Corporate Business

Agricultural businesses are varied and cover much more than a large farm or ranch. A person looking to start a business or buy an existing business in this area will need financing as well as specialized knowledge. The availability of land to start a new agricultural business is a limiting factor these days as there just is not that much land still not being cultivated. This means that a new owner will usually have to find an agricultural business that is for sale. There are always family businesses for sale, but they do not become available at low prices these days. The land is valuable and the existing equipment if in good repair is also not cheap. New equipment is priced like new cars are these days. The prices are higher and higher and out of sight. Most new owners of ranches or farms were born into the family business and are just taking over the running of a family or corporate enterprise. There are other related agricultural businesses that can be started from scratch or purchased from an existing owner. These include farm supplies, farm equipment, nurseries, small special crop farms, pest control, a niche winery, crop dusting companies and horse or cattle ranches. All of these businesses can usually be found on the market. The problem, as with any other purchase of a business, is this. Can the buyer come up with enough money to interest the current owner and will the current owner carry back some of the paper. There are many very solid reasons that a new owner should consider buying an existing operation rather than starting a new company. The cost will be higher usually with a running business, but the existing business will have customers or a history of production.

Many of the related agricultural businesses will not take the capital to get started or to buy that is needed for the purchase of a large ranch or farm Farming these days is a capital intensive business and this is one of the reasons that family units are always coming on the market. This opens the door for opportunity for the person looking to buy, but it also means that the buyer must have the capital or credit to make the purchase. A suggestion for a potential buyer is contact brokers who specialized in these businesses and see what is being offered and the terms of the offers. This will quickly inform the buyer what they are going to need to make a sale happen.
Getting started in related businesses

If you are interested in owning an agricultural business that supports the farming community, then your capital outlay may be significantly lower and may show a higher percentage return on investment. Farming has a low return on invested capital since the price of land and equipment has sky rocketed in this current market. Some of the other specialized businesses can be purchased or started with less capital and the percentage return is considerably higher. These are factors that should be considered by a potential new owner. One of the reasons that the family units come to market is just this fact. The old owners die or wish to retire and their children do not with to continue the business. So they put it up for sale, knowing they can get a better return on their money without the work or the risk of farming. Brokers usually know why a property is being offered and this knowledge can help the buyer make a better deal with the old owner. Maybe just as a matter of principal, they want to see their farm remain a family farm and not part of a large agricultural corporation.

Related businesses offer the potential owner the chance to be in the agricultural business, but with a lower entry cost. Again check the Internet and with brokers to see if there are existing businesses for sale. If you are planning a new start-up, then you will need to do a good deal of investigation and planning to see if your idea is feasible. The biggest problem you will have is the agricultural community is pretty loyal to old suppliers and a start-up must fight this earned loyalty. Another question is there enough possible business to make your operation money above expenses.

If you are going into a specialized crop area then this may be a situation where the return is much higher than normal farming. Some specialized crops do not take a huge amount of acreage to be successful. A small hot pepper farm can make a killing if they have the right crop and their harvesting season is different than the rest of the world. Small wineries in many states are allowing families to make a livable income and enjoy their way of life. Your broker should know if any of these types of agricultural businesses are for sale, or will you need to start your own operation from scratch.

A farm supply company is just a specialized retail store. If you know how to buy merchandise and then market it, this can be a very profitable business. If you can find a need and fill it then you are going to be well ahead for most businesses. Winning on price is a dangerous way to do business. Filling a need with something that others do not offer is a sure way to make money. This kind of a start-up is golden.

Any kind of special farm product that can be grown on small amounts of acreage can be a profitable venture as the capital cost are kept low and the return can be substantial. If you like an area and there is land available maybe this kind of agricultural business should be looked at and considered. Ag businesses that are support in nature and have nothing to do with the actual growing of the crops can be profitable as long as the farm community is financially healthy.
Conclusions

There are always agricultural businesses for sale; the problem is many potential owners do not have the needed capital or credit to pull off the deal. Farming is a high dollar investment due to the cost of land and equipment. It is also hard to begin a start-up since land is dear and good land is hard to find. This means that the only way most people can get into this area of the agricultural business is to buy an existing operation. Related agricultural businesses can also be found on the market. They may be easier to buy, as the investment needed will probably be lower and terms may be easier to arrange. This area is also easier to get a start-up off the ground and running.

Special crop production is another way to make it in the agricultural business. If you know how to produce a special farm product and you do not need a lot of land to make it work, then this area may be just the ticket. The markets are wide open for quality higher priced farm products.

The best advice that a potential owner can get is study the market and make sure you have the needed money to pull off whatever deal you are looking at. Find a knowledgeable broker and ask lots of questions. Use the Internet to look up answers to questions that you come across. There is a store of solid

Bill Henthorn formerly was principal broker and owner of a resort / commercial real estate brokerage in Honolulu which specialized in representing sellers in transactions up to $50MM.He currently serves as the marketing director of http://www.acquireo.com

Article Source: ArticlesBase.com - Agricultural Business Start Up Ideas