How to Start a Christmas Tree Farm
Do you have some acreage and want to put it to use? You might consider starting a Christmas tree farm. You could make some extra money during the holiday season and have beautiful trees on your property year-round.
A Christmas tree farm grows a variety of Christmas tree types to sell to customers. They might provide the cutting as well or allow people to cut them themselves. Often, other Christmas items such as wreaths are sold as well.
There are several different ways a Christmas tree farm can sell their trees:
- Retail sales are the most common way to sell trees and is where the business sells their pre-cut trees on their property or by setting up a spot in a parking lot or roadside stand.
- You-Pick farms let customers on the farm and pick out a live tree. This is the highest profit method, but involves more customer service.
- Wholesale operations will sell in builk to a secondary retailer. This results in less profit per tree, but you aren’t dealing with the general public.
According to Modor Intelligence, the Christmas tree industry saw $2.56 billion in 2018, which was up 25.5% from 2016. According to Real Christmas Trees, 25-30 million real Christmas trees are sold each year. There are around 15,000 Christmas tree farms in the United States.
Real Christmas trees are growing in popularity as people look for renewable and recyclable options. The growing demand is resulting in higher prices due to supply shortages because Christmas trees take an average of 7 years to grow.
Your target market will be people who want real Christmas trees rather than artificial ones.
Skills, Experience, and Education Useful in Running a Christmas Tree Farm
There are several specific skills that you will need to open a Christmas tree farm.
- Experience. You should have some experience planting and growing trees and maintaining crops, although Christmas trees are a low maintenance crop.
- Business knowledge and experience. You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
- People skills. You’ll need to build rapport with your customers so that you retain them as customers and keep them coming back.
Checklist for Starting a Christmas tree farm
If you’re thinking about starting your own Christmas tree farm, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.
Step 1: Write your Business Plan
After coming up with the idea, the next step in starting your Christmas tree farm should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.
Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.
Related: How to write a business plan
Step 2: Name the Business
Finding the perfect Christmas tree farm name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name. Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.
Step 3: Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a Christmas tree farm, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: 3 steps to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 4: Select your Location
Your farm could be on some property you own or rent from a landowner or farmer. Accounting for loading areas and access paths, you can plant around 1,500 trees per acre.
The soil type, drainage, climate, etc., will impact the quality and types of species that can be grown. There are several popular types of Christmas trees include; Fraser fir, Douglas Fir, Balsam Fir, Virginia Pine, Scotch Pine, White Pine, Norway Spruce, Blue Spruce, and White Spruce), but research will be needed to see which ones will grow best on your property.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
In some states, a license is required before harvesting trees. In addition, general business licenses may be required, such as a sales tax permit and an Employer Identification Number.
Step 6: Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a Christmas tree farm is another. In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.
Step 7: Open a Business Bank Account
Keeping your business and personal finances in separate business bank and credit card accounts makes it easier to track the income and expenses of the business.
Step 8: Get your Marketing Plan in Place
A Christmas tree farm will need to set aside a budget to cover marketing costs on a continuous basis. Common marketing techniques for a Christmas tree farm include social media marketing and online advertising, as well as brochures and flyers. Developing a website can be a significant expense, but it can also give your Christmas tree farm greater visibility online.
Step 9: Get Insurance
A Christmas tree farm needs several types of insurance for full coverage:
– General liability insurance can help protect you from third-party claims of bodily injury and property damage, which is especially important if customers are on your property.
– Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.
– Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.
The cost for Christmas tree farm insurance will vary. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.
Step 10: Hire Employees
You may need employees to help run your Christmas tree farm, or you may choose to be a one-person Christmas tree farmer. While the majority of the business is extremely busy at the end of the year, make sure that you select people with appropriate experience. Even though the sales only happen around Christmas, it’s not a passive business. Christmas tree production requires constant monitoring to ensure the trees are free from insect and disease problems, and growers have a sellable product at the end of the year.
In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your Christmas tree farming operation is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost to start a Christmas tree farm?
Here are the typical costs you will face when you open a Christmas tree farm, assuming that you already own the land.
– Land purchase – $1,000 – $5,000 or more per acre
– Land preparation – $1,000 +
– Equipment (tractor, auger, plow, chainsaw, shears) – $5,000 +
– Seedlings – $700
– Chemicals for weed control – $100 +
How profitable is a Christmas tree farm?
Your revenue will depend on how many trees you grow and harvest. If you grow 200 trees and sell them at an average of $75, you would make $15,000 per year.
Additional revenues can be generated by selling handmade wreaths and other holiday-related products.
Are there grants to start a Christmas tree farm?
It’s extremely rare to find a grant to start a Christmas tree farm. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for a Christmas tree farm?
The NAICS code for a Christmas tree farm is 111421, which also includes nursery and flower growing businesses.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.