Each year, farm and forest owners consider starting nontraditional enterprises to take advantage of renewable natural resources, such as forests, wildlife, and water, as well as cropland. Some landowners are traditional farmers who want to diversify their operations. Others are new property owners. Their aim may be to produce a sustainable source of income over a long term. Or, they may just want to be good stewards of their forest’s resources. However, many endeavors are less than successful—or fail altogether—because the landowner lacked sufficient information necessary to make an informed decision and/or failed to take a long-term view of the enterprise. Equally important, they often also lacked necessary technical, business, and marketing skills.
Develop a Forest Stewardship Plan – Consider Sustainable Forest Harvests
Before you as a forest landowner begin to consider the time, resources, and money necessary to develop a rural enterprise, you need to undertake a few relatively simple steps:
- Contact a Maryland licensed professional forester to make sure you are properly managing your existing forest resources and are currently making wise forest management decisions. This usually involves the development of a forest stewardship plan that will act as your roadmap for forest management decisions for the next 10 years.
- Consider the sale of commercial forest products. Timber harvests, although infrequent, can offer a substantial and sustainable form of income. Income from a well-managed timber sale can provide seed money for some of the more intensive rural enterprises discussed later or needed capital for improvements to wildlife habitat, road access, and structures.
- Practicing forest stewardship on at least 5 acres of woodland offers the potential for significant property tax reductions under the Maryland Woodland Assessment Act, especially if the property is assessed at a residential rate.
Intensive Rural Enterprises
After your forest resources are in order, you can then consider one or more intensive rural enterprises; these usually fall into one of three categories:
- Forest farming and forest product enterprises: Intensive management of a sustainable stream of a forest product or products every few years (firewood, high-quality sawtimber, and veneer); producing mushrooms, maple syrup, pine straw, and medicinals such as ginseng and goldenseal; collecting native plants and materials; producing wood and native crafts; growing Christmas trees; providing custom sawmilling and kiln-drying services.
- Recreational access and ecotourism: Offering fee hunting and/or fishing; hunting preserves; sporting clays; guide services; wildlife viewing; campgrounds; outdoor sports; high-risk recreation such as rock climbing, canoeing, and rafting; bed and breakfasts; vacation cabins; immersion experiences that teach skills and crafts such as basket weaving, herb preparation, horseback riding.
- Alternative agriculture and horticulture: Aquaculture; growing Christmas trees, holiday greenery, nuts, or herbs; breeding specialty livestock; operating greenhouses and other enterprises that use cropland and nonforest resources.
Evaluating and Choosing an Enterprise
The process of evaluating and choosing an enterprise can be likened to a sieve filtering sand. The sand poured into the sieve corresponds to the ideas you generate before you do much serious thinking or research about possible enterprises. The filtering process corresponds to the process of gathering information about your ideas and evaluating your personal and family goals. From here, a few of the "refined" ideas emerge as possibilities worth pursuing. This leads to the decision-making stage from which you are able to develop the components of a business plan.
Evaluate & develop personal & family goals; seek educational programs and information
Assess family labor, land, management, and financial resources
Assess enterprise choices and choose one, or a few, that will work together
Plan your new enterprise marketing, costs, profit potential, production, labor, management needs, and business structure
Test production & marketing
Start or abandon the enterprise with good information
|From: Evaluating and Choosing a Natural resource Based Enterprise (NRAES-151) by J. Kays.
In selecting one or several ideas over others, balance your objectives against the reality of the available resources and markets. Practicing diversification—having several enterprises that are compatible with one another—will give you more flexibility and opportunity than concentrating on just one. However, start small and then expand. Once you select an enterprise or enterprises, develop a rough business plan for each, which includes addressing basic business and marketing concerns included in this workbook. In following this process, you move further down the sieve, refining your ideas to those that best suit you.
The key component of this assessment is the development of an enterprise budget, which requires that you estimate your costs and revenues for one year, one season of operation, or whatever length of time is necessary to produce a crop. This simple tool will help you to determine if the enterprise will be profitable or not given all the assumptions you must make for costs and revenues.
This is the stage when many people rethink their ideas. Although the more demanding an enterprise is, the more complex the business plan will be, all of the business, financial, and marketing components in this guide must be addressed. After going through this process, you will be able to go into the venture with your eyes open and have a good idea of what—or what not—to expect.
Ideas Abandoned and/or Changed
Many individuals who go through the various steps of the sieve process of enterprise development abandon some or all of their ideas along the way. Typically, once individuals become aware of what is involved in an enterprise—the time, resources, and possible financial return or loss (which is usually lower than expected)—they either abandon their effort or look at other options that are more compatible with their objectives. For example, landowners who do not live on their property might realize that their idea will not work unless they live on the land. Landowners who have the modest financial objective of paying the property taxes or who just wish to pursue a hobby may opt for a less intensive venture than landowners who want an enterprise to generate significant income.
The Decision: Yes or No?
In the end, landowners who base their enterprise decisions on what they learn by going through the sieve process described here will generally be more successful than landowners who bypass the process.
The Real Life Process of Decision-Making Involves Making Real Choices!
In leading you through the process of evaluating and selecting an enterprise that is compatible with your life situation, consider each of the following steps in the sieve or business planning process:
- Identifying personal and family goals
- Identifying current financial resources
- Determining family labor and management resources
- Assessing the marketplace
- Assessing the site and taking an inventory of
- land and natural resources, and
- physical and personal resources
- Choosing your new enterprise
- Planning and developing the new enterprise, which involves:
- selecting a marketing strategy
- examining legal, regulatory, and liability issues
- determining labor and management needs
- determining production needs
- developing an enterprise budget—startup costs and profit potential
- developing a cash-flow pattern
- Reaching a decision to start or abandon the enterprise
The resource section provides publications, videos and other resources that will help you generate ideas, investigate different enterprises, and assess your resources.
University of Maryland Extension Website
University of Maryland Publications & Videos
Forest Stewardship Planning and Timber Harvesting
Choosing & Evaluating Enterprises
Rural Enterprise Series – (each includes a downloadable excel enterprise budget)
Landowner Liability and Recreational Access
Other State Extension Links