future by allowing you to streamline and be efficient faster. So reinvesting in things that are absolutely necessary and that will undoubtedly make you money in the beginning. So, you know, a tractor would be nice at first, but do you really need one if you're only growing on a quarter of an acre? Like probably not. Is that purchase going to directly result in more profits? Probably not.
You can use elbow grease to get away with, you know, whatever you can in order to get money in the bank at first, and then take your profits and reinvest them for as long as possible. So you don't have to spend your own money or take out those loans. Another thing here is to invest in things like your own education as a business owner, not just an infrastructure on the farm. Because if you have like a natural disaster, like a hurricane or a tornado or whatever, like, yeah, sure. You'll get some insurance money or whatever, but.
You're going to have to rebuild your business. And if you are forced to move somewhere or something, and you can't take any of that with you, you're going to be forced to start a new business based on the business skills that you've acquired. And so I think that that's really important as well, when we're talking about, you know, a spending plan. look at certain areas that you might need to learn in like marketing or sales or numbers or, or
growing, maybe it's growing, whatever you need to learn to move your business forward, set aside some money to invest in your own education for that. Okay, moving on to number four. Number four is focusing on gross margin. And this basically means that your gross revenue doesn't matter.
You can make a hundred thousand dollars a year, but if your profit margin is only 2%, then you're only walking away with $2,000 in profit. And you're not going to be in business for very long because you have to pay yourself as a business owner and you have to pay yourself well, in my opinion. So instead of focusing on gross revenue, pick customers and products that provide you with a really healthy profit margin. So you can get money in the bank and ignore the rest. Profits come from managed margins and no debt to service.
And when you manage your profit margins well and keep your expenses low, including debt, your bottom line profits will almost undoubtedly exist. And when I say to target customers and products that provide you with a healthy profit margin for most people starting a small scale flower farm, that is going to mean selling retail. So direct to consumer or to high end wedding florists and maybe a traditional florist.
But selling wholesale to a wholesaler when you're only growing on like a half an acre or an acre of flowers, it's going to be difficult. I'm not saying it's impossible, but it's going to be difficult for you to have a profitable farm where you pay yourself like a decent living wage. And maybe that's just my opinion, but it seems like that is a truth. So really focus on.
earning a high profit margin and looking at your sales versus your expenses and making sure that your expenses are low and your sales are high enough that you are earning a good margin. You're earning a good profit because a lot of times like this podcast and my course are both called six figure flower farming. And I think people get like kind of alarmed by that thinking like, my God, a hundred thousand dollars, but it's just a catchy name. You guys like it's truly nothing more than that. Like
Yes, my farm earns multiple six figures, but it doesn't really mean anything because what matters is what your profit is. So if you are earning a hundred thousand dollars from your farm, but you're only paying yourself $20,000 a year, like that's going to be really hard for you to keep your farm moving, but you can definitely find ways to pay yourself 40, 50, $60,000 a year on that kind of revenue. And it's,
happens all the time. I have, I do it. There's lots of friends of mine that do it. And so just really focusing on that profit piece instead of your overall revenue, make the goal your profit, make the goal to profit $60,000 this year, not to earn a hundred thousand dollars. So focus on your gross margin. Then finally, my last tip for you, final tip of the day.
Is to buy used equipment and cheap materials, at least at first while you're growing and scaling your business. Honestly, this is the biggest thing that I think contributed to the financial success of my farm. Besides investing in my own business as education, you don't need to buy brand new anything. In fact, our farm was like completely built on Craigslist and sweat equity. bought everything used.
We bought everything as cheap as we could just to keep our overhead and our costs as low as possible, which meant we made a lot more profit and were able to invest more in the farm and to pay ourselves more. And when I say ourselves, I mean me. So really just looking at buying used stuff and getting cheap materials. So examples of this from my own farm is the first greenhouse, our propagation house we put up.
We bought a used greenhouse frame off of Craigslist and we bought new plastic to put over it. We went and we took it down from somebody that we found online and then we put it up ourselves and we didn't know how to put up a greenhouse. We'd never done it before, but we learned and it was fine and it was great. It's still standing today and doing amazing. I also bought my first two hoop houses were they're more like caterpillar tunnels. not like true hoop houses. They're sort of farmer's friend style.
Caterpillar tunnels and they're not farmers from brand, but they're something like it. And we bought them from two vegetable farmers in our area that were moving and they were just sort of liquidating all of their things. And we bought their, caterpillar tunnels used from them for just a thousand dollars a piece. And we grew like probably tens of thousands of dollars worth of flowers in those.
cheap little hoop houses at first. So we also bought a BCS tractor, which is a walk behind tractor. They're normally $7,000 do new. We bought one used off of Craigslist for 300 bucks. it did have something wrong with the carburetor and my husband, this is like where I fall into a lucky trap here, but my hubby is good with engines and he was able to fix it. And so we basically got like a $7,000 walk by and tractor for under 400 bucks.
if you're not super mechanical or you don't know someone who's super mechanical, I could have hired our local engine shop to fix it for a fraction of the costs that I bought it for. So it doesn't hurt to look at those things and like find a small engine shop near you and ask for their opinion on it and make friends with them. Our tractors that we use on our farm, which quite honestly, we don't really need tractors, but, but we have them and use them on our farm. They're all used. They're all old tractors from like the sixties. We.
have never bought a brand new tractor and we probably never will because that cost just doesn't equate to it being worth it for our bottom line. All of our implements like our plow, our disc harrow, our spring tooth harrow, we're all bought off Craigslist, are all like old rusty. A lot of people would look at them and think they're pieces of junk, but they work great. Um, my first delivery van was a $3,400 purchase off of Craigslist. I recently, just recently,
Upgraded to a newer one. We didn't buy new again. We bought a used one, but got a great deal on it. It's almost brand new. And so all of these things, just buying like used equipment and cheap materials. another one is our cooler. We bought, like a freezer bed truck off of Craigslist. And for those of you who are young, Craigslist is like the old Facebook marketplace. We're just buy you stuff on the internet, but, our cooler, we bought a used.
like freezer truck bed and a cool bot system and converted it that way. And so if you feel like some of these things I'm talking about might be kind of hard for you to do because you just don't know how to do it. Like I didn't know how to do it either. My husband didn't know how to do a lot of this stuff either. and so we just like figured it out along the way and did a lot of YouTube and asking other people for help and taking like lots of online courses and reading books. So if we can do it, you can do it too. All right.
So those are my top five tips for debt free flower farming for you. And again, you know, sometimes debt is unavoidable, necessary, and even desirable and use wisely. Debt can probably give you a leg up in some cases. Capital expenses that optimize your systems or improve your products or reduce your overhead might be worth it, especially if you can
if they allow you to make more money faster, but personally, I have not found a need for it yet. If I want to make a big purchase to improve my farm, I simply budget for it and save until I have enough money for it. And this is different than like incurring debt for the sake of cheap money in order to grow your business at lightning speed, which might not be the best idea if you have no experience as a business owner or far farmer yet.
And a big piece of this is that financial discipline is a skill that you can hone by practicing restraint and making well thought out decisions and just having like a little discipline behind your spending and your budgeting and putting a little bit more thought into things instead of just like buying whatever you think that you need.
But make sure you keep your costs and overhead low, make a budget and stick to it. Make a three to five year spending plan, focus on your margin and your profit, not just revenue and buy used equipment and cheap materials at first, whenever you can. All right. I hope this episode was helpful and I can't wait to talk to you on the next episode of the Six Figure Flower Farming Podcast. I'll catch you next week. Same place, same time.
