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.
According to Modor Intelligence, the Christmas tree market size was $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.
Costs 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 +
Steps to Starting a Christmas Tree Farm
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.
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 a 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.
Related: Comparison of Business Entities
Step 4: Select your Location
Your farm could be on 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 trees that can be grown. Popular types of Christmas trees include; Fraser fir, Douglas fir, Balsam Fir, Scotch Pine, White Pine, Norway Spruce, Blue Spruce, and White Spruce) will
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.
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.
Insurance policies 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: Hiring Employees
You may need employees to help you run your Christmas tree farm, or you may choose to be a one-person show. Make sure that you select people with appropriate experience.
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 farm 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.
How Much Can You Potentially Make Owning 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.
Things to Consider Before Starting a Christmas Tree Farm
Running a Christmas tree farm or any business will have its challenges. You need to be prepared and make sure that you know what you’re getting into.
It will take a long time to see a profit since most Christmas trees species take an average of 7 years to grow to 5 to 7 feet. This can be especially challenging if money is being borrowed to finance the business.
Your business will obviously be seasonal (typically from November to December from Thanksgiving until Christmas Eve), so it may be hard to make a living off of selling just Christmas trees. Even though the sales of the business are seasonal, the farm operates all year with weed control, pruning of trees, and protecting the buds from frost.
Some Christmas tree growers also sell pumpkins, wildflowers, or other plants to provide more year-round income.
Talk to other business owners for tips on starting a business and do your homework to determine costs. Research other Christmas tree farms to see what they offer and what prices they charge.