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How to Start a Farmer’s Market

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Published on January 13, 2022

Updated on September 21, 2022

How to Start a Farmer’s Market

Disclaimer: Step by Step Business’ content is for informational and educational purposes only. It’s not intended to be a substitute for professional legal or tax advice. All of our articles are thoroughly reviewed and fact-checked by our editorial team. Read our editorial guidelines for more details.

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Fast Facts

Investment range

$2,050 - $5,100

Revenue potential

$33,000 - $70,000 p.a.

Time to build

1 – 3 months

Profit potential

$24,000 - $50,000 p.a.

Industry trend

Growing

Commitment

Flexible

How to Start a Farmer’s Market

Health-conscious America loves fruits and vegetables, and the fresher the better. There’s nothing like the produce that you get right off the farm at your local farmer’s market. Farmer’s markets can be operated in a lot of different ways. If you have land, you can grow your own produce for sale at a farm stand on your own property. 

The alternative is to partner with local farmers and set up a stand to sell their produce. Interestingly, many farmer’s markets run as non-profits with the goal of providing healthy, fresh food. In California, you can’t have a certified for-profit farmer’s market. However, if you want to run a for-profit business in another state, fruits and veggies are big business. The market is worth over $5 billion in the US.

It’s not so easy to start a farmer’s market, however, and you need to first grow your knowledge. Luckily, you’ve come to the right place, as this step-by-step guide has all you need to know to get you started on your journey into entrepreneurship.

Step 1: Decide if the Business Is Right for You

Pros and cons

Starting a farmer’s market has pros and cons that you should consider before deciding if it’s right for you.

Pros

  • Help People! – Provide healthy food and help local farmers
  • Community Involvement – Be an integral part of your community
  • Low Startup Costs – No product investment to make

Cons

  • Low Revenue – Revenue will be from vendor’s fees only
  • Seasonality – Climate may limit your business

Farmer’s market industry trends

The most common products sold in farmer’s markets are fruits and vegetables. According to the 2019 National Farmers Market Managers Survey, 99.6% of farmers’ markets sold fruits and vegetables.[1]https://www.nass.usda.gov/Publications/Todays_Reports/reports/nfar0820.pdf So let’s take a look at how fruit and vegetable markets have been performing. 

Industry size and growth

  • Industry size and past growth – The US fruit and vegetable markets industry is valued at more than $5 billion and has been growing at a steady half percent a year.[2]https://www.ibisworld.com/industry-statistics/market-size/fruit-vegetable-markets-united-states/
  • Growth forecast – Fruit and vegetable markets are expected to post steady growth over the five years to 2026 as government and school programs encourage consumption of fresh fruits and vegetables.[3]https://www.ibisworld.com/united-states/market-research-reports/fruit-vegetable-markets-industry/ 
  • Number of businesses – There were more than 8,000 farmers’ markets across the US in 2019.
farmer’s markets industry size and growth

Trends and challenges

Trends in farmer’s markets include:

  • Successful farmer’s markets are offering additional products such as baked goods or locally made crafts and art. 
  • Organic foods are in demand, which presents an opportunity if you have access to organic farmers.

Challenges also exist for farmer’s markets including:

  • Demand for grocery delivery is growing, which could decrease customer visits to farmer’s markets. This could be, however, an opportunity to offer fresh, local produce deliveries to customers. 
  • The popularity of farmer’s markets has grown, creating an increasingly competitive environment.
farmers market Trends and Challenges

Consumer spending

  • Average consumer spend – Consumers spent more than $14,000 per farmers market in 2019.
  • Potential customer base – More than 900 households shopped at farmers’ markets on an average market day in 2019.
farmers market consumer spending

How much does it cost to start a farmer’s market?

Startup costs for a farmer’s market range from $2,000 to $5,000. The largest expenses are for a website and your booth space rental. A website is important so that people can find your market and see what you offer.

Start-up CostsBallpark RangeAverage
Setting up a business name and corporation$150 - $200$175
Licenses and permits$100 - $300$200
Insurance$100 - $300$200
Business cards and brochures$200 - $300$250
Website setup$1,000 - $3,000$2,000
Deposit on booth rental space$500 - $1,000$750
Total$2,050 - $5,100$3,575

How much can you earn from a farmer’s market?

Your farmers or other product providers will typically pay an average of $15 per day to sell their products. Your profit margin after space rental and other costs should be about 70%.

In your first year or two, you could have 10 providers and sell 32 weeks out of the year, bringing in over $33,000 in annual revenue. This would mean nearly $24,000 in profit, assuming that 70% margin. As your brand gains recognition, your providers could increase to 20. With expected annual revenue of close to $70,000, you would make close to $50,000.

Farmer Market earnings forecast

What barriers to entry are there?

There are a few barriers to entry for a farmer’s market. Your biggest challenges will be:

  • You need to be near farmers who are willing to partner with you.
  • You’ll face competition from other farmer’s markets.

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Step 2: Hone Your Idea

Now that you know what’s involved in starting a farmer’s market, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Why? Identify an opportunity

Research farmer’s markets in your area to examine their products, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing an organic farmer’s market.

You might consider targeting a niche market by specializing in a certain aspect of your industry such as fresh fruit.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

In addition to produce, you could find providers with other types of products made locally. You could offer:

  • Baked goods
  • Other food products
  • Crafts
  • Art
  • Books
  • Gifts

How much should you charge farmer’s market farmers?

Farmers typically pay vendors $10 to $20 a day to sell their products. Your costs will be rent for your market space and any labor that you hire. You should be able to get to a profit margin of about 70%.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price point. Remember, the price you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

You have two target markets. First are the farmers and other product producers that you need to partner with. Second is the people who will attend the farmer’s market, which will be broad. 

Where? Choose your business premises

You’ll need to find a convenient space, either indoors or out, to sell the produce and other products. Often an indoor flea market is a good opportunity to get an inexpensive space, or a space inside a larger farmer’s marketplace. Find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

  • Central location accessible via public transport
  • Ventilated and spacious, with good natural light
  • Flexible lease that can be extended as your business grows
  • Ready-to-use space with no major renovations or repairs needed
farmer’s markets idea rating

Step 3: Brainstorm a Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better 
  • Name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “farmer’s market” or “produce market”, boosts SEO
  • Name should allow for expansion, for ex: “Jim’s Bakery” over “Jim’s Cookies”
  • Avoid location-based names that might hinder future expansion
  • Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

  • Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
  • Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
  • Product and Services: Describe your offerings in detail.
  • Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
  • Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
  • Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
  • Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
  • Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
  • Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
  • Appendix: Include any additional financial or business-related documents.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to farmer’s markets.

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your farmer’s market will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
  • C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using ZenBusiness’s online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re  completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

  • Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
  • SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
  • Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal: Self-fund your business via your savings or the sale of property or other assets.

Your best bet is to use your personal funds since the startup costs are low.

Step 8: Apply for Licenses/Permits

Starting a farmer’s market business requires obtaining a number of licenses and permits from local, state, and federal governments. Federal regulations, licenses, and permits associated with starting your business include doing business as, health license and permit from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level licenses and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account. Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your farmer’s market as a sole proprietorship. 

Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

  • General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business Property: Provides coverage for your equipment and supplies.
  • Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto: Protection for your company-owned vehicle.
  • Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You can use industry-specific software, such as Booth Tracker, Manage My Market, or Market Wurks, to manage your inventory, payments, billing, and to track attendance. 

Accounting

  • Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial. 

Marketing

Some of your business will come from the casual passerby or online visitors, but still, you should invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness. 

Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products: 

  • Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area. 
  • Instagram: Same benefits as Facebook but with different target audiences.
  • Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now”. This can sharply increase purchases. [fit to your article/business idea]
  • Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers. 

Kickstart Marketing

Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include: 

  • Signage – Put up eye-catching signage at your store and website. 
  • Flyering – Distribute flyers in your neighborhood and at industry events. 
  • Email marketing/newsletter – Send regular emails to customers and prospects. Make them personal. 
  • Start a blog – Start a blog and post regularly. Change up your content and share on multiple sites.
  • Seek out referrals – Offer incentives to generate customer referrals to new clients. 
  • Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
  • Pay–per-click marketing – Use Google AdWords to come up faster from searches. Research your keywords first.
  • Create infographics – Post infographics and include them in your content.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your farmer’s market meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your farmer’s market could be: 

  • Organic produce straight from the farm
  • Fresh produce and local art
  • Local goods, local food
unique selling proposition

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a farmer’s market business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in farmer’s markets for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in farmer’s markets. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

As your business grows, you will likely need a few workers to fill various roles. Potential positions for a farmer’s market business would include:

  • Drivers – pick up and deliver produce and other goods
  • Market Clerks – make sales, customer service

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Start Making Money!

Farmer’s markets are all about fresh, local food. They help people stay healthy, and they are a great help to the farmers trying to make a living. People are more and more conscious of their community and buying local, which is part of the reason that farmer’s markets are growing in popularity. 

By starting your own farmer’s market, you’re doing something productive for your community, and you can make some money at the same time. Now that your knowledge about the business has grown, you’re ready to start your fresh journey into entrepreneurship. 

Farmer’s Market Business FAQs

How much does it cost to start a farmer’s market?

You can start a farmer’s market for as little as $2,000 if you partner with local farmers to sell their produce. Part of the cost is for a website and some is for a booth space rental.

Are farmer’s markets profitable?

Many farmer’s markets are non-profit but they can be self-sustaining. It is possible to have a for-profit farmer’s market by partnering with farmers to sell their produce and collecting vendor fees. You can sell other products at your market as well to increase your profits.

Do I need a license to have a farmer’s market?

You may need business licenses and permits at the state and local levels. Check with your local governments for requirements.

How can I start a farmer’s market if I don’t have a farm?

You can create partnerships with local farmers to sell their produce, and in turn, they will pay you vendor fees. You just need a booth space to rent, whether indoors or outdoors.