NC State Extension Publications

A How-To Guide for Successful Agritourism Enterprises

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Prepared for The University of Georgia’s Center for Agribusiness and Economic Development and North Carolina State Cooperative Extension Service’s Business Side of Agritourism Program Series. The Primary Investigators on this project were Kent Wolfe, Center for Agribusiness and Economic Development and Gary Bullen, North Carolina State University Cooperative Extension Service.

Funding for this project was provided by a grant from SARE


Funding for this project was provided by a grant from SARE

Section 1: An Introduction to Agritourism

Skip to Section 1: An Introduction to Agritourism

What is Agritourism?

Poor agricultural commodity prices coupled with rising input costs are slowly but substantially eroding small farm incomes. Forces such as globalization, industrialization, and development encroachment are also threatening small farms. As a result, farmers are acquiring second jobs or leaving their farms altogether to sustain their household incomes.

In many regions across the globe, farmers are recognizing the need and desire to diversify their farm products and supplement their agricultural incomes. Agricultural tourism increases the potential for higher-margin, on-farm sales of value-adding products and services, further diversifying the product line of the farm operation.

Agritourism is defined by the American Farm Bureau Federation (2004) as:

"Agritourism refers to an enterprise at a working farm, ranch or agricultural plant conducted for the enjoyment of visitors that generates income for the owner. Agricultural tourism refers to the act of visiting a working farm or any horticultural or agricultural operation for the purpose of enjoyment, education or active involvement in the activities of the farm or operation that also adds to the economic viability of the site."

Although other definitions exist, most definitions of agritourism have a common theme that combines elements of the tourism industry with elements of the agriculture industry. This common theme involves bringing members of the public to farms. The ultimate goal of an agritourism enterprise is often to increase farm income by providing education and/or recreation to consumers.

There are three agritourism basics: Have something for visitors to see, something for them to do, and something for them to buy. How well these components are related will determine how successful the enterprise will be.

Research has shown that a unique product is essential to the success of an agritourism business. For example, customers are not just interested in the produce available; they are interested in the total package. That is, they are looking for the product combined with the overall farm experience. The overall farm experience includes special services provided (not all of which have to be free) plus the friendly, local atmosphere created. The goal should be to create a unique experience for the visitor.

Imagination is the only limitation as to what can be incorporated into an agritourism enterprise. Some examples of activities include:

  • Farm tours
  • Storytelling
  • Festivals/Special Events
  • Wineries and vineyards
  • Fee hunting
  • Farm vacations
  • Camping
  • Country stores
  • Roadside stands
  • Picnic/Playground areas
  • Orchard tours
  • Hayrides
  • Fee fishing
  • Pumpkin patches
  • Farm museums
  • Bed and Breakfast
  • Horseback riding
  • Pick your own operations
  • Nature trails
  • Birdwatching
  • Tree farms
  • Gardens/Greenhouses/Nurseries
  • Fish Farms
  • Dairies
  • Corn mazes
  • Dude ranches
  • Animal farms
  • Cattle ranches

With so many options, it might be hard to decide what to do. Most successful agritourism ventures started with one idea, perfected it, and then moved on to the next idea. Take time and listen to the customers, then incorporate their needs and wants into your enterprise.

"Not everything that can be counted counts and not everything that counts can be counted" - Albert Einstein

Agritourism Today

Today, agritourism continues to be an opportunity to increase income for some farmers and agribusinesses around the nation. Some producer organizations, state and federal government agencies, university Extension programs, state tourism offices, professional consultants and the media are recognizing agritourism as an industry and devoting resources to address it.

The United States Department of Agriculture (USDA) estimates that more than 62 million people over the age of 16 visited farms during a one-year period in 2000-01. This does not count the numerous children and youth under 16 years of age who visited farms during the same time period. One estimate suggests approximately 20 million children under the age of 16 visited farms during the year, bringing the total to 82 million visitors.

USDA Forest Service, Interagency National Survey Consortium. National Survey on Recreation and the Environment (NRSE). 2000- 2003.
Maetzold, Jim. National Alternative Enterprise and Agritourism Leader, USDA/NRCS. Personal Correspondence. March 9, 2005

Why do people travel?

Understanding why people travel can help assess the opportunities for various agricultural enterprises.

One of the major reasons people travel is to build or strengthen relationships. The number one reason for vacation is to "be together as a family." Families find they have little time to be alone together—they want to get away from the stress of home and work. They look forward to travel as an opportunity to rekindle relationships. Many seek social interactions on trips, a time for making new friends.

Another reason people travel is to gain better health and well-being. The vast majority of adults say that a vacation is vital to their family's physical and mental well-being. Most travelers want to refresh and renew themselves by actively participating in outdoor activities

To rest and relax is a third reason people vacation. Getting away from work, worry, and effort enables vacationers to refresh and renew.

A fourth reason to travel is to have an adventure. Many travelers look to vacations for exciting experiences that stir emotions. Adventure, whether dangerous or romantic, provides the heightened sensation that consumers seek.

For Knowledge. Learning and discovery are strong motivators for today's better-educated travelers. People travel to learn or practice a language, study a culture, explore gourmet foods or wine, investigate spirituality, discover something new about themselves, and pursue numerous other learning pursuits. They want to see, touch, or feel something unfamiliar. "Bragging rights" or good stories to tell back home are powerful motivators.

Another reason people travel is to mark a special occasion. Some travelers take vacations to celebrate milestones in their lives— a new relationship, a marriage, a birthday, or a professional achievement. Vacations to mark special occasions are usually taken with loved ones and provide memories that last a lifetime.

Lastly, people travel to reminisce. Many people travel to relive fond memories, to rekindle those memories that they remember from another time in their lives.

But why do visitors choose agritourism sites?

People visit farms for a number of reasons. Some of the reasons may surprise you. The 2000–2001 National Survey on Recreation and the Environment outlines the following information of why people visit farms.

  1. Enjoy rural scenery
  2. Learn where food comes from
  3. Visit family or friends
  4. Watch/participate in farm activities
  5. Purchase agricultural products
  6. Pick fruit or produce
  7. To hunt or fish
  8. Spend a night

Farm-based recreation provides an important niche market for farmers, but limited information is available on the topic. Access to two USDA databases, the 2004 Agricultural Resource Management Survery (ARMS) and the 2000 National Survey on Recreation and the Environment, provide some deeper understanding of farm-based enterprises.

ARMS (2004) indicates that 52,000 farms nationally received income from recreation, representing 2.5 percent of all farms. These farms earned approximately $955 million in income from recreation activities. Significant variation exists in terms of where on-farm recreation takes place, with the South accounting for more than half of all farms receiving recreational income, followed by the Midwest, which accounts for about a quarter of such farms. A greater proportion of recreational farm operations are also located in completely rural nonmetropolitan counties and in counties more dependent on recreation in general.

Why Agritourism?

"Diversification into...such opportunities as agricultural or educational tours, pick operations, farm stores, pumpkin patches, agricultural festivals, and farm stands is not a substitute for a pro­-family farm agenda...[However,] one of my fears is that if farmers and ranchers are too tardy in their response to this emerging opportunity, theme park operators will develop simulated farms and operate them as agritourism attractions."

--Desmond Jolly, Director Small Farm Program, University of California-Davis

For the Farmer:

  • An opportunity to diversify income
  • Increase revenue without increasing acreage
  • Compared to traditional commodity markets, agritourism offers a new way of marketing products and services, allowing farmers to put a price on time and value
  • An opportunity to build new business with resources that already exist
  • Provides a way to include future generations on the farm or ranch and keep the land in the family
  • A way to supplement retirement
  • Offer a way to educate the public on how their food is grown
  • Demonstrate and showcase how producers protect and care for the land and natural resources
  • An opportunity to educate people about both historic and modern methods of farming and the risks involved in everyday agriculture

For the Traveler:

  • Unique and authentic experiences
  • To get away from everyday stress
  • Most individuals are three to five generations removed from the family farm. They no longer have a parent, grandparent, or relative to visit on the farm anymore
  • To participate and see how their food is grown
  • To experience the culture and heritage

Is it For Me?

Agritourism activities are only limited by your imagination. If you are considering agritourism, you will need to look at your surroundings and resources in a very creative and different way than you have in the past.

Agritourism enterprises offer opportunities to diversify the farm business. Such activities offer additional income opportunities and may provide safe alternatives for family labor as well as opportunities to promote the critical yet diminishing industry of agriculture. However, activities may result in extra responsibilities, require additional labor, interfere with ongoing farm activities, lead to a deterioration in privacy and increase the farm's exposure to risk and liability.

Starting an agritourism operation requires consideration of a number of factors. Keep some of the following in mind as you decide to pursue:

  • Choose something you love to do. It's hard work to start a new business under the best of circumstances. If you are doing it just for the money, it's unlikely that the energy, creativity, and satisfaction necessary for success will be adequate. What are your talents, skills, and interests? Are you or others in your family good at particular crafts, such as woodworking, quilting, or others that could be taught or demonstrated?
  • Get the whole family involved. Agritourism takes additional energy and skills. When several family members are involved, each person can contribute his or her unique talents and specialize for efficiency.
  • Follow demand-driven product. Produce what your customers want. Get to know your customers. Keep adjusting your products according to their tastes and preferences. Conduct research at the library or on the internet. Talk to friends, neighbors, other producers, people in the tourism industry, extension service, RC&D Council, foundations, and other entrepreneurs who run agritourism enterprises.
  • Create a high-quality product. Quality is the single most important element that will differentiate your product from mass-produced alternatives. Make your product or service unique. Remember that people are looking for a connection with their rural roots. They want to experience the satisfactions of your farm life. Provide them with some fun, education, peace, and relaxation.
  • Keep informed and educated about the industry. It is important to keep informed about your customers, your competition, the laws concerning your business, and other producers. Attend conferences and meetings. Join organizations such as your local chamber of commerce and Rotary that serve local businesses as well as your new customers.
  • Start small and grow naturally. Invest your ingenuity first, labor second, and money third. If you start small, the effort you invest and the income you generate are more likely to be matched. Let the market tell you when and how to grow.
  • Form partnerships. Make plans to work with those in your neighborhood, community, and region. Look for ways you can work with other businesses and local attractions to make all of you more successful.

Since everyone is not suited for carrying out agritourism activities on their farms, first determine whether or not it is an appropriate option for you. To do this, consider the following:

  • Does my family like meeting all types of people?
  • Do I like to entertain strangers?
  • Do I mind giving up some of my privacy at home?
  • Can I always be cheerful and helpful around my guests?
  • Are my farm and facilities neat and clean?
  • Am I successful at managing and organizing my home and farm expenses?

Before embarking on an agritourism venture, weigh the advantages and disadvantages to hosting visitors on your farm. Consider the following and add any additional that may apply.

Possible Advantages

  • Diversify and bolster income sources
  • Share challenges and satisfactions of your lifestyle with others
  • Develop interpersonal and communication skills
  • Agritourism activities may take place on a small scale
  • Visitors represent a high-value, low-volume market
  • Relatively inexpensive

Possible Disadvantages

  • May require additional money and time
  • Planning can be tedious and frustrating
  • May impact some family members negatively
  • Additional risks involved in allowing visitors on property
  • Additional facilities may require additional time and money
  • Adding products and services is a long-term process

Keys to Success

Adapted from Holly Born's "Keys to Success in Value Added Agriculture"

The Southern Sustainable Agriculture Working Group and The National Center for Appropriate Technology interviewed successful farmers to determine what they learned in marketing directly to consumers. A few general practices emerged that could be considered as "Keys to Success."

  • Choose something you like (love) to do. Most people start value-added activities to make more money. Your sincere enthusiasm and belief in your product are part of what make you unique. Without doing something you love to do, it is difficult to find the energy and motivation to stick with it.
  • Provide quality. Offer a high-quality product or service. High quality with some unique trait is an avenue that many direct marketers pursue to differentiate their product. Quality is made up of many dimensions (fresher, better tasting, healthier, more consistent, or cleaner product; thoughtful presentation or packaging/labeling, etc.). It may be tempting to use substandard inputs or services, but most direct marketers today find that a great experience or quality product is more important for attracting consumers than a low price. The consumer knows value and if you're shooting for low quality and price, direct marketers can seldom compete with large wholesale and retail outlets.
  • Start small and grow naturally. Starting small usually means investing less money and borrowing less. Starting small also means mistakes are less costly; remember, it is easier to manage a small operation.
  • Keep good records (production, financial, regulatory). Trying to manage without good information is like trying to find an address without a map. Good information and records are necessary for knowing whether or not you are meeting your goals and for understanding reasons why your goals are or are not being met.
  • Provide what the consumer/customer wants. There are two approaches to agricultural marketing: "push" and "pull." The push approach implies producing a product and then pushing it onto consumers for the going market price—the traditional way of marketing many commodity crops. The pull strategy, however, is increasingly becoming the norm in today's environment. Under this approach, specific products and desired product attributes are targeted using consumer preferences so that the seller is not entirely a price taker at the market place.
  • Maintain a loyal (preferably local) customer base. An important way to capitalize on your uniqueness is through relationship marketing. You are unique and no one can do exactly what you can do. These personal relationships and the trust they engender over time are effective marketing strategies. Local customers are generally the easiest to develop into a solid, loyal customer base.
  • Provide more than just a product. Most successful value-added businesses provide more than just a product or service. They provide an experience that can be in the form of pleasant social interactions, a chance to experience the rural way of life, education, services, tours, etc.
  • Involve others. Get the whole family, partners, and/or community involved. Take advantage of different skills and talents.
  • Keep informed. You must keep informed on every aspect concerning your business, consumer wants, competition, finances, etc.
  • Plan for the future. Fail to plan and you plan to fail. It's true. Planning is essential to success. In planning, be realistic in terms of goals, pricing, costs, time commitments, etc. Be flexible and realize that the best-laid plans can go wrong and that things change.
  • Evaluate continually. Things are always changing. You need to constantly monitor and evaluate what is going on in your business. It is impossible to know if you are reaching your goals without taking the time to evaluate.
  • Persevere. You need a good deal of perseverance just to figure out how to produce the products, much less how to market them. Identifying your niche and building a customer base takes time.
  • Secure adequate capitalization. A direct-marketing or agritourism business is likely to operate at a loss for at least the first year or more of operation. Make sure you have adequate liquid financial reserves to meet setup costs and cash flow requirements. Many businesses fail because they did not secure enough capital to see their venture through to a positive cash flow.

Planning is important and the key to success for all types of business ventures, including direct marketing and agritourism. Before starting, be prepared. While much of the market risk of adverse price swings is removed with a direct-marketing enterprise, risks associated with production (quality and yield), events being rained out, greater labor skill requirements, and liability risks require that careful risk assessments are made before disaster strikes. Dr. Neil Hamilton's book of The Legal Guide for Direct Farm Marketing (Drake University Agricultural Law Center and USDA Sustainable Agriculture Research and Education [SARE]. 235 pp. June 1999) is a good resource for assessing the legal risks of a direct farm marketing or agritourism enterprise. Most ventures will fail without proper research and planning. Assess your management skills and personal qualities, as well as your family needs and lifestyle preferences. With proper planning, you will position yourself to be successful.

Section 2: Preliminary Evaluation

Skip to Section 2: Preliminary Evaluation

Now What?

Now the decision has been made. Starting any new enterprise can be risky. Before investing time, money and energy in an unconventional business, consider the following:

  1. Personal assessment
  2. Business goals and objectives
  3. Internal resource assessment
  4. Business plan

Personal Assessment

Where does tourism fit into my farm plan?

Tourism can be:

A supplementary enterprise. As a supplementary enterprise, agritourism could be a minor activity that would support the other products on the farm. For instance, if the primary enterprise is livestock production, you may decide to invite school groups to your farm several days a month to learn about your animals and your occupation. Occasionally hosting guests on your farm would make agritourism a supplementary enterprise to your primary enterprise as long as the agritourism activities were a minor part of your farm product mix.

A complementary enterprise. As a complementary enterprise, agritourism activities would share equal footing with other enterprises in your farm product mix. For example, you may have an apple production enterprise on your farm. If you were to sell half of your apples to a wholesaler and the remainder to "pick-your-own" guests on your farm, then the two enterprises (the wholesale market and the direct market) would be complementary enterprises.

The primary enterprise. As the primary enterprise, agritourism would be the dominant activity on your farm. For instance, you may decide to open a winery on your farm and invite guests to spend the day or the weekend tasting wine. As part of the wine-tasting package, you may include overnight lodging in a cottage on your property. You may produce grapes for the wine on your farm to supplement your wine-tasting activities. However, because agritourism is the main part of your farm product mix, it becomes your primary enterprise.

It is important for you, as a farmer, to realize that agritourism has the potential to become whatever you want it to be on your farm. Whether you use agritourism as a supplementary, complementary, or primary enterprise, you must be ready to think creatively and plan effectively in order for your new enterprise to be successful.

Something to Think About:

Tips for Getting Started and Staying on Track

Recommended for a 1- to 2-year period:

  1. Assess your resources
    • Look at notes you have made in this workbook. Use them to make a more in-depth assessment of the resources available to you and your family
  2. Get informed
    • Attend conferences, field days, workshops, trade shows and schools
    • Purchase books, videos, newsletters, magazines and other publications
    • Go to the library and do some research. Use the internet to get the most up-to-date information. If you don't have an internet connection at home, one should be available to you at the library
    • Look through the resources listed in the NRCS publication "Alternative Enterprises and Agritourism: Farming for Profit and Sustainability Resource Manual," available at your area Resource Conservation and Development office.
  3. Find out what other entrepreneurs are doing
    • Talk to neighbors, friends, and strangers about their business
    • Visit businesses in your surrounding area and in neighboring counties or states and see what they are doing and how they are running their businesses.
  4. Consult potential customers
    • Ask your relatives, friends, and neighbors about the products or services you are thinking of providing through your new enterprise. Are they interested?
  5. Research the market to identify products and services needed or wanted.
  6. Network
    • Join organizations or groups involved in enterprises similar to the one in which you are interested.
    • Join the local Chamber of Commerce, Rotary, and/or other business and planning organizations or committees
    • See if other local entrepreneurs would like to join you in your business venture or start their own agritourism or alternative enterprise.
  7. Get help
    • Visit resource people in your county, region, or state. Cooperative Extension Service agents and staff, RC&D coordinators, Department of Agriculture staff, state tourism directors and staff, small business development center staff, and other specialists should all be willing to answer your questions and help you get started.
  8. Develop a business and marketing plan
    • Various books, worksheets, and programs are designed to help you develop a successful business and marketing plan. These resources are available through the internet or your local library, community college, small business administration, economic development organizations, Cooperative Extension office, or RC&D office
  9. Create a financial plan
    • Decide how you will finance your business
    • Find out about financial assistance (grants and loans) available to you
  10. Start small, learn from your experience, and expand the business

Personal Evaluation Exercise

Adapted from Agritourism on Focus: A Guide for Tennessee Farmers

For each of the following 25 statements, circle the letter corresponding to the response that describes you best. Circle A if you agree with the statement, SA if you somewhat agree with the statement, SD if you somewhat disagree with the statement, and D if you disagree with the statement.

Statement Agree Somewhat Agree Somewhat Disagree Disagree
1. I am a self-starter. A SA SD D
2. I relate well with others. A SA SD D
3. I enjoy being around and responsible for a large number of people, including children. A SA SD D
4. I look forward to meeting people and opening my farm up to the public. A SA SD D
5. I am an effective leader. A SA SD D
6. I am responsible and enjoy being responsible. A SA SD D
7. I have effective organizational skills and abilities. A SA SD D
8. I have a strong work ethic. A SA SD D
9. I am comfortable making important decisions A SA SD D
10. I am honest even if the truth is not what people want to hear. A SA SD D
11. If I make up my mind to do something, I do not let anything stop me. A SA SD D
12. I am in good health, have plenty of energy and rarely get sick. A SA SD D
13. I am patient. A SA SD D
14. My family is 100 percent committed to starting and operating an agritourism venture. A SA SD D
15. I am courteous and understanding. A SA SD D
16. I have a strong desire to succeed. A SA SD D
17. I have experience in managing and operating a business. A SA SD D
18. I am an effective communicator. A SA SD D
19. I enjoy learning new things. A SA SD D
20. I am competitive in nature. A SA SD D
21. I am effective at setting and meeting deadlines to accomplish tasks. A SA SD D
22. I adapt well to change. A SA SD D
23. I am willing to risk losing an investment. A SA SD D
24. I will be able to survive financially if a new enterprise does not generate a profit for a few years. A SA SD D
25. I am prepared to invest substantial time in planning and operating a new enterprise. A SA SD D

Once you have circled answers to all of these statements, follow the directions below to score your responses.

  1. Count the number of times you circled each response (A, SA, SD, D) and write the number in the table below under Number of Responses.
  2. Multiply the Number of Responses times the given Points per Response and write the product in the table under Points.
  3. Add the points for each of the four categories of responses and write the sum in the table next to Total Score.

    Number of Responses

    Points per Response


    Agree (A)

    × 4 =

    Somewhat Agree (SA)

    × 3=

    Somewhat Disagree (SD)

    × 2 =

    Disagree (D)

    × 1=

    Total Score:
  4. Compare your total score to the ranges below.
  • 90-100 Your personality and skills are similar to individuals who have succeeded as entrepreneurs.
  • 75-89 You have some characteristics similar to individuals who have succeeded as entrepreneurs. You should consider whether others involved in the operation are strong in areas challenging to you.
  • 0-74 You do not have characteristics similar to individu­als who have succeeded as entrepreneurs, and you should reconsider your entrepreneurial project.

After evaluating your personal characteristics, how do you feel about your overall potential to operate and manage an agritourism venture? Circle the corresponding number below on a scale of 1 (very pessimistic) to 10 (very optimistic).

1 2 3 4 5 6 7 8 9 10
Very Pessimistic Neutral Very Optimistic

Goal Identification

Adapted from Holland, Rob. Evaluating the Potential of Value-Added Agricultural Ideas; A Series of Worksheets to Assess Feasibility. Preliminary Worksheet #2. Center for Profitable Agriculture publication. ADC Info #16. October 1998.

If you don't know where you are going, how will you know when you get there? This is the essence of goal setting, and it has a direct relationship to evaluating a new agritourism venture. Starting and operating a successful enterprise is often only a means to a much larger end. Therefore, identifying your ultimate ambition is critical to properly assessing the true merit of the agritourism enterprise idea.

Identifying your goals focuses your attention and provides a basis for making decisions. Setting and achieving goals keeps an enterprise going in the right direction. Without goals, an idea's ultimate feasibility cannot be evaluated.

You should develop goals, but not just once. Goals, personal and business, change over time. Therefore, goals should be developed early in the life of a business and then evaluated and adjusted to address changing times and changing desires.

Your agritourism enterprise goals should meet the S.M.A.R.T criteria. That is, each goal should be Specific, Measurable, Attainable, Rewarding, and Timed in order to be effective.

Use the following exercise to assist in the identifcation and development of the goals for your agritourism enterprise idea. Make sure that each of your goals is S.M.A.R.T.

Goal Identification Exercise

1. What are your ultimate lifetime goals?

2. What are your goals for the next three to five years?

3. What are your goals for the coming year?

4. How might an agritourism enterprise fit into these goals?

5. If you were to develop an agritourism enterprise, would it be profit-driven, or is profit not a main consideration?

O Profit-Driven O Not Profit Driven

If not profit-driven, what factors would drive your enterprise?

After identifying and analyzing your goals, how do you feel about the overall potential of your agritourism enterprise idea? Circle the corresponding number below on a scale of 1 (very pessimistic) to 10 (very optimistic).

1 2 3 4 5 6 7 8 9 10
Very Pessimistic Neutral Very Optimistic

Land and Property Evaluation

As with all businesses and tourism activities, the natural environment and the experience or product offered are at the heart of success. Therefore, it is extremely important to analyze all property assets and characteristics to maximize the potential for success. The following exercise will assist in the analysis of your land and property resources and help you develop an agritourism enterprise that is unique and marketable. Remember, something you believe is ordinary may be unique and interesting to others.

Land and Property Evaluation Exercise

Fill in the table below with the location, number of acres and current use(s) of available land. Consider all activities for which the property is currently being used. This would include the raising of livestock, growing of crops, living/residential space and recreational activities. Be very specific and list all activities that currently take place on the property throughout the year.

Land Location

Number of Acres

Current Use(s)

List any unique or interesting characteristics of your land and property. Consider the farm's topography, vantage points, special crops grown, wildlife, springs, ponds, creeks, caves, structures, wooded areas, plant life, and other unique characteristics. You may want to ask friends, neighbors, or others what they think are the unique or interesting characteristics of your land and property.

List any potentially hazardous characteristics of your land and property. Some of the characteristics listed above may also be listed here. Consider old wells or mines, streams and ponds, barbed wire fences, cliffs or drop-offs, fuel or chemical storage, areas where farm equipment is parked, potentially dangerous plants, wildlife, or livestock, and other characteristics.

Another approach to identifying special features of your land and property is to create a map of the farm that specifies unique or interesting characteristics as well as potential hazards. It is also important to think about areas of the farm or business that you do not want accessible to individuals. The map will be particularly useful when you begin to plan parking locations, activity locations, trails, and other activities that involve land resources. Use the grid below to map your farm and agritourism enterprise.

Farm Map

After identifying your land and property assets and characteristics, answer the following questions.

Do you have an adequate amount of property available for use in an agritourism operation, including room for activities/ attractions and parking?

O Yes O No O Do Not Know

Do you have some unique land or property resources that will be strengths of your agritourism operation?

O Yes O No O Do Not Know

Does your land or property have particular characteristics that may be liabilities to an agritourism enterprise?

O Yes O No O Do Not Know

After assessment, how do you feel about the overall potential of an agritourism venture? Circle the corresponding number below on a scale of 1 (very pessimistic) to 10 (very optimistic).

1 2 3 4 5 6 7 8 9 10
Very Pessimistic Neutral Very Optimistic

Time and Labor Resource Evaluation

Time is one major limitation for agritourism entrepreneurs. When considering an agritourism venture, it is important to analyze the amount of time available for preparation for and accommodation of visitors in addition to existing farm activities. The following exercise will assist you in evaluating your time and labor resources.

Time and Labor Resource Evaluation Exercise3

Fill in the following table by listing your current farm operations or tasks and placing an X under the columns corresponding with months when the operation requires labor. Include time spent in all aspects of the task including planning and preparation, actual implementation, and follow-up activities. Then, following the same process, add proposed agritourism activities and their labor requirements.

Task Schedule
Description of Task Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec.
Current Tasks
Proposed Agritourism Tasks

3Adapted from Woods,Tim and Steve Isaacs. A Primer for Selecting New Enterprises for Your Farm. AEES No 2003-13. University of Kentucky. August 2000.

Considering the information from the task schedule, do you have the necessary time and labor resources to manage and operate your existing farm enterprises, take care of personal obligations and conduct agritourism activities effectively?

O Yes O No O Do Not Know

Are family members and hired employees committed to taking on the additional time, effort and responsibility for an agritourism operation?

O Yes O No O Do Not Know

After evaluating time and labor resources, how do you feel about your potential to operate and manage an agritourism venture? Circle the corresponding number below on a scale of 1 (very pessimistic) to 10 (very optimistic).

1 2 3 4 5 6 7 8 9 10
Very Pessimistic Neutral Very Optimistic

Preliminary Market Analysis

Considering the potential market(s) for an agritourism enterprise is vital in determining the potential for success of such an enterprise. The following exercises will assist you in assessing some very basic market considerations.

Preliminary Market Analysis Exercise

Describe the type of people you envision visiting your agritourism enterprise. For example, are they school groups, families with children, gardeners, interstate travelers, bus tour groups, or others? Many potential agritourism target audiences are listed in Chapter 1.

Describe the types of people, if any, that you would rather not target with your enterprise. For example, you might decide not to target school groups because you become nervous around groups of children.

What are the people you envision visiting your operation looking for? For example, are they looking for entertainment, relaxation, education, a genuine farm experience, a hands-on experience or a place to hold an event?

What other enterprises already exist that would compete with you for this audience's business? Consider other agritourism enterprises, tourism attractions, and entertainment venues in your area.

After considering some basic market information, how do you feel about your potential agritourism venture? Circle the corresponding number below on a scale of 1 (very pessimistic) to 10 (very optimistic).

1 2 3 4 5 6 7 8 9 10
Very Pessimistic Neutral Very Optimistic

Agritourism Activity Options

Agritourism attractions and services are limited only by one's imagination and include everything from apple picking to wine tasting. While analyzing your resources, it is beneficial to brainstorm and list all possible attractions or activities for your operation. The following attraction-brainstorming exercise will you explore activity options.

Attraction Brainstorming Exercise

A list of some possible agritourism activities and operations follows. Read through the list and mark activities that best fit the strengths of your resources.

  • Bed and breakfast
  • Bicycle trails and rentals
  • Bird watching
  • Boating, canoeing, kayaking, tubing or rafting
  • Camping
  • Catering services
  • Cave tours
  • Children's camps
  • Classes, clinics or demonstrations (farming, ranch skills, cooking, planting, harvesting, fishing, hunting, wildlife viewing)
  • Community-supported agriculture (CSA)
  • Corn cannon
  • Corn maze (educational, haunted)
  • Cut your own Christmas trees
  • Dairy shares
  • Display gardens (flowers, greenery, herbs)
  • Educational or technical tours
  • Event hosting (birthday parties, family reunions, corporate retreats, receptions,
  • Farm or ranch work experience
  • Farm stays
  • Fee fishing
  • Fee hunting (dove, duck, goose, pheasant, turkey, deer, small game)
  • Festivals (seasonal, harvest, food, holiday)
  • Game preserve or guided hunts
  • Goat walk
  • Go-carting
  • Guided crop tours
  • Guiding and outfitting
  • Habitat improvement projects
  • Hay bale maze
  • Hayrides
  • Hiking Trails
  • Historical museums and displays
  • Haunted barn or house
  • Horseback trail riding
  • Hunting dog training and competitions
  • Lasertag
  • Living history events
  • Mountain biking
  • Off-road vehicle driving areas
  • On-farm retailing
  • Pack trips
  • Paintball
  • Petting zoo
  • Photography/painting
  • Picnic area
  • Playground
  • Pony rides
  • Pumpkin painting
  • Refreshment sales
  • Rent a cow or tree
  • Roadside markets
  • Rock climbing or rappelling
  • Rodeos
  • School tours or activities
  • Self-guided driving tours
  • Shooting range (firearm or moving-target skeet)
  • Sorghum maze
  • Swimming area
  • Pick-your-own operations
  • Wagon trains
  • Wilderness experiences
  • Wildlife viewing
  • Winery tour or wine tasting
  • Working farm stays

What other types of activities or services could be considered for your operation? Remember to consider your unique personality and skills, land and property characteristics, and defined goals. Are there activities other than those listed on the previous page that you might offer at your agritourism operation? List them here.

After evaluating your agritourism activity options, how do you feel about your potential agritourism venture? Circle the corresponding number below on a scale of 1 (very pessimistic to 10 (very optimistic).

1 2 3 4 5 6 7 8 9 10
Very Pessimistic Neutral Very Optimistic

Financial Situation Evaluation

Adequate financial resources for start-up and operations are critical to the potential success of any business. Often, starting a new enterprise is not an effective way to save an operation already experiencing financial difficulty. The following exercise will help you evaluate your financial situation.

Financial Evaluation Exercise

In the following table, list any liabilities and debts you currently owe and calculate your total debt.

Description of Liability/Debt Amount of Liability/Debt







Total Debt


How much capital do you have available for start-up and operating expenses?


Do you have a source for additional, affordable capital if needed?

O Yes O No

After evaluating your financial situation, how do you feel about your potential agritourism venture? Circle the corresponding number below on a scale of 1 (very pessimistic) to 10 (very optimistic).

1 2 3 4 5 6 7 8 9 10
Very Pessimistic Neutral Very Optimistic

Summary Analysis

By completing the previous exercises, you have considered several important factors to help you determine whether agritourism is an enterprise you would like to investigate further. This final exercise will help you to summarize what you learned.

Summary Analysis Exercise

The factors examined in the previous exercises are listed in the following table. Indicate whether the information learned about yourself and your resources for each of these factors is a positive (pro) or negative (con) in your decision to pursue agritourism as an enterprise. Summarize your reasoning in the appropriate space. Some factors may be both positive and negative in different ways.

Positive Negative
Entrepreneurial experience and skills
Land and property resources
Time and labor resources
Preliminary market analysis
Agritourism activity options
Financial situation and resources

Consider all the information learned through the evaluation exercises included in this chapter. Do you feel agritourism is right for you?

O Yes O No

If yes, this analysis is only the beginning of evaluating your potential and planning for an agritourism enterprise. More in-depth analysis of your potential through business planning, market planning, risk assessment and management, and consideration of government regulations is needed.

Additional Activity

Visit several agritourism operations as a customer and observe the enterprise in action. Talk with the owners and employees to get a feel for how the business works and how you would feel about being responsible for a similar operation.

Additional Resource

Taking the First Step: Farm and Ranch Alternative Enterprise and Agritourism Resource Evaluation Guide is a document published by the Southern Maryland Resource Conservation and Development Board with similar evaluation exercises. The document focuses more heavily on evaluating your natural resources. The guide is available online or by calling (202) 720-2307.

Financial Analysis

Source: SCORE, Ft. Worth, TX, April, 1997

Estimating a Business Opportunity's Economic Viability

Evaluating an agritourism business opportunity can be an overwhelming task. There are many things to consider but the most important is to determine whether the business can generate a level of sale sufficient to generate a profit. If the business is not able to generate a sales revenue that is equal to or exceeds expenses, it is most like not an economically viable business proposition.

Before spending time and resources on developing a feasibility study and/or business plan, you should prepare a break-even analysis which will provide an estimate of the sales required to cover total costs. If the break-even analysis reveals that estimated sales revenue significantly exceed the estimated cost of doing business, it is worthwhile investing more time and resources to conduct a comprehensive feasibility study.

This checklist will introduce you to break-even analysis and provide an example presenting the basic tools required to perform an agritourism business opportunity evaluation. However, it is important to remember the more detailed the information that is collected regarding the business proposition, the better the analysis and resulting conclusions regarding the project's economic viability.

Estimating Start-up Costs

Estimating start-up costs is a critical part of evaluating an agritourism business. These costs will include one-time costs like purchasing land or constructing a building, while other expenses will be ongoing, like payroll, insurance, facility lease, and utilities. It is important to make a list of these start-up or one-time expenses and then assign a corresponding dollar figure to each. Startup costs should then be evaluated to determine if they are essential or optional. Only the essential costs should be included in the startup budget.

The essential costs need to be classified as either fixed (overhead) costs or variable (related to business sales) costs. Fixed expenses will include figures like the monthly rent, utilities, and administrative and insurance costs. Variable expenses will include inventory, shipping and packaging costs, sales commissions, and other costs associated with the direct sale of a product or service. When starting a new business, it is important to estimate the costs of operating the business for the first several months it is in existence. The following is an example of the types of costs that need to be considered.

Start-up Budget Sample (Source: SCORE, Fort Worth, TX, 4/97)


Dollar Cost

Real Estate, furniture, fixtures, machinery, equipment: (Record either purchase price if paid in full with cash or cash down payment if purchased on contract)



​​​​Fixtures and fittings


Transportation & installation costs


Specialized computer software


Security system


Starting Inventory (1 to 3 months)


Decorating, refurbishing, & remodeling costs


Deposits Required:







Other (identify)


Fees Required:

Legal, accounting, others


Licenses, permits, etc.


Bank/checking account


Other (identify)


Initial Advertising & Marketing Costs (i.e., flyers, sales letters, and calls, signs, brochures, etc.)


Accounts Receivable (days of sales)


Salaries for employees and owner until the business opens or
cash flow is positive


Other miscellaneous expenses:

Trade shows


Office supplies


Travel expenses




Cleaning service


Profession Association fees


Other supplies, etc.


Payments on other fixed obligations


Total Start-Up Costs


Start-up Cost Budget Example

The following are examples of start-up costs associated with an agritourism operation.



Barn, fence, farm renovations




Long-term signage 10 @ $150 each


Wagon Adjustments $200×2 wagons


Playground development


Picnic tables $80×7 tables


Develop walking trails




Total Start-up Costs


These start-up costs will be used later in developing the break-even analysis.

Preparing a Break-Even Analysis

A break-even analysis can be used to calculate the number of tours that need to be sold to break even or the price per tour needed for the business to break even. A break-even analysis allows you to run "what if" scenarios. For example, if an additional wagon or site is added to the business, how many extra tours will have to be sold to cover these costs? If you have a variable rate loan, what will the impact of interest rate changes impact the level of sales needed to cover these changes in costs.

The formula for preparing a break-even analysis is as follows:

  • Break-Even in Tours = Fixed Cost / (Tour Price − Average Variable Cost)
  • Break-Even Price= (Fixed Costs/Estimated Tours/Sales) + Average Variable Costs

Preparing a break-even analysis requires a basic understanding of simple financial analysis terms.

To prepare a break-even analysis, four variables are needed.

  • Variable costs
  • Fixed costs
  • Price
  • Estimated sales

A brief explanation of each of these terms is provided to ensure a basic understanding of the financial terms utilized in preparing a break-even analysis. Remember, the start-up costs outlined earlier need to be included in your break-even analysis.

Variable costs—These are costs that are correlated or change with a business's level of production and/or sales. An example of variable costs would be the fuel needed to run a tractor for a corn maze hay ride. As the number of visitors increases, so does the number of hay rides and fuel needed to run the tractor. The purchase of additional fuel would be considered a variable cost. The following provides a list of potential variable costs.

  • Wages (how many and what are you paying employees)
  • Raw material costs (inputs)
  • Utilities (electricity, natural gas, water, sewer)
  • Cost of maintaining inventory (giveaways, etc.)

The following are variable cost estimates for a pumpkin patch facility that provides hay rides. Remember, a number of these variable costs were included in the start-up cost budget.

Variable Costs Cost
Electricity $ 1,200
Labor $ 1,800
Hay for wagons $ 40
Tractor fuel $ 75
Maintenance $ 300
Total Variable Costs $ 3,415

Fixed Cost — These are costs that a business incurs regardless of its level of production or sales. Fixed costs do not fluctuate with sales volume and are sometimes referred to as overhead costs. An example of a fixed cost would be the monthly mortgage payment on farmland. Regardless, if the business is providing tours, the business has to pay for the facility. The following are examples of fixed costs.

  • Mortgage/rent
  • Interest on debt
  • Insurance
  • Plant and equipment expenses
  • Business licenses
  • Salary of administrative personnel
  • Utilities
  • Taxes
  • Supplies
  • Sales and Marketing

The following are the fixed costs associated with a pumpkin patch.

Fixed Costs
Loan payment $ 4,757
Portable restrooms/handwashing rooms $ 600
Liability Insurance $ 2,000
Marketing $ 1,750
Business License $ 50
Total Fixed Costs $ 9,157

Total Variable Costs—The sum of the variable costs for the specified level of production or output. For example, a pumpkin patch is capable of hosting up to 380 rides per season. However, a farm is currently only hosting 250 tours a season. The total variable cost is the sum of all the variable costs to host 250 tours.

Variable Costs Cost
Electricity $ 1,200
Labor $ 1,800
Hay for wagons $ 40
Tractor fuel $ 75
Maintenance $ 300

Total Variable Costs = $ 3,415

Average Variable Costs—These costs are the variable costs per tour or of total variable costs divided number of tours for a specific period of time. Using the total variable expenses from above, it is possible to determine the average variable costs for the pumpkin patch hosting 250 tours a season. This is done by dividing the total variable costs by the number of tours being hosted.

Average Variable Cost= $3,415/250

Average Variable Cost= $13.66

Revenue Estimation

In addition to having detailed cost information, it is important to estimate potential sales in both units and revenue. However, to gain a clear picture of the viability of a business it is essential to have both cost and sales information. Therefore, it is important to estimate sales potential and drive a price estimate.

Estimated Sales—refers to estimated sales during a specific period of time. A company's estimated sales are derived from estimating market potential and anticipated market share. It is advisable to estimate sales using two or three different market share figures to provide an estimated sales range.

Price—It is important to estimate how much a business will charge for each tour and/or service. One method of determining price is to spy on the competition and collect their products' pricing information.

Calculating a Break-Even Figure

Given both the cost and marketing information provided above, it is possible to calculate a break-even for a proposed pumpkin patch tour. It is important to calculate a break-even unit and price to effectively evaluate the business opportunity. This calculation will rely on information presented earlier in this document. For example, the average variable cost figure was derived in the variable cost section.

Break-Even Unit Calculation

The first calculation is focused on calculating the number of tours that need to be sold to break-even.

Break-Even in Units = Fired Cost/ (Unit Price - Average Variable Cost)

Break-Even in Units =9,157/($15.00-$13.66)

Break-Even in Units = 12,271 - number of tours to be sold to break even.

The calculation reveals that 12,271 tours need to be sold at a selling price of $15.00 per tour for the operation to break even. Sales exceeding this level will allow the business to start generating a profit.

Break-Even Price Calculation

The second calculation is focused on calculating the price per tour that needs to be achieved for the operation to break even.

Break-Even Price= (Fixed Costs/Estimated Sales(Units)+ Average Variable Costs

Break-Even Price = ($9,157(250+13.66))

Break-Even Price = $34.75 per tour is the break-even price

The calculation reveals that each tour being sold needs to sell for $34.75 per tour for the operation to break even.


Adapted from University of Arizona's Market Analysis and Pricing

Do consumers not buy their preferred produce because it's too expensive, or is it other reasons like insufficient quality? Does a consumer not buy their favorite item of sweet corn because of poor quality or the price is too high? The Packer's 1994 Fresh

Trends survey asked consumers this question. The percentage of respondents that didn't purchase their preferred fruits was for the following reasons: 59% too expensive, 8% disliked appearance, 7% underripe, 5% shelf life too short, and 3% inconsistent quality. Vegetables showed a similar pattern, with 51% too expensive, 14% disliked appearance, 8% inconsistent quality, 4% shelf life too short, and 1% underripe. Thus, price appears to be a main reason why mainstream consumers sometimes don't buy their preferred commodities. How should one price? Although there is no black-and-white answer, this section discusses issues related to pricing.

Sizing up the Competition

Sizing up the competition starts at assessing the supply and demand for the specific products you are selling. If you had a bed and breakfast with a view of the Grand Canyon, your product would be unique from other bed and breakfasts near the rim. Just like beach front property is different from property a few blocks away from the beach. Product uniqueness allows you to be more of a price setter rather than just a price taker. How unique is your product compared to competing products? If you are selling seedless watermelons at the farmers' market next to four other vendors selling seedless watermelons, your price will need to be right at the going rate. Even if you try to get a price that is just 1% to 2% more, virtually all consumers will opt for the cheaper melons. But if you are selling a melon that is more exotic and unique, many consumers will pay a 50% to 100% premium over what regular watermelons are selling for.

Freshness is a unique characteristic for products that are very perishable, like sweet corn, blackberries, raspberries, and strawberries. But products like carrots, potatoes, and apples that store well need to be priced competitively with supermarket prices. If you're selling storable products, you might possibly use exotic varieties, distinguish your growing methods, or provide rural recreation opportunities for developing product uniqueness. Defining a unique market niche is critical for having any ability to set price rather than being a pure price taker.

When Domino's Pizza recently gave up the motto of "delivery within 30 minutes, or your pizza is free," many franchise owners were disappointed. Franchise owners recognized the litigation scrutiny and pressure that prompted Dominos to give up the guarantee, but many also voiced that this guarantee was important because it set Dorninos apart from the com­petition. The guarantee of delivery within 30 minutes or your pizza was free made Domino Pizza unique from other pizza delivery services. What makes your product(s) unique?

Pricing for Maximum Profit

Pricing for maximum profit requires that you can assess consumer demand and variable costs of production for your product. Costs of production are commonly broken down into fixed and variable costs of production. Fixed or ownership costs are defined as those costs that don't change with an increase or decrease in output — they are fixed once these resources are committed to production. Land payments, property taxes, capital allocations, and your own management skills are generally referred to as fixed costs. Costs that vary with production, like labor, fertilizer, gas, fuel, and water, usually refer to variable costs of production. But once fertilizer has been applied, the cost becomes sunk or fixed in that you can't go out and retrieve 300 lbs. of nitrogen that you applied yesterday. Conversely, if you haven't yet invested any capital or resources into a direct farm marketing or tourism operation, all costs are variable. No resources have been committed to the production process.

Ideally, one would like to receive a price that covers all fixed, variable, and opportunity costs of production. It is important to include any opportunity costs or foregone alternatives. For example, if you could earn $75/acre for renting your land to a neighbor, this is a foregone opportunity. Your land cost would be the greater of your actual costs or the $75/acre fore­gone in land rental fees. Owner wages are often foregone opportunities that need to be accounted for as well. If you add up all fixed, variable, and foregone costs of production and divide by an estimated yield you will obtain your break-even price. Since yields will vary from one year to the next, calculate a break-even price using a five-year average yield and then 25 above and below the five-year average.

Maximum profit for the "short-run" is where the additional revenue from selling one more unit (marginal revenue) barely exceeds or meets the additional cost of selling another unit (marginal cost). In economic jargon, this is referred to as marginal pricing. The additional revenue received needs to exceed the added costs from making a sale. Figuring out the additional revenue received or marginal revenue requires that you can assess consumer demand — which is related to your competition, on the cost side, if you have hauled perishable sweet corn to the farmers' market and the market is to close down in 5 minutes, your marginal cost is close to zero. Almost all costs are sunk (i.e., growing and trucking costs) and the perishable nature of the product implies that you have little opportunity for selling at the next farmers' market. At this point, any money that you receive from a sale will help cover some of your sunk costs. Some money is better than throwing the corn away. But all costs are variable or must be covered in the long haul, so you don't like to get into a situation where you're "forced" to take rock-bottom prices.

Trial and error is often involved with feeling out consumer demand and adjusting prices appropriately. If you are forced to take a rock-bottom price at the end of a day at the farmers' market, your price was probably too high earlier in the day. Lots of lookers, low sales per customer, and complaints are other signs that your price is too high. But if your product is moving so that you run out of product before you run out of buyers, your price is too low. Even if you are covering all your costs of production and realizing a good return you should raise your price. An exception might be when your buyer has agreed to pay a price below the market when prices are high but above the market when prices are low. But this type of an agreement needs the trust and commitment of a long-lasting relationship. If you are working on this kind of a relationship, your break-even price is appropriate provided that you have included a reasonable return for your wages, management, and capital.

Some consumers are willing to pay more than others, so how does one differentiate between consumers? Retailers have used various tools to maximize their profits through the years by "price discriminating" among consumers. Coupons are a form of price discrimination. Consumers that are looking for the lowest possible price have a demand curve that is relatively elastic. This means that the consumers are very price-sensitive. Supermarkets offer coupons in order to maximize their profits, not because they like to save the consumer money. They recognize marginal pricing concepts. Coupons are a vehicle for allowing them to price lower for the price-sensitive shopper but maintain a higher price for consumers that are less price sensitive (i.e., more inelastic demand) and don't want to be bothered with coupons.

Terrific Tuesdays or Wednesdays (i.e., discount days) are another vehicle for price discrimination. Video stores commonly have one day a week where they rent videos at half price. These stores do this because they know sales revenues will increase for these price shoppers (i.e., elastic price demand) even though prices are cut in half. Seniors are generally price shoppers so businesses offer discounts to Seniors as a form of price discrimination. Volume discounts reflect a form of price discrimination and/or a different per unit cost of making the sale. If you plan to purchase a large volume, you will be a more price-sensitive shopper. Again, these discounts are offered in order to maximize profits rather than "give a good deal to the consumer." Discounts are most appropriate for the direct marketer at the peak of harvest when ample produce is available.

Pricing Strategies and Tips

Does $9,999 differ from $10,000? Even though the percentage price difference is essentially zero, retailers commonly price with 9's to convey a cheaper price image in the consumer's mind. If you want to have a product position of being the low-price vendor or offer a discount to attract the bargain hunter, price in 9's. If your regular price is $15.00 a bag, offering a price of $12.99 would be an appropriate use of 9's. A $3 discount is flashed in consumers minds before they think a $2 discount. Multiple pricing is also a form of price discrimination, and pricing 3 for $.99 or $.40/each would be an appropriate use of 9's to attract the bargain hunter. Nine pricing doesn't generally fit if you are trying to promote a product image of high quality and solid value.

When dealing primarily with cash sales, prices that are in $.25 increments have an obvious advantage of reducing time at the cash register. If a tax must be added, price items so that they will come out to a $.25 increment. Selling by weight for some items helps consumers compare with supermarket prices, but this also requires more time at the checkout line. Most direct marketers don't have computerized scales that provide calculations to the ounce in a fraction of a second. Scales also need to be monitored for their accuracy and are subject to the scrutiny of inspectors. If your prices are obviously lower than supermarket prices, unit pricing may be to your advantage. When your prices are near supermarket prices and you're competing with the same supermarket varieties, sales by weight are generally most appropriate.

With many singles, couples, and small families today, a "variety pack" of assorted fruits and vegetables is probably more appropriate to offer as a special than a volume discount. Variety packs get consumers to try new items that they might not otherwise try and reduce the risk of getting too much of one item. A meal with corn, sweet potatoes, and a salad with fresh lettuce, green pepper, celery, carrots, and tomatoes is more appealing for most individuals than corn, corn, corn, and more corn. That is, a couple might not be able to consume two dozen ears of corn before their sweetness and freshness is lost.

Loss leader pricing refers to advertising one item at a price below cost, with the intent of getting customers "in-the-door." After customers have made the decision to stop and buy the loss leader item, the objective is to sell enough items at full price to cover any losses occured on the loss leader. Loss leaders are most effective for a common good that everyone is purchasing. Turkeys at Thanksgiving are a classic example of a loss leader. Almost everybody serves turkey and all the other goodies that go in and with the turkey cost way more than the turkey, making it a good loss leader item. Pumpkins sold during Halloween are sometimes used as a loss leader item by direct marketers of produce.

Method of Payment

Why are retailers all across the US willing to give credit card companies up to 5 of the purchase price of an item to make a credit card sale. Why do retailers not just request cash? First, retailers know that the average consumer will buy more if they take plastic rather than require cash or check. A consumer may plan to spend $50 when they visit your outlet and take $50 in cash. But if, after arrival, they realize that your produce is a better value than they anticipated, they are constrained to spending $50 or less if you only take cash. You are at risk of not receiving any payment if you accept checks. Credit card companies are a vehicle for insuring payment to the retailer and getting consumers to buy more. Keeping cash out of the cash register also reduces the risk of losing all your sales for the day to a dishonest or disgruntled employee, or armed robbery. The fixed costs of getting connected and set up for credit card purchases may outweigh the perceived benefits for small and isolated outlets. But if your business is growing and you want consumers to walk out buying $75 worth of produce rather than $20, credit card purchases are a must. Most consumers are so accustomed to the convenience of purchasing items with credit cards that they don't carry significant amounts of cash.

If you are operating a delivery service, an account is generally set up for each client, and you send them a bill at regular intervals, commonly every two weeks. Offer a slight discount for early payment from your "regular price" in order to encourage prompt payments. Some farmers' markets and roadside stands are set up to take food stamps as a form of payment to promote afford ability. Food stamps are probably not worth investigating for produce outlets that are isolated and provide a "rural experience" or up-scale in price. But if your outlet is catering to low-income consumers with a product image that includes low-price food stamps, it may be worth pursuing.

Regardless of the method of payment you choose to adopt, records need to be kept. Records that can track how much was received for fresh corn and day-old corn on the same day are needed to make keen pricing and, ultimately, next year's planting decisions. Personal ob­servation helps, but it is definitely not enough when it comes to going to the bank. User friendly computer programs can be used to enter the sale code and quantity purchased, and within seconds a detailed sales receipt is printed out for your customer. With the price of computers getting more affordable every year, computerized records and receipts are a wise business tool for even small produce outlets. Tracking individual consumer purchases from year to year can be the best key for discovering what items need to be discontinued or emphasized more.

Financial Resources

*Adapted from Agri-Tourism Workbook, Agribusiness Council of Oregon


Business and Industry (B&I) Loan Guarantees

The RBS program provides a loan guarantee to a bank) savings and loan, or other approved lender to finance private businesses located in rural areas of 50,000 population or less. Business loan guarantee purposes include, among other items, construction, acquisition, working capital, equipment purchase, start-up costs, and expansion costs. Applicants for these loans may be any legal entity, including individuals, public and private organizations, and federally recognized Indian tribal groups.

Program Goal

To encourage the commercial financing of rural business, thereby:

  • Creating and saving rural jobs.
  • Improving the economic and environmental climate of rural communities.
  • The B&I Program is lender-driven. RBS guarantees the loan rather than lending directly. A commercial lender requests the B&I guarantee, and if approved, it makes (and services) the loan.

Type of Assistance

  • Federal guarantees (typically of 80 percent or less) for lenders on their rural business loans:
    • 80 percent (maximum) guarantee on loans of up to $5 million.
    • 70 percent (maximum) guarantee on loans of $5-10 million.
    • 60 percent (maximum) guarantee on loans of $10-25 million.
  • Limited/Special Circumstances — 90 percent (maximum) guarantee on loans of up to $2 million.

Lender Benefits

The guaranteed portion of the loan is protected against loss by a Federal guarantee. The guaranteed portion of the loan can be sold on the secondary market. The guaranteed portion of the loan does not count against lending limits. B&I guarantees help lenders satisfy Community Reinvestment Act (CRA) requirements.

Size of Loans

No minimum, but typically beginning at SBA maximum ($750,000)

Maximum loan is $25 million

Interest Rate, Tenn, Payment Structure, and Fees

Rate: Lender's customary commercial interest rate-negotiated by lender & business. Fixed or variable (but not more often than quarterly) tied to a published base rate.

Term: Working Capital —7 years maximum.

Equipment —15 years maximum.

Real Estate —30 years maximum.

Structure: Balloons are not permitted. Reduced payments may be scheduled in the first 3 years.

Fees: Lender's reasonable and customary fees — negotiated by lender & business.

Authorized Loan Purposes

Business asset acquisition, construction, repair, modernization, and development. Real estate, buildings, equipment, inventory, supplies, & working capital (NO lines of credit). Loan fees & costs, packaging fees, professional services, and feasibility study costs. Debt refinancing in certain cases.

Loan Limitations

Construction projects —Construction loan funds should not be advanced until RBS has approved the project.

Commercial lease projects —Need not be owner-occupied, but must have enough committed tenants to evidence positive cash flow.

Ineligible businesses include:

Production agriculture (except when linked to agricultural processing & marketing businesses).

(Note: Nursery, forestry, and aquaculture operations are eligible)

Gaming facilities —Golf Courses, Lending, investment, and insurance companies. Projects involving more than $1 million and the relocation of 50 or more jobs.

Lender Eligibility

Any Federal or state-chartered bank, Farm Credit System, Bank of Cooperatives, bank-holding company's mortgage company, credit union, or insurance company.

Lender must be subject to government credit examinations and in good standing. Lender's officers/directors/owners have no substantial financial interest in the borrower.

Borower Eligibility

Most types of enterprises qualify —manufacturing, wholesale, retail, service.

Project must be in a rural area — outside the immediate influence of a 50,000 + population city.

Proprietorships, partnerships, corporations, nonprofits, tribes, or political subdivisions.

Majority ownership by US citizens or permanent residents,

Less than 20 percent ownership by government or military employees. Good Credit history.

Must have tangible balance sheet equity at loan dosing/project completion of:

10-20 percent or more (for existing businesses).

20-25 percent or more (for new and energy-related businesses). Inability to get credit elsewhere is NOT a requirement.

Security Requirements

The proposed operation must have realistic repayment ability.

There must be adequate collateral to protect the Lender and RBS. Lender should discount collateral consistent with sound loan-to-value ratios. Typical discount factors are:

Real-estate —using 80 percent or less of the appraised value.

Chattels —using 80 percent or less of the appraised value.

Accounts receivable (<90 days) -using 60 percent or less of value.

Inventory —using 60 percent or less of the value.


Hazard insurance on collateral (lesser of loan amount or depreciated replacement value). Life insurance (decreasing term OK) on principals/key employees — amount negotiated.

Personal/corporate guarantees:

Typically from all proprietors, partners (except limited partners), or major (20 percent or more interest) shareholders.

Special Requirements

A feasibility study by a recognized, independent consultant may be required.

Annual audited financial statements are generally required for loans in excess of $3 million and when other special circumstances warrant an audit.

A 2% fee on the guaranteed portion of the loan is paid to RBS at the time the guarantee is issued.

Application Process

  • Lender & business submit a joint preapplication to RBS, indicating a willingness to make the loan provided a B&I guarantee is approved.
  • RBS meets with all parties at the project site and then makes a preliminary determination of project eligibility, normally within 15 days.
  • Lender & business complete their application.
  • From RBS receipt of complete application, approval takes less than 60 days. Loans up to $5 million are approved locally; larger ones are reviewed in Washington, DC.
  • RBS issues a conditional commitment, approving a guarantee subject to conditions.
  • After meeting RBS's conditions, the lender may dose the loan and request the guarantee.
  • RBS issues the guarantee after verifying all conditions are met and collecting guarantee fee.


United States Department of Agriculture

Rural Business-Cooperative Service

USDA Rural Business-Cooperative Service (RBS) makes grants under the Rural Business Enterprise Grant (RBEG) Program to public bodies, private nonprofit corporations, and Federally recognized Indian Tribal groups to finance and facilitate development of small and emerging private business enterprises located in rural areas outside the boundary of a city or unincorporated areas of 50,000 or more and its immediately adjacent urbanized or urbanizing area. Public bodies include incorporated towns and villages, boroughs, townships, counties, States, authorities, districts, Indian Tribes on Federal and State reservations, and other Federally recognized Indian Tribal groups in rural areas.

The public bodies, private nonprofit corporations and Federally recognized Indian tribes receive the grant to assist private businesses located in rural areas. GRANT FUNDS DO NOT GO DIRECTLY TO THE BUSINESS. Grants may be made only for projects for which it can be demonstrated that there is a reasonable prospect that the project will result in development of small and emerging private business enterprises.

The small and emerging private businesses to be assisted must have less than 50 new employees and less than $1 million in gross annual revenues and must be located in a rural area outside the boundary of a city or unincorporated areas of 50,000 or more and its immediately adjacent urbanized or urbanizing area.

How May Funds be Used?

Funds are used for financing or development of private small and emerging businesses.

Eligible uses are:

  • Technical Assistance (providing assistance for marketing studies, feasibility studies, business plans, training, etc.) to small and emerging businesses.
  • Purchasing machinery and equipment to lease to a small and emerging business.
  • Creating a revolving loan fund (providing partial funding as a loan to a small and emerging business for the purchase of equipment, working capital, or real estate).
  • Constructing a building for a business incubator for small and emerging businesses.


Grants cannot be used for:

  • Agricultural Production.
  • Comprehensive area-wide planning.
  • Loans by grantees when the rates, terms, and charges for those loans are not reasonable or would be for purposes not eligible under RBEG regulations.
  • Development of a proposal that may result in the transfer of jobs or business activity from one area to another. This provision does not prohibit the establishment of a new branch or subsidiary.
  • Development of a proposal, which may result in an increase of goods, materials, commodities, services, or facilities in an area when there is not sufficient demand.
  • Programs operated by cable television systems.
  • Funding part of a project, which is dependent on other funding, unless there is a firm commitment of the other funding to ensure completion of the project.

USDA Rural Business-Cooperative Service is an Equal Opportunity Lender, Provider, and Employer. Complaints of discrimination should be sent to: USDA, Director, Office of Civil Rights, Washington, DC 20250-94 10

All applications are considered without regard to race, color, religion, sex, national origin, age, marital status, or physical or mental handicap (provided applicants have the capacity to enter into a legal contract) of the members of the groups applying for assistance. Service must be extended on the same basis.

How are Applications Processed?

Applicants will submit supporting data before a formal application is made. After determining the order of funding priorities, RBS will tentatively determine eligibility and request applicants to assemble and submit a formal application.

'Where Is Application Made?

Just call 1-800-ASK-UGA1 (275-8421) from anywhere in Georgia. You'll be automatically connected to the UGA Extension office in that county.

Other Conditions

Applicants for grants to help develop private business enterprises must file written notice of intent consistent with Intergovernmental Review requirements, Federally recognized Indian Tribes are exempt from this requirement.

Applicants for grants to establish a revolving loan program must include detail on the applicant's experience operating a revolving loan program, proposed projects, applicant's financial ability to administer a revolving fund, the need for a revolving fund, and other funds proposed to leverage funds made available under this program.

All community projects funded by RBS are subject to an environmental assessment in accordance with the National Environmental Policy Act.

USDA Rural Business-Cooperative Service is an Equal Opportunity Lender, Provider, and Employer. Complaints of discrimination should be sent to: USDA, Director, Office of Civil Rights, Washington, DC 20250-94 10

Agritourism Budget Example

Start-Up Cost
Start-Up Cost Cost
Grading Land Parking $1500

Kids Corral/play area


Improve the appearance of farm/clean up and paint

Fencing restricted areas $1000
Train labor- 8 hours of training (8 people) $512
Wagons- Wagon $6000-$8000 for new $7000
Safety Chains, steps, sideboards $500
Total $14512

Variable Expenses Corn Maze Planting

Expense Unit Quantity Cost/Unit Per Acre
Seed THOU 28 $ 0.90 $ 25.20
Fertilizer (Nitrogen) LBS 120 $ 0.29 $ 34.80
Fertilizer (Phosphate) LBS 70 $ 0.25 $ 17.50
Fertilizer (Potash) LBS 70 $ 0.15 $ 10.50
Lime (Prorated) TON 0.33 $ 31.50 $ 10.40
Herbicides ACRE 1 $ 62.84 $ 62.64
Tractor/Machinery ACRE 1 $ 18.07 $ 18.07
Labor HRS 2.12 $ 8.00 $ 16.96
Interest on OP. CAP. DOL 89.555 $ 0.09 $ 8.06

Total = $178.93

Utility Unit Quantity Price or Cost/Unit
Electricity kilo
Water gallons

Corn Maze Operation (8 Weeks)

Expense Unit Quantity Cost/Unit Notes
Design Job 1 $1,500.00
Maintenance Hours 40 $320.00
Labor (3 people, 25 hours/week, 8 weeks) Hours 600 $4,800.00 Normal day- 1 person inside maze, 1 person in concession and tickets,1 person outside maze, greeting and getting started, hours (3 people for 25 hours/week per person), 1 additional person is needed for each additional 150 people visiting per hour.
Flashlights/batteries Flashlight 100 $100.00
Batteries Batteries 300 $300.00

Total = $ 7,020.00

Hay Ride
Expense Unit Quantity Cost/Unit Total Notes
Horses for Hayride
Tractor for Hayride
Hayride wagon(s)
Labor (2 people, 25 hours/week, 8 weeks) hour 400 $8.00 $3,200.00

2 people- one driving and one monitoring group

2 people, 25 hours/a week

Fuel gallon 20 $2.75 $55.00
Oil and Lube case 1 $25.00 $25.00

Total= $3,280.00

Pumpkin Launcher
Expense Unit Quantity Cost/Unit Total Notes
Gourds Gourd 3000 $0.10 $300.00
Misc. Supplies $200.00 $200.00
Machine Machine 1 $500.00 $500.00
Labor (1 person, 25 hours/week, 8 weeks) Hours 200 $8.00 $1,600.00 1 person selling tickets and monitoring

Total = $2,600.00

Expense Unit Quantity Cost/Unit Total Notes
Bottled water 16 oz 1,000 $0.69 $690
Roaster corn ear 1,000 $0.10 $100.00
Hotdogs 10 pack 500 $1.59 $795.00
Buns 8 pack 625 $1.00 $625.00
Ketchup 12 oz bottle 50 $1.00 $50.00
Mustard 12 oz bottle 50 $1.00 $50.00
Napkins Sleeve 100 $1.25 $125.00
Labor (1 person at 25 hours/week, 8 weeks) hours 200 $8.00 $1,600.00 1 person in concession and tickets

Total = $4,035.00

Expense Unit Quantity Cost/Unit Total
Radio 30 second slot 270 $10.00 $2,700.00
Newspaper advertising 2 × 5 space 10 $50.00 $500.00
TV advertising 15 sec space $2,500.00
Billboard one 1 $1500.00 $1,500.00
Coupons *$1 off admission bottled water label 1000 $1.00 $1,000.00
Shirts dozen 240 $12.00 $2,880.00
Caps dozen 240 $5.00 $1,200.00

Information signs on farm

per sign 10 $250.00 $2,500.00
Directional signs per sign 4 $25.00 $100.00
Website site 1 $1,000.00 $1,000.00

Total = $15,880.00

Expense Unit Quantity Cost/Unit Total
Portable Toilets Toilet 4 $100.00 $400.00
Tent (fair style) Tent 1 $2000.00 $2,000.00
Materials/Supplies 5 $100.00 $500.00

Total = $2,900.00

Calculation of Individual Attraction and General Admission Prices
General Admission Pricing Option Start-up Costs Utilities & Misc. Exp. Corn Maze Hay Rides Pumpkin Launcher Concessions Total
A. Individual Attraction Expenses $14,511 $2,900 $7198.93 $3280.00 $2,600.00 $4,035.00 $34,526
B. Share of Total Expenses (percent) 42% 8% 21% 10% 8% 12% 100%

Break-even price for the following estimates of number of farm visitors (dollars per visitor)

Number of Visitors Start-up Costs Utilities & Misc. Exp. Corn Maze Hay Rides Pumpkin Launcher Concessions Total
500 $29.02 $5.80 $14.40 $6.56 $5.20 $8.07 $59.05
1,000 $14.51 $2.90 $7.20 $3.28 $2.60 $4.04 $34.53
1,500 $9.67 $1.93 $4.80 $2.19 $1.73 $2.69 $23.02
2,000 $7.26 $1.45 $3.50 $1.64 $1.30 $2.02 $17.26
2,500 $5.80 $1.16 $2.88 $1.31 $1.04 $1.61 $13.81
3,000 $4.84 $0.97 $2.40 $1.09 $0.87 $1.35 $11.51
3,500 $4.15 $0.83 $2.06 $0.94 $0.74 $1.15 $9.86
4,000 $3.63 $0.73 $1.80 $0.82 $0.65 $1.01 $8.63
4,500 $3.22 $0.64 $1.60 $0.73 $0.58 $0.90 $7.67
5,000 $2.90 $0.58 $1.44 $0.66 $0.52 $0.81 $6.91

Section 3: Business Planning

Skip to Section 3: Business Planning

Estimating Marketing Potential

  1. Describe Your Target Market Segments:
    Demographic Characteristics (examples) 1st Segment (home schools) 2nd Segment (Elementary Schools) 3rd Segment (Church Groups) 4th Segment (Families)
    Gender: Male or Female
    Age or age group
    House Hold Income
    Marital Status
    Children in Home
    Religious Affiliation
    Lifestyle Characteristics (examples) 1st Segment (home schools) 2nd Segment (Elementary Schools) 3rd Segment (Church Groups) 4th Segment (Families)
  2. Market Area (Where are visitors located or coming from)
    Where is Your Market Area or How Far are They Willing to Drive, i.e. ,County, city, South East, 45 miles, 70 miles etc. Location or Distance

    First Segment Market Area

    Second Segment Market Area

    Third Segment Market Area
    Fourth Segment Market Area
  3. Estimated Number of Customers within Market Area (define your market area, look within that area at the demographic composition) How Many People Matching My Demographics Live Within the Defined Market Area
    Market Area Number of People (target market)
    First Segment Market Area

    Second Segment Market Area

    Third Segment Market Area
    Fourth Segment Market Area
    Market Potential - Total (sum 1-4 above)
  4. Consumption Figures (how often is the product consumed and how much of the product is consumed.)
    Consumption or usage by People Matching My Demographics Within the Defined Market Area
    Market Area Consumption or Usage
    First Segment Market Area

    Second Segment Market Area

    Third Segment Market Area
    Fourth Segment Market Area
  5. Price (what is your cost of producing the product, and what type of "profit" do you intend to generate? How does this price Compare to your competitors? How sensitive are customers to price changes?) Also, look at what your different segments are paying for their products.
Target Markets
Segments Price
First Segment

Second Segment

Third Segment
Fourth Segment

Estimating Market Potential: , where MP = market potential, N= number of possible buyers, P = average selling price, Q= average annual consumption

Demographic Characteristics (examples) Number of Possible Buyers 2nd Segment (Elementary Schools) 3rd Segment (Church Groups) 4th Segment (Families)
First Segment

Second Segment

Third Segment
Fourth Segment

Developing a Business Plan

What is a business plan and why do I need one? Business plans essentially force usiness owners to spend some time thinking about the business, industry, ompetition and to determine the best direction for the business. It is a roadmap to developing a successful agritourism business.

A business plan helps assess and create a vision for what needs to be accomplished. It helps evaluate future needs and can be used as a tool for measuring and improving the operation. Developing a business plan does not happen overnight, but taking the time to build a solid plan will save time and money in the long run. Realize that the plan is a working document and must be realistic and fit needs and objectives of the agritourism business.

A business plan serves many purposes and is essential to starting or expanding a new business venture. A business plan consists of several parts.

Executive Summary

The executive summary simply highlights the major parts of a business plan. Although the executive summary is at the beginning of the business plan, it is usually written after all other sections have been carefully thought out and planned. Briefly cover Who, What, When, Why and How. This is just a summary and should include no more than 2 pages.

Create a Mission Statement

Reflecting the core purpose of your business, stating the basic values and goals in a short, focused sentence of no more than 20 words. Ask yourself: What is the purpose of the proposed project? What benefit will it provide? Who are the customers?

Create a Marketing Slogan,

consisting of a short, clever, even humorous translation of your mission statement that conveys a single, simple thought about your business to your customer.

Set Measurable Goals & Objectives

Goals are 3-5 years out; objectives are things you want to accomplish in the next year. Some areas for consideration may include sales volume, profits, customer satisfaction, owner compensation, number of employees, employee development, etc. To set goals and objectives, ask yourself the basic: What? Why? How? When? and Who? questions. Then set timetables to match goals and objectives. Who will be responsible for what activities? Who are the key employees and what are their titles? How long do you plan to operate this venture? How many hours are you willing to commit to this venture? Where do you see the business in 3-5 years?

How are you going to promote customer satisfaction?

Gather Information

from reputable sources to document your business plan. You'll want to know about potential visitor days and expenditures, preferences, and interests; competition and complementary services in your area; etc. These types of surveys are available from Economic Development organizations, Tourism boards and various associations.

Describe Farm or Ranch Recreation Enterprise

When was it started, or projected to start? Why was it started? Who started it? How does the recreation enterprise fit in with your overall farm or ranch operation? How are you set up as a business (sole proprietorship, general partnership, limited partnership, regular corporation, chapter S corporation)?

Describe Product or Service

Write down what you are selling to the public. Why should people buy your service? What does it do? What makes it unique? What will it cost to provide this service or product? How much will you charge? How does it compare to other similar recreation enterprises? Are there complementary services in the area?

Define Customers

Who are you targeting for your recreational enterprise? You'll want to define: gender, age, income, occupation, location, family status, children, education, and interests.

For example, if you are developing a fee-hunting enterprise, you'll probably look at males in the 25 to 50 age range.

Compete or Complement

Since farm and ranch recreation is relatively new as an emerging industry, state agencies are encouraging enterprises to work together to attract visitors, share resources, and market services. However, you should first carefully develop and evaluate your business and product, considering your resources and activities.

Develop a Marketing Strategy

Your marketing and advertising method may be as simple as word of mouth and repeat customers, or it may involve an ad campaign with printed materials, radio spots, newspaper or other media advertising, mass mailings, and the like.

Marketing and advertising will be covered more fully in the next section, but you should include your marketing strategy in your business plan.


Include a resume of each owner and key employee. Identify outside consultants and advisors, including accountant, lawyer, banker, insurance broker and other consultants.


Because a recreation enterprise may create a new Standard Industrial Code (SIC) for the activities associated with that portion of your business - resulting in different workers' compensation rates and reporting requirements— you should treat your personnel issues separately for this enterprise from your farm or ranch business.

Written job descriptions that clearly define duties and a personnel manual may be helpful in this setting. You should identify how many employees you need to run the recreation enterprise, their titles, job duties and skills. If you need additional employees, where and how will you attract them? What process will you use to screen and hire employees (job skill testing, job interviews, etc.)? What training needs will you face? Who will conduct employee training (inhouse, paid consultant, community college, other recreational businesses)? What will be the cost of the training? How will you set salaries and wages? What benefits will you provide?


Identify the types of insurance you have for your business. See the section on Liability and Insurance

Fixed Assets

You will need to identify your current fixed assets (those with a useful life or more than one year) and those, which you need to purchase. These might include land, buildings and improvements, machinery, other equipment, livestock, office furniture, computers, etc. Determine the cost and estimated acquisition date. Estimate the useful life of each fixed asset. Complete a monthly depreciation schedule.

Start-up Expenses

Any new enterprise will have start-up costs. These costs are those associated with what it takes to open your door for business. Most of these costs will be one-time expenditures, while a few will occur every year. Examples include legal fees, accounting fees, licenses and permits, remodeling work, advertising, promotions, hiring costs, etc.

Sales Forecast

Forecasting sales are critical to your enterprise from both a management and sales point of view. You can't plan financially if you don't have an estimate of sales. You should review your data on products, customers, competitors, and budgets to develop the trends and projections. Be realistic in making these forecasts. Estimate the total market size in $ sales per year based on your research, and create a market share analysis with worst case, mostly likely case, and best-case scenarios.

Financial Strategy

A financial strategy is also an important component of a business plan. It identifies your sources of existing debt and your financing needs. It specifies your fixed assets, start-up costs, and payments (if debt financing is required), and several basic forecasts for your business.

This component of your business plan is important for two major reasons. First, the financial strategy is fundamental to your primary evaluation of the business idea and in the management of the enterprise. Second, your financial strategy is fundamental to a lender's evaluation of your enterprise and key to obtaining financing.

In order to understand your financial situation, you need to know how your financial statements are developed and be able to read and analyze them. Make sure your numbers are verified, needs are justified and sources of capital are accurately researched. Adopt systems for record keeping and bookkeeping that allow you quick access to accurate data and create a system of management checks and balances.

The following financial statements should be included in the business plan. In each case, include assumptions made to create estimates and forecasts.

  1. Enterprise budget — a projection of income and expenses
  2. Cash-flow forecast — an estimate of how income and expenses will "flow" through the operation, usually over a period of one year
  3. Profit and loss statement — a projection of revenues and expenses including adjustment categories such as capital gains or losses and depreciation
  4. Balance sheet — an accounting of assets, liabilities, and owner equity
  5. Income statement — a projection of revenue and expenses for a specific period of time
  6. Break-even analysis — an analysis describing how many visitors or what amount of sales would be needed to cover costs
  7. Sources and uses of cash — a description of funding sources and uses of funds

A summary of your financial strategy should be included in your business plan. The summary describes your financial documents and explains how your new enterprise will fit into your current operation. It also serves as the second part of your business plan's executive summary.

Create an Exit Strategy

The exit strategy is the next-to-last component of the business plan. An exit strategy specifies situations in which you would exit the business or situations that might necessitate closing the business. The exit strategy also outlines the methods you would use in these situations.

Situations in which the business would be exited or closed will vary. Your personal goals may indicate that you plan to retire at a certain age, or your goals may include plans to grow the business to the highest value and sell it or pass it on to your children. In addition, it may become infeasible to continue to operate your enterprise due to changes in competition, market trends, regulations, personal goals or circumstances.

Methods for exiting a business also vary. Some examples include selling the business to a competitor, selling the business to a family member or employee, selling your share of the business to a partner or other shareholders, passing the business on to a family member or liquidating the business inventory and assets.

Each method will have implications for tax liability, retirement finances, and relationships with family members and other business interests. You may want to discuss your exit strategy with your management team to determine the best strategy for you and to make preparations to effectively implement the strategy in the future.

Indude an Appendix

The appendix is located at the end of your business plan. Include supporting documents such as

  • Tax returns
  • Financial statements
  • Resumes of owner and key employees
  • Resumes of your management team, including your outside consultants and advisors such as accountants, lawyers, bankers, and insurance agents
  • Certificates of completion of all business planning, management and technical courses taken

Where to get help?

The business plan should be tailored to fit the agritourism project. Write the plan yourself, even if you seek assistance from professionals and other community members. Professional assistance (attorneys, accountants, financial consultants, etc) should be used as needed.

There are several resources available to assist in writing a business plan. Listed below are a few to get started:

Business Planning Checklist - Is Your Plan Complete?

Description of Business

  1. Business form: proprietorship, partnership, corporation, or cooperative?
  2. Type of business: retail, wholesale, manufacturing, service, or consulting?
  3. What is the product and/or service? What makes it unique?
  4. Is it a new business? A takeover? An expansion? A franchise?
  5. When is your business open?
  6. Is it a seasonal business?
  7. How long have you been in business?
  8. What have you learned about your business from past operations or (if you're a start-up) from outside sources?
  9. Why will your business be profitable?
  10. What are your personal and business goals?


  1. What are you selling?
  2. What benefits are you selling?
  3. What is unique about your goods or services?
  4. If you are a consultant, what process will you use?


  1. Who buys from you?
  2. Are your markets growing, steady, or declining?
  3. Is your market share growing, steady, or declining?
  4. Have you segmented your markets? How?
  5. Are your markets large enough for expansion?
  6. What social, political, regulatory, economic, and technological changes are taking place that could impact your industry, your market, or your market's perception of and desire for your products/services?


  1. Who are your nearest direct competitors?
  2. Who are your indirect competitors?
  3. How are the businesses similar to and different from yours?
  4. What have you learned from their operations? From their advertisements?

Product Development Plan

  1. What other products/services (if any) are you currently considering?
  2. What is your time frame for developing and introducing them?

Marketing Plan

  1. Who will actually buy from you (e.g., do you sell to distributors, wholesalers, retailers, businesses, consumers?) And how does this impact your marketing plan?
  2. How will you attract and hold your target market and increase your market share?
  3. Are you planning to enter or leave any markets?
  4. How do you price your products?
  5. Where are you (will you be) located?
  6. Why is this a desirable area? A desirable building?
  7. What kind of space do you need?
  8. Are there any demographic or other market shifts going on in your area that could impact your marketing plan?

Sales Plan

  1. Who will do the selling in your business? (You? Company salespeople? Independent sales representatives?)
  2. What are your weekly, monthly, and quarterly sales goals?
  3. What other checkpoints have you established for reaching those goals?
  4. What sales approach will you use?

Operations Plan

  1. How will you organize the flow of work through your business? (This is especially important if you have several people doing different parts of the overall tasks, such as in a factory or a farming operation.)
  2. How will you ensure that all tasks are performed? Performed on time?
  3. How will you monitor quality?
  4. How will you keep costs under control?

Personnel Plan

  1. What are your current personnel needs?
  2. What skills will your employees need in the near future? In three years?
  3. What are your plans for hiring and training personnel?

Management Plan

  1. How does your background/business experience help you in this business? For your own use: What weaknesses do you have and how will you compensate for them? What related work experience do you have?
  2. Who is on the management team?
  3. What are their strengths and weaknesses?
  4. What are their duties?
  5. Are these duties clearly defined? How?
  6. What additional resources are available to your business?

Application and Expected Effect of Loan (Investment)

  1. How will the loan (investment) make your business more profitable?
  2. Will you buy or lease your equipment, location, or vehicles?
  3. Do you really need this money? Or can you make do without?


  1. Have you completed your financial projections? (As a minimum, you should have profit and loss statements, cash flow and income projections for three years, and a current balance sheet.)
  2. Will you need additional cash? If so, how will you get it?
  3. Have you shown that your business will be profitable?

Start-Up Expenses

Source: Jenni Jeras, The Business Journal

Start-up expenses are the various expenses it takes to open your doors for business. The majority of these expenses will be one-time expenditures, while others will occur every year. Examples of these expenses are listed on the next page. If you have an existing business, skip this work-sheet.

Step 1:

Fill in Total available cash for starting your business venture.

Step 2:

Review the expenses listed on the next page. You probably can use this list for the expenses for your business. You may have some expenses which are not listed here, write them under Other expenses.

Step 3:

Estimate your cost for each expense.

Step 4:

Calculate the total for your start-up expenses.

Step 5:

Calculate Beginning Cash Balance by subtracting Total Start-up Expenses from total available cash. This amount should be written on the Projected Cash Flow worksheet under each month on the Beginning Cash Balance line.

Start-Up Expenses
Expense Cost
Total Available Cash
Total of capital equipment (find this total in next table)
Beginning inventory of merchandise for retailing businesses
Legal fees
Accounting fees

Licenses & permits

Remodeling work
Deposits (public utilities, etc.)

Advertising (grand opening, etc.)

Promotions (door prizes, etc.)
Other expenses
Total Start-Up Expenses
Beginning Cash Balance

Capital Equipment
Equipment Cost Acquisition Date Useful Life (in months) Monthly Depreciation

Total Costs Capital Equipment: $

Total Monthly Depreciation: $

Projected Cash Flow

Cash flow projections are among the most critical financial projections you will make. You will calculate your cash receipts and the cash disbursements for each month. If the cash receipts are greater than the cash disbursements, you will have a positive cash flow. If the cash receipts are less than the cash disbursements, you will have a negative cash flow. Negative cash flows are enclosed in brackets. Here is an example: ($5,218).
Step 1:

Fill in your beginning cash balance for the first month. This amount should be taken from the start-up expenses worksheet if your business plan is for a new business.
Step 2:

Fill in the various categories for Cash Receipts and total them for the first month only.

Step 3:

Fill in the various categories for Cash Disbursements and total them for the first month only.

Step 4:

Calculate the Net Cash Flow for the first months (Total Cash Receipts minus Total Cash Disbursements).

Step 5:

Calculate the Ending Cash Balance for the first month. (Beginning Cash Balance plus a positive Net Cash Flow (or minus a negative Net Cash Flow).

Step 6:

Fill in the Beginning Cash Balance for the second month, (which is the Ending Cash Balance for the first month). Step 7:

Repeat the first six steps for each of the twelve months remember to complete one month at a time!

Projected Cash Flow- Cash Receipts
Month Yearly Totals
1 2 3 4 5 6 7 8 9 10 11 12
Beginning Cash Balance
Cash Receipts Cash Sales
Collect Account Receivables
Loans from Banks, Etc.
Other Receipts
Total Cash Receipts
Cash Disbursements
Cash Disbursements Month Yearly Totals
1 2 3 4 5 6 7 8 9 10 11 12
Purchases (merchandise)
Payroll Benefits
Occupancy Expenses
Purchase Capital Equipment
Loan Principal Repayment
Owner's Withdrawals
Total Cash Disbursed
Net Cash Flow
Ending Cash Balance


You are now ready to assemble the data for your projected income statement. This statement will calculate you net profit or net loss (before income taxes) for each month.
Step 1:

Fill in the sales for each month. You already estimated these figures; just recopy on the work sheet.

Step 2:

Fill in the cost of goods sold for each month. You already estimated these figures; just recopy on the work sheet.

Step 3:

Calculate the Gross Margin for each month (Sales minus Cost of Goods Sold).

Step 4:

Fill in the three categories of labor-related operating expenses (salaries, mandatory benefits, optional benefits). You estimated these figures already; just recopy them on the worksheet.

Step 5:

Fill in the Operating Expenses - Non-labor. You estimated these figures; just recopy them.

Step 6:

Fill in the Monthly Depreciation Expense. You estimated this figure already; just recopy them for each of the 12 months.

Step 7:

Calculate the Total Operating Expenses for each month by adding all operating expenses.

Step 8:

Calculate the Net Profit or Net Loss (before income taxes) for each month (Gross Margin minus Total Operating Expenses).

Projected Income Statement
Month Yearly Totals
1 2 3 4 5 6 7 8 9 10 11 12
Cost of Goods Sold
Gross Margin
Operating Expenses Salaries & Wages
Mandatory Benefits
Optional Benefits
Occupancy Expenses
Bad Debts
Total Operating Expenses
Net Profit (or Loss) Before Income Taxes

Balance Sheet

The balance sheet can be compared to a picture of your financial condition on a particular day. This statement is a list of your assets (at your cost), your liabilities (yo debts), and your equity in those assets.

You are going to prepare a balance sheet as of the end of your last fiscal year or as o the start-up date of your business. You should include all the assets and liabilities as of the appropriate date. You will also be preparing a projected balance sheet for a da e one year in the future.

Step 1:

Fill in the amounts for each of the Current Assets and calculate the Total Current Assets.

Step 2:

Fill in the amount for Fixed Assets, ( Land, Buildings and Equipment), less accumulated depreciation.

Step 3:

Calculate the Total Assets (Total Current Assets + Total Fixed Assets).

Step 4:

Fill in the amounts for current and long-term liabilities and calculate the required total.

Step 5:

Calculate the Owner's Equity (Total Assets - Total Liabilities).

Step 6:

Fill in the amount of Total Liabilities + Owner's Equity. This amount should equal the amount for Total Assets.

Step 7:

Repeat Steps 1 through 6 for the end of the year projections.

Balance Sheet

Current Assets
Assets As of: As of:
Cash $ $
Accounts receivable $ $
Inventory $ $
Prepaid expenses $ $
Other current assets $ $
Total Current Assets $ $

Fixed Assets

Assets As of: As of:
Land $ $
Buildings (Less Accum. Depr.) $ $
Equipment (Less Accum. Depr.) $ $
other fixed assets $ $
Total Fixed Assets $ $

Total Assets

As of:


As of:


Current Liabilities
Liabilities As of: As of:
Accounts payable $ $
Federal & State taxes owed $ $
Other current liabilities $ $
Total Current liabilities $ $

Long-term Liabilities
Liabilities As of: As of:
Notes payable to bank $ $
Mortgages payable $ $
Other longterm liabilities $ $
Total Long-term liabilities $ $

Total Liabilities

As of:


As of:


Owner's Equity

As of:


As of:


Total Liabilities + Owner's Equity $ $

Jenni Jeras, The Business Journal July 8, 1994

Threats to Success

Despite the optimism that surrounds a small business startup, most small businesses fail. In fact, 80 percent of small businesses fold in their first five years according to the Small Business Administration. Unquestionably, all entrepreneurs make mistakes, but those who recognize and correct mistakes are more likely to succeed.

Why do small businesses fail?

The answer varies with entrepreneurial skills and business conditions. It is important to have good managerial, analytical, communication, and interpersonal skills, in addition to drive and vision. It is also important to understand common threats to business success.

Failure to understand or predict the difficulty of owning your own business or adding an enterprise

Owning and running a business is hard and stressful work. As a service business operated from your home on family land, your agritourism enterprise can be particularly difficult, requiring tremendous commitment and effort. Learn how to cope with stress and try to find a balance with family, friends, and activities you enjoy.

Lack of strategic planning

Make mistakes on paper before you risk assets. Understand that planning is an ongoing and cyclical process. In other words, plan strategically.

Not knowing how to manage and operate an agritourism enterprise

Agritourism enterprises require a different set of skills from production agriculture. Take courses, read books, attend seminars, listen to tapes, get a mentor, or do whatever you can to gain the skills you need.

Lack of cash, poor cash flow, lack of financial savvy, poor money management, under-financing

"Do not have the 'build it and they will come' mentality!" said one agritourism operator. Instead, know and fill demand and then expend capital. Learn about available financing opportunities, tools, and techniques. Understand the basics of business finance.

Growing too fast

When a business grows too fast, entrepreneurs often lose control, quality of products and service deteriorate, and customers go elsewhere. Business growth should be done strategically and at a rate you can manage.

Poor interpersonal skills

Relationships within a business are complex, important, and worthy of time, attention, and feedback. You will need to develop relationships with members of your management team, employees, and customers.

Poor communication skills

Good communication skills consist of good listening skills as well as good verbal skills. Develop a system for reporting feedback and suggestions from employees and customers. You might consider holding regular meetings of your management team.

Failure to innovate

Markets are dynamic. It is important to monitor market conditions and make adjustments to meet the needs of consumers.

Trying to go it alone

Having strong, well-rounded management and working teams is important. Pay for and use the services of professionals when needed. Hire employees that complement your weaknesses and delegate responsibility. You should also form networks with people involved in agritourism activities locally and regionally.

Failure to recognize your own strengths and weaknesses

The better you know yourself, the better your chances of avoiding problems and achieving success. Ask for help when you need it.

Failure to seek and respond to criticism

Many of the problems listed can be corrected or avoided with the help of candid feedback. Do not automatically blame external causes for failures, but take a look at internal causes. Have people you trust critique your management skills. Talk with management team members, friends, and peers. Use the information to learn how to improve your skills.

Reference: Nelton, Sharon. June 1992. "Ten Key Threats to Success." Nation Business.

Section 4: Marketing

Skip to Section 4: Marketing

Marketing is often thought of as simply product advertising or sales pitches; however, marketing includes much more. Marketing is "planning and executing a set of objectives to bring buyers and sellers together so that a sale can take place." It requires thorough planning and execution.

In the case of agritourism, marketing has four main goals:

  1. Identify a target audience and their needs.
  2. Attract the target audience to the enterprise.
  3. Meet the needs of the target audience and entice them to spend their money at the enterprise.
  4. Create a desire in the audience to return again and again to the enterprise.

Marketing requires focusing on customer values to develop and market a product or service to meet unfulfilled needs of consumers. Thus, it is important to understand the concept of "consumer values." When making purchase decisions, consumers generally consider four factors, often referred to as the Customer's 4 C's:

  1. Customer Benefit - What benefit will customers receive from the product or service?
  2. Customer Cost - What cost will the customer incur to acquire the product or service?
  3. Convenience - How convenient is the process of acquiring the product or service?
  4. Communication - How do customers learn about products, services, and how to acquire them?

Agritourism entrepreneurs should keep these factors in mind when developing products and services as well as when developing their marketing plan.

Developing a Marketing Plan

Developing a marketing plan takes time and commitment, but it is well worth the investment. There is no single formula for success or "silver bullet" strategy that will guarantee success. Instead, marketing is more like an art than a science, in that it is a creative process rather than an exact formula that can be followed in all situations. "Creating a marketing plan does not guarantee success, it only reduces the chance of failure."

A marketing plan can be compared to a road map in that it allows you to look at where you currently are and provides direction on how to get to your destination. The marketing plan provides the same guidance as a road map, outlining your plan for bringing buyers and sellers together. Attracting and retaining customers is fundamental to the success of a business, as customers provide the money that is essential for a business' daily operation, payroll, debt servicing, and profits.

A comprehensive and properly prepared marketing plan can provide invaluable information pertaining to the marketplace. It is easy to brainstorm and hold strategy sessions. These meetings can generate brilliant marketing strategies as ideas are conceived and communicated. However, if these ideas are not recorded and then implemented, they are useless. Lee Iacocca, former chairman of Chrysler, provided great insight that supports the creation of a written marketing plan when he said: "the discipline of writing things down is the first step toward achieving them."

Constructing a marketing plan is similar to putting a jigsaw puzzle together. Many individual components provide specific pieces of information, but none of the individual pieces provides enough information to see the "big picture." However, when these individual components are combined, the big picture becomes clear and the business has a plan for marketing its wares.

A good marketing plan for an entertainment farm operation can be broken down into the eight different elements:

I. Introduction

The introduction of a marketing plan provides a concise and complete overview of what the marketing plan is going to accomplish. The reader should be able to gather enough information about the marketing plan from the introduction that he or she has a general idea of what is going to take place.

II. Market Analysis

Market analysis is an essential component of the marketing plan. The market analysis contains information on consumers, competitors, and the overall industry. This information is critical to developing an effective marketing plan. In order to accurately complete the market analysis, an in-depth study of the industry and extensive research into consumer tastes and preferences is needed. These investigations will allow you to identify industry trends, changes in consumers' tastes, and how the competition is positioning its products. This type of strategic information is critical to effectively position and promote a product to a target market.

To effectively perform a marketing analysis, the market area must be defined, the target market identified, and a competitor and situational analysis developed.

A. Market Area

The market area can be thought of as the geographic area where the business intends to operate, i.e., a city block, between the rivers or the globe. Defining the market area is important because it defines the geographic area where potential consumers live and or work. The people in the market area are considered to be potential customers. If the population in the market area is not sufficient, it will have to be expanded. Food retailers, for example, typically rely on drawing customers from a five-mile radius around the store. If this population is too small, the retailer will build elsewhere or risk insufficient sales revenue.

Total sales for specific products can be determined once a market area is defined. For example, Americans consume approximately two pounds of honey annually. Therefore, defining a market area provides the means of determining the total market potential by multiplying the area's population by consumption figures. The result is the area's estimated total sales potential. However, this figure may be misleading and overstate the true market potential for a particular product as not all of the residents in the market area are potential consumers. For example, assume the population for a defined market area is 10,000 people. Some of the people in the area eat beef while others are vegetarians. Therefore, not all of the people in the market area are potential consumers. As a result, it is important to determine what segment of the total population in the market area can realistically be considered potential customers.

B. Target Audience or Customer Profile

Once you have made an initial description of your enterprise and studied the market situation, it is critical to identify your specific target market or audience. Identifying a target audience will allow you to design your marketing efforts effectively by focusing directly on customers you are seeking rather than mass marketing to the general public.

A target audience is defined as a specific portion of the population that has:

  1. A need the product or service can fulfill
  2. A willingness to purchase the product or service
  3. The financial ability to purchase the product or service

Describe the customers in your target audience by answering the following questions:

  1. Where do your target customers live?
  2. What age or in which age range are your target customers?
  3. What is the marital status of your target customers?
  4. Are your target customers families, individuals, or groups?
  5. Do your target customers include or exclude children?
  6. What is the income range of your target customers?
  7. What sources or types of advertising or promotion influence the purchasing decisions of your target customers (newspaper, radio, TV, publicity, word-of-mouth referrals, Internet, brochures, or other types of advertising)?
  8. What are your target customers' hobbies and interests?
  9. When are your target customers available for the services your venture plans to provide?
  10. What are your target customers looking for in an agritourism enterprise (entertainment, relaxation, action/adventure/hands-on-experience, education, social interaction, genuine farm experience, or other)?
  11. How far are your target customers willing to travel to obtain such an experience?

Answer the following questions about your target audience to test for the three components of the target audience definition:

  1. Do your target consumers have a need that your agritourism enterprise can fulfill that has not already been fulfilled by other businesses in the area? O Yes O No O Do Not Know
  2. What are the target-customer needs that your enterprise can fulfill? How will customers benefit from your operation?
  3. Does your target customer have adequate disposable income to spend at your enterprise? O Yes O No O Do Not Know
  4. Is your target customer willing to pay an acceptable price for the products or services you can offer at your enterprise? O Yes O No O Do Not Know
  5. Does your target customer have convenient access to your proposed operation? Consider distance to the operation, access from major roadways, quality of roadways, and difficulty in finding the operation. O Yes O No O Do Not Know
  6. Will enough of your target customers be willing to travel the distance to visit your location? O Yes O No O Do Not Know

If you answered "Yes" to each of the six questions above, it is likely that your identified target customer meets the three components of the definition of a target audience. If you answered "No" or "Do Not Know" to any of the questions above, your identified target customer is most likely not a suitable target audience for your enterprise. Consider whether other customer types will fit your personality, skills, and goals and whether they meet the target audience criteria.

C. Competitor Analysis

A competitor analysis focuses on identifying competitors and collecting pertinent information related to their business. The analysis should investigate both direct and indirect competitors. For example, an upscale fruit preserve's main competition is other upscale fruit preserve products and not the mass-produced national brand jams and jellies. The analysis should contain a list of each competitor's strengths and weaknesses, resources, marketing channels as well as their strategic plans (if available). It is important to highlight competitors' weaknesses as this provides material which can be used to exploit competing products' weaknesses in marketing materials. It is important to know the competition. By identifying competitors' strengths and weaknesses, it is easier to determine a product's competitive advantage, which is useful in product positioning and promotion.

Identifying competitors provides basic information for estimating market share. Market share can be estimated using the total market potential figures and the number of competing outlets. Finding market share information is a difficult if not an impossible task. This information is very valuable and acquiring it may be very expensive. In other instances, there is no market share information. If market share information is not readily available, there is a way to derive a crude market share figure. This crude estimation is calculated by dividing the total market potential equally among the total number of competitors. For example, if there are 15 competing products in a specific market, it is assumed that each of the fifteen competing products captures approximately 7% of the market (100% /15= 7%). Again, this method of market share estimation is by no means accurate or representative of the actual market shares held by each competing product because it assumes that all outlets have an equal market share which is probably unrealistic. For instance, one national supermarket outlet may capture 50% of the grocery market and the remaining 50% of the grocery market may be divided among the remaining 14 competitors. Despite its shortcomings, this crude method of estimating market share information provides a means for a company to make an assumption of how much they might capture if they entered the market. The alternative is to make a guess based on the best available information.

D. Situational Analysis

The situational analysis can be thought of as a comprehensive investigation into the business environment in which your company will be operating. The situational analysis can be separated into two different elements.

  1. Industry Overview—This element primarily focuses on industry trends and should provide a general review of the industry. For example, is demand for your product category increasing, decreasing, or stable? Is the product category moving toward fat-free products? What are the long-term trends in the marketplace? What are the demographic trends, and how might they impact the market? These are some of the questions that need to be investigated. Traditionally, it is easier to enter and compete in a growing market than in a stagnant or declining market.
  2. Regulatory and social implications—This element of the situational analysis should focus on government regulations and social trends that would directly or indirectly impact consumer demand for or consumer perception of your product. Social trends may have positive or negative product ramifications. For example, the new organic regulations stipulate that before a product can be labeled organic, it has to be certified organic. An example of social implications and their impact on product consumption could be the current public anti-tobacco sentiment.

III. Marketing Objectives and Goals

The marketing objectives section should outline detailed and specific marketing goals and objectives. This section is essential to the overall success of the marketing plan. By setting business goals and defining objectives, the strategy and tactics subsections that follow will provide detailed information on how the objectives and goals will be met. However, before marketing strategies and tactics are developed, a clear picture of what is expected to be accomplished must be created. For example, you need to set specific goals, such as to accommodate 1,500 students and 200 families. Again, you may want to set specific sales goals by market.

IV. Marketing Strategies

This section outlines and describes what needs to be done to reach specific marketing goals and objectives. Specific marketing strategies are developed after the entertainment operation identifies its marketing objectives. Marketing objectives are specific and measurable goals used to define where the business would like to be at some definite time in the future. For example, if an entertainment farming operation's goal is to have 1,500 school children tour the facilities in the upcoming year, a marketing strategy must be developed and implemented. Once the business has determined its marketing goals, a method of achieving the goals must be formulated and outlined. Assume the marketing goal is to have 1,500 school children tour the facilities in the upcoming year. How is the operation going to accomplish this goal?

Marketing strategies are concepts that can be used to create a set of activities aimed at reaching specific marketing goals, "how" specified marketing objectives are to be met. Depending on the operation's current status in the market, different marketing strategies are needed to achieve the specified marketing objectives. The four general marketing strategies that can be used to market a product or service are:

  • Market Penetration
  • Market Development
  • Product Development
  • Diversification

After developing specific marketing strategies, it is important to consider how the competition will react when these strategies are implemented. An outline of the anticipated competitors' reactions should be developed and strategies to counter their reactions need to be considered.

Market Penetration is similar in meaning to market share and refers to the percentage of total product sales that is captured by a company. For an entertainment farming operation to increase its market penetration, it must attract competing entertainment farming customers, attract customers new to entertainment farming or increase its existing customers' use of the facilities.

Market Development is a very simple strategy. The business tries to identify new markets or new uses for its existing products, e.g., offer corporate outings using the facilities developed for school tours. If a business wants to expand and does not want to develop or produce a new product, it can use a market development strategy.

Product Development strategies occur when a business develops new products or services for existing customers in the business' current markets. Product development may be as simple as adding value to existing products or developing an entirely new product. A new eco-tour could be created at the "Farm Forest" enterprise, which would be an example of new product development.

Diversification is a strategy that is typically used as a business grows. The purpose of diversification is to attract new groups of customers by producing new products and/or entering new markets. Let's look at a producer who initially offers a fall pick-a-pumpkin operation. As the operation grows, he or she decides that the business could attract even more customers by offering a cut-your-own Christmas tree enterprise. By venturing into the cut-your-own Christmas tree market, the producer has diversified the product mix.

V. The Marketing Mix

The marketing mix component of your marketing plan describes the methods you will use to attract customers to your operation. Strategies developed and used to gain market share should be tailored to the specific target audience and the values of those customers. The strategies should also be developed to meet your goals for the operation. Marketing strategies include the 4 P's of marketing: product and/or service positioning, price, place, and promotions.

Product — refers to the actual product being offered. The "product" can be thought of as the summation of the individual product's physical and perceived attributes, including packaging. The product needs to have desirable characteristics, appropriate packaging, and a perceived image consistent with the demands of the targeted market. Packaging is a significant aspect of the product. For example, according to Larry Davenport with the International Jelly & Preserve Association, packaging is essential to a product's success because 90 percent of niche product purchases are based on presentation. Thus, how the agritourism operation is packaged can influence the customers' perception of the operation and the likelihood they will visit it.

Price — Determining the admission price and the price of the products and services available at the operation is a critical marketing tactic. The prices have to be high enough to cover the total cost of operating the enterprise, yet not so high to discourage potential customers from visiting. One method of determining the admission price is to research existing entertainment farming operations or competing forms of entertainment and use these prices as a starting point.

Promotion — is a term used to describe the advertising, promotion, publicity, and selling of a product or service. Promotion can be broken down into two distinct categories: 1) face-to-face selling and 2) advertising, promotion, and publicity.

Place — refers to a general concept describing how the product will get to consumers. In the agritourism operation, place refers to the site where the activities take place.

It is important to understand that the ultimate function of a marketing mix is to sell more product. Because developing an effective and successful marketing mix is more like an art than a science, it takes experimentation and follow-up evaluation to determine the most effective method(s) of marketing a product to consumers.

VI. Advertising, Promotion, and Publicity

Advertising, promotion, and publicity are three distinctly different communication strategies that are frequently used together to increase customer traffic and sales. The goal of each of the three strategies is to influence the purchasing decisions of consumers. It is important to remember that advertising, promotion, and publicity alone cannot generate significant demand for a product if consumers do not like the product or it does not meet a specific need.

Advertising relies on both printed and electronic communication to deliver information about a product or business to potential and existing customers. It is important that your advertising campaign is directed at your target market, in terms of content and where the message is going to be aired or printed. Advertising a business whose target market is school groups and adults with children has a number of functions:

  • to inform teachers and parents of your agri-entertainment operation's existence
  • to inform teachers and parents why they should visit your farm (e.g., learn about agriculture)
  • to remind teachers, students, and parents of a specific reason why they might want to visit your farm (e.g., need a pumpkin for Halloween)
  • to associate specific qualities with your enterprise (e.g., good, clean, family fun)
  • to help differentiate your operation from the competition (e.g., hayride and pumpkin included in the admission price)

Sales Promotion involves customer response and involvement as opposed to advertising which involves delivering information about a product or business to potential and existing customers. However, product advertising and promotion are frequently used together. For example, a car dealer may advertise his dealership while running a free hotdog and soft drink promotion for individuals who visit his business. Promotions are a way to entice the customer to purchase a product through a special activity. Everybody is familiar with promotional strategies like clearance sales, in-store sampling, and product giveaways.

Advantages and Disadvantages Associated with Specific Advertising Media1





  • Potentially large coverage area
  • Low cost relative to other media
  • Immediate/timely (daily or weekly)
  • Access to many socioeconomic groups
  • Ability to target specific audience via specialty section
  • Can use color
  • Flexibility in ad size and cost Visibility of the product (i.e., picture)
  • Use of coupons to measure effectiveness Short lead time
  • Inconsistent reproduction
  • Typically one-day exposure
  • Clutter (can be lost among other ads)
  • May be limited to text or black-and-white
  • Lack of movement and sound


  • Specific audience (demographics)
  • Immediate/timely/multiple exposures
  • Possible high entertainment value of ad
  • Celebrity endorsement or pitch
  • Time and content flexibility
  • Use of a human voice (celebrity)
  • Sound reinforcement
  • Time limitations restrict message
  • Need for repetition
  • Clutter (can be lost among others)
  • Ad recall is low
  • "Station surfing" during commercial breaks
  • Short ad exposure


  • Potentially large coverage area
  • Can target a specific audience
  • Can use color
  • Flexibility in size and cost
  • Visibility of the product (i.e., picture)
  • Use of coupons to measure effectiveness
  • Large repeat and secondary exposure
  • Clutter (can be lost among others)
  • Cost associated with repeat exposure
  • Lack of movement and sound
  • Not immediate; publication may be weekly, monthly or less frequent


  • Large coverage area
  • Can target a specific audience
  • Uses both visual and auditory stimuli
  • Large repeat exposure
  • Costly to produce and air
  • Time limitations restrict message
  • Need for repetition
  • Short ad recall
  • Clutter (can be lost among other ads)
  • Inverse relationship between hours watched and audience income

Direct Mail

  • Can target a specific audience
  • More opportunity to educate on product/service benefits
  • Expensive ($1 to $2 per piece)
  • Difficult to obtain "clean" mailing list
  • May be perceived as junk mail
  • Not immediate, 2-to 3-week lag time
  • May be discarded unopened

Point of Sale

  • Can influence impulse purchasing
  • Helps product stand out among competition
  • Customer has opportunity for direct response at time of ad presentation (i.e., purchase)
  • Can be expensive
  • Clutter (ad can be lost among other point-of-sale material)

Outdoor (signage and billboards)

  • Large audience exposure depending on placement
  • Use of color
  • Can provide information and directions
  • Continuous exposure
  • Limited message length
  • Initial production and preparation costs
  • Ideal sites are difficult to access


  • Information available 24/7
  • Customers access in their environment and at their convenience
  • Relatively cost-effective
  • Can target types of viewers
  • Messages can be timely
  • Ads can be interactive
  • Ability to use coupons to measure effectiveness
  • Maintenance necessary
  • Not effective as a stand-alone strategy
  • Difficult to gauge impact
  • Costs of development and maintenance can vary dramatically

1Dalton, Anne, Rob Holland, Shasta Hubbs, and Kent Wolfe. Adapted from Marketing for the Value-Added Agricultural Enterprise. University of Tennessee Extension publication PB1699. May 2002.

Mass media advertising should be directed at the local market. At least two months before the entertainment farming operation opens, advertising costs and scheduling information should be obtained from local newspaper(s), radio station(s), and television station(s). In addition, you should also begin preparing your advertisement(s). Newspaper, television, and radio advertising are particularly useful when starting a new agritourism business. By advertising, you are able to reach a large number of potential consumers. The advertisement can be used to get potential consumers' attention and alert them to your opening and any special events that may be taking place. It is also a good idea to periodically advertise and remind existing and potential visitors that you exist.

Before you decide to advertise in any medium, make sure that the subscriber or listener demographics of the newspaper, television station, or radio station are similar to the demographics of your target market (customer).

Publicity might be considered inexpensive or free advertising. There are a number of sources of publicity, and a lot of times, publicity can achieve the same goals as advertising.

  • Television Publicity—You should try and convince one or more of the local television stations that they need to do a feature story on your business or product. This feature story has the potential to reach a very large number of potential customers within a Metropolitan Statistical Area.

  • Newspaper or Magazine Publicity is another way to reach a large audience. Again, newspapers in the target area and other publications or magazines servicing your niche market should be approached about doing a feature article on your business. In some instances, your local county Extension Agent can help you get a feature story in the local paper.

  • Radio Publicity is another option for informing potential customers that the business exists and what activities and products are available. Again, you may get a local radio station to do a feature story on your business. Radio publicity is immediate and can be used to contact consumers when inventories are high or traffic is slow, for example, when apples are ready for picking.

It takes work and planning to obtain print and electronic media publicity. The following outlines possible methods for obtaining print and electronic media publicity:

A media list should be developed. The media list should include local and regional media that are directed toward potential customers. These media provide a means of advertising your product to potential consumers or even generating publicity for your products through feature stories. In addition to providing free publicity, the media list can be a valuable source of "events" for promoting the pumpkin patch's products as the media provides information on community events. Another promotional tool is to contact local radio stations and have your product be a part of an on-air promotional campaign. A gentleman in Chicago used this tactic to generate inexpensive advertising. The local radio personalities would give one unit of his product away every hour as part of their listener appreciation program. This promotion generated hourly advertising for the cost of a bottle of product ($2.29). A similar strategy could be used by the business. For example, if you are operating a pick-your-own pumpkin enterprise, you may want to work with a local radio station so that they give away one free pass that enables the winner to enjoy all the activities at the pick-your-own pumpkin enterprise as part of their listener appreciation campaign. This would generate free radio advertising for the price of a pumpkin, hay ride, and other activities.

News leads should be sent to appropriate media each time there is an occasion or event associated with the pumpkin patch. Such occasions or events could be:

  • the 10,000th jar sold
  • new product introductions (e.g. new re-sealable container.)
  • the business visited by a notable person

It is very important that the news lead be formatted to meet a particular publication. Editors are not likely to spend the time and effort to rewrite a news lead. A news lead has a better chance of being published if it is easily adapted to the specific format of the newspaper or magazine to which it is being submitted.

Key people in selected media should be identified and provided product samples, if applicable, at appropriate times, such as holidays or other occasions. An extensive list of publication editors, radio news editors and local television editors should be compiled and provided samples on holidays or special occasions. These individuals look for interesting stories focusing on the region and could promote your business via a news article or feature story.

Just like selling your business or products to consumers, you will have to sell your business or product to the media to be considered for a feature story. Before contacting television stations, radio stations, or newspapers in your area, there are some simple questions you should have answered to help you effectively and efficiently pitch your story. The following outlines questions that you should be able to easily and readily answer and even have in front of you when talking when you talk to individuals in the mass media:

  • What is the story? (Two sentences maximum)
  • Who is in the story? ( list the people that can be interviewed and their area of expertise)
  • When is the best time to air your story? (Think about the goal you want to achieve getting your story on the air. If you are trying to build participation, the story should be aired prior to your event)
  • Where will the story take place? (What are the visuals? Will it look good on TV?)
  • Why is this a good story? (How will the story affect the viewers or listeners)

Caution: Before you decide to advertise, promote, or seek publicity for your business, via print or electronic media; make sure that the viewer or listener demographics of the media are similar to the demographics of your customers


The internet has created a new method of marketing products to consumers. However, it takes a plan to successfully launch and support a retail website, but given its sales potential, it is a must. Research has shown that over two-thirds of online users use the internet to purchase products.

However, they use the web to collect information and compare products before making a purchase. According to industry research, 91 % of online users use the internet to seek information, while 7 % use it to research a product before making a purchase. This provides a great marketing opportunity and a venue to inform potential customers about a product's benefits. However, getting them to the website can be difficult. It is important to continually update your site and create a reason for people to want to come back. Add new recipes, have an editorial column, run specials, anything to make them wan to return and return often.

A website should have a shopping cart feature that allows the customer to add items and track their purchases. Shoppers want to add stuff to their cart and have it still be there if they turn off their computers and come back later. They want to use it as a wish list and add and subtract to it as they shop and to compare items in cart.

Email lists are a very important part of direct marketing. Collecting email addresses can be as simple as asking visitors to provide you that information. A website may have a sign-up list that allows customers to enter their email addresses and receive an email notice when an event happens. For example, a roadside stand may send out emails to customers, alerting them to the fact that strawberries are ready. Start an online registration book to collect basic information (customer's name, email address, address, city, state, ZIP code, and telephone number). As you fill orders to ship to consumers, it is necessary to have contact information in order to ship the product. By collecting and saving customer information, you can gradually compile an extensive email and mailing list/database of consumers. This customer database can then be used to generate future sales by periodically reminding consumers via email about your products or sending them information describing new products via advertising flyers, brochures, and price lists. It is important to not abuse email as customers can become fatigued and irritated if they feel they are receiving too many emails and might consider it spam.

Word-of-Mouth Advertising appears to be a very effective way of attracting customers. It can be both positive and negative. As a general rule, people are more likely to complain about their experience than they are to compliment it. As a result, if customers are less than satisfied with quality, price, service, or any other aspect of the operation, they may actually hurt business by generating negative word-of-mouth advertising. On the other hand, if customers are satisfied, they may recommend your business to family and friends. Satisfied customers are significantly more likely than unsatisfied customers to make repeat visits. Thus, it is critical that you maintain a quality product, deliver exceptional service, and make the experience enjoyable for the customer. A simple formula to remember is that 20 percent of customers account for 80 percent of your business, so generating loyal repeat customers is a critical success factor.

According to a 1999 entertainment farming survey of elementary school teachers, word-of-mouth advertising is the most common way teachers learn about field trip opportunities. Thirty-seven percent of the teachers who completed the survey indicated that they learn about field trip opportunities from talking with others.

Road Sign Advertising can provide potential customers with a variety of information about the entertainment farming operation. However, it is a good idea to investigate local and state regulations concerning road signage. Some of the information you should include on your sign includes:

  • Location
  • Business hours
  • Special promotions
  • Other attractions

In addition to containing information, your sign should "catch" the attention of motorists. The sign should be designed to attract the attention of passing motorists by using high contrast and large letters in combination with bright, easy-to-read colors (e.g., yellow writing on a navy blue background). However, the sign needs to be easy to read, as motorists will typically be passing by the sign at speeds of 30 mph or more.

Table 4 presents a guideline for creating a sign given various traveling speeds

Table 4. Example Distances and Words Read at Various Speeds with Recommended Letter Height and Widths
Distance (Ft) Letter Width (In) Letter Height (In) Number of Words at Speed
30 Mph 40 Mph 50 Mph 60 Mph
50 3/8 4 2 1 0
100 ¾ 8 5 4 3
200 13/8 7 15 11 8 6





















A number of signs should be placed on busy roadways to ensure customer exposure, as well as to provide directions to the entertainment farming operation. However, the final sign needs to be spaced at a reasonable distance from the entertainment farming operation to allow motorists time to slow down safely to make the turn. The following outlines the distance needed to slow down safely at different speeds:

  • At 30 mph, a car needs 2/10 of a mile to slow down safely.
  • At 40 mph, a car needs 1/4 of a mile to slow down safely.
  • At 50 mph, a car needs 3/10 of a mile to slow down safely.

According to the results of a University of Georgia direct marketing study, there is a significant correlation between the number of roadside signs and revenue. The study concluded that roadside stands with more road signs had higher weekly sales than roadside stands with few road signs. Although the study focused on roadside stand operations, the finding may be applicable to many other types of retail operations.

Collateral Marketing Materials

Logo Development and Trademarking

A logo or trademark should be developed so that it can be registered with the state and cannot be used by another individual or company. Trademarking can be very important, as your logo can be used by other businesses if it is not trademarked. You could lose the right to use your logo if another individual or business applies for your trademark. Additional information pertaining to trademarks is available in Appendix E.

Brochures and/or Flyers

This type of marketing material is commonly referred to as collateral material and is a necessity. Many times the brochure or flyer is all that potential customers have to learn about your product and find your business. The brochure/flyer is a selling tool by which information about your business and its products is relayed to potential consumers. These materials may not have a direct impact, but potential customers may take the material with them and refer to it at a later date. The brochure/flyer can be used as a handout and/or mail piece. This makes the brochure or flyer a very important part of your marketing material. It is important that you convey your product's desired image and its attractions in the brochure or flyer as this may be your business's only exposure to potential customers (e.g., pick your own pumpkin at a working farm and experience a real corn maze).

A general price list can be incorporated into the brochure or flyer. If you develop a brochure, the price list can be a separate insert. A price list insert is suggested if you are ordering a large number of brochures or you expect to have a price change before you deplete your supply of brochures. This will allow you to change prices without having to print new brochures. The brochure or flyer should include a list of activities, products, prices, hours of operation, directions, or any other pertinent business information.

For example, if you are operating an agri-entertainment business (pumpkin patch with a Halloween theme), you might try to display or distribute brochures or flyers in the following locations:

  1. Area supermarkets - bulletin boards
  2. Area convenience stores and gas stations - bulletin boards or taped to the door
  3. Area schools - take a stack of brochures/fliers to the school secretary and see if she will put them in the faculty congregation area
  4. Area preschools - take a stack and leave at the front desk for parents to see and pick up
  5. Try to post and distribute brochures/fliers at Little League sporting events
  6. Identify other activities focused on children and children's activities and post and distribute brochures/fliers. For example, a gymnastics complex, a Karate school, or Sunday school.

Again, think of your target market and try to distribute these materials in locations where potential customers frequent.

Business Stationery

Stationery should be purchased using the company logo. Using company stationery in written correspondence portrays a professional image and an official organization. The stationery can also be used to send out news releases and official notices. The logo should be on everything associated with the business such as brochures, invoices, signs, stationery, business cards, displays, etc. These items can be referred to as your business stationery system and they must be consistent in the image they send to customers. For example, Starbucks has been diligent in the application of its identity. All visual communication (napkins, coffee bags, storefronts, tabletop promotions, etc.) used by Starbucks is consistent in the message it projects.

Mailing Lists

Mailing lists are a very important part of direct marketing. Start a registration book to collect basic information (customer's name, address, city, state, ZIP code, and telephone number). As you fill orders to ship to consumers, it is necessary to collect basic information. In order to ship the product, you will need to capture the consumer's name, address, state, city, ZIP code, and telephone number. By collecting and saving customer information, you can gradually compile an extensive mailing list/database of consumers. This customer database can then be used to generate future sales by periodically reminding consumers about your products or sending them information describing new products via advertising flyers, brochures, and price lists.

Another use for capturing and saving customer information is in identifying potential consumers. The information that can be captured and entered into a database can be used in generating a customer profile, a demographic description of your target market. A customer profile can provide an accurate picture of your customer. Customer profiling information can help identify areas where potential customers reside. There is a theory that "birds of a feather flock together." Therefore, people residing in the same ZIP or postal codes generally share similar demographics. By profiling customers via information captured from shipping products, it is possible to estimate.

Marketing Budget

A marketing budget is a necessity. After a creative marketing plan has been developed, money is required to effectively implement the marketing plan. Money must be allocated from the operating budget to cover marketing expenses (e.g., advertising and promotional material, market research, marketing consultants, market development, and marketing personnel). The marketing budget should include the cost for all of the advertising and promotional media that will be used, travel and expenses, the cost of collecting additional research data, monitoring trends and shifts in the marketplace, developing collateral marketing material, and all other marketing-related expenses.

The marketing budget should be developed at the beginning of the year. For the existing business, a good place to start is using the past year's expenses. Additional marketing costs can then be included based on any new marketing or promotional strategies to be implemented in the upcoming year. However, for a new business, marketing costs will have to be estimated based on the upcoming year's marketing plan. The marketing budget costs should not be carved in stone but should be used as a guide and modified according to the pumpkin patch's marketing needs and projected income during the year. A rule of thumb would be 5-10% of expected annual sales or a specified set minimum. Remember that the marketing budget is a tool to help you plan and finance marketing activities. It may be important to increase or decrease your marketing budget as your marketing needs change. For example, next year you may plan to advertise on two radio stations instead of one, thus increasing your marketing expenses by 10%.

Table 5. Sample Marketing Budget
Transfers(Marketing Budget):
5% of expected sales $9,500
Expenses Cost
Local Newspaper Advertisement $200.00
Food Magazine Advertisement $500.00
Association Membership $500.00
Brochures (printing) $600.00
Stationary (printing) $50.00
Business Cards (printing) $100.00
Samples $100.00
Postage $400.00
Other $50.00

Simple Marketing Checklist

Source: Center for Agribusiness and Economic Development

IV. Market Plan Checklist

The marketing checklist is to provide a simple means of tracking the company's marketing activities and to establish marketing goals. Lee Iacocca said it best: "The discipline of writing things down is the first step toward achieving them." The checklist should be used to record which marketing activities the company intends to pursue and to track the progress in meeting its marketing goals. For example, the company may set a goal of placing its products in two mail-order catalogs over the next year. The goals would then be written and would include what part of the activity is to be pursued, as only portions of each activity might be of interest.

Let's use Tar Heel Hot Sauce as an example. Tar Heel Hot Sauce may set a goal of placing its products in two gourmet mail-order catalogs featuring hot sauce products over the next year. In the space provided for goals, Tar Heel Hot Sauce should include what part of the activity it intends to pursue, as only portions of each activity might be of interest. The following is not intended to be an exhaustive listing for a business's marketing process; however, it does provide a guideline.

The following checklist example was completed for Tar Heel Hot Sauce.

  • Develop a company and product name.
    • Goal: Research and develop a name. Check company and product registration to make sure that the name is not taken and that the name can be reserved. Register the name with the North Carolina Secretary of State.
    • Was the goal accomplished? O Yes O No X Partially
    • What needs to be accomplished? Need to register the name with the Secretary of State.
  • Develop a marketing budget.
    • Was the goal accomplished? X Yes O No O Partially
    • What needs to be accomplished?
  • Develop business stationary systems (brochures, invoices, signs, stationery, business cards, displays, etc.).
    • Goal: Need to develop business material. Need to obtain product photographs for the brochure and website. Need to develop a company logo to incorporate into all business materials and labels.
    • Was the goal accomplished? O Yes X No O Partially
    • What needs to be accomplished? Need to meet with a graphic artist to design a logo.
  • Develop a list of media you would like to contact during the next year. The list should include local, regional, national, and international media directed toward potential consumers. This would include news lead sources, newspapers, magazines, radio stations, and television stations.
    • Goal: Investigate local print media. Determine what media exist and who they target. Investigate radio stations servicing the area. Determine what audience the radio stations serve. Identify contact with each media outlet for future advertising and promotional activities. Investigate local television shows that focus on the area. Morning shows highlight area businesses in special segments, i.e., cooking segment. Contact the local cable provider to determine the feasibility of local advertising.
    • Was the goal accomplished? O Yes O No X Partially
    • What needs to be accomplished? Need to contact local television stations to identify cooking segment contacts.
    • Explore promotional activities — see about giving Tar Heel hot sauce away as part of radio stations' call-in promotions. Obtain a list of food editors in the area.
  • Develop a list of key people who will be provided product samples at appropriate occasions.
    • Goal: Compile a detailed list of food editors and store buyers.
    • Was the goal accomplished? X Yes O No O Partially
    • What needs to be accomplished?
  • Develop a list of trade shows you plan to attend.
    • Goal: Investigate the specialty food industry to identify specialty food shows in the Southeast. Determine when the shows start, cost of obtaining a booth, how to register, and the types of attendees the shows generally draw. Talk to other specialty food businesses and ask their opinion of each show. Develop a shortlist of shows that Tar Heel will attend.
    • Was the goal accomplished? O Yes O No X Partially
    • What needs to be accomplished? Have developed a list of southeastern trade shows. Have not contacted other specialty food businesses to determine which shows are viable and which are not.
  • Develop a list of specialty and gourmet shops you plan to call on during the next year.
    • Goal: Drive around and call area Chambers of Commerce to identify specialty shops that may be willing to carry Tar Heel Hot Sauces. Contact the North Carolina Specialty Food Association and ask for a list of specialty food shops. Contact the Center for Agribusiness and Economic Development to see if they have a list of specialty food stores.
    • Was the goal accomplished? X Yes O No O Partially
    • What needs to be accomplished?
  • Develop a list of mail-order catalogs you plan to contact during the next year.
    • Goal: Identify all mail-order catalogs that market specialty foods. Contact each catalog to see who they target, see if they would consider a new hot sauce product, and determine how to get products included in the catalog.
    • Was the goal accomplished? O Yes O No X Partially
    • What needs to be accomplished? Have developed a list of mail-order catalogs, have not contacted any of them about getting Tar Heel Hot Sauce included.
  • Develop a list of gift basket companies you want to contact during the next year.
    • Goal: Tar Heel has identified and contacted five gift basket companies.
    • Was the goal accomplished? X Yes O No O Partially
    • What needs to be accomplished?
  • Develop Tar Heel's website and update it regularly.
    • Goal: Find a web developer and develop a functional website. The website will promote products as well as allow customers to purchase products online. Need to contact five web developers. Have each developer submit a bid for the website and make a selection. Have the website up by the end of the calendar year.
    • Was the goal accomplished? O Yes O No X Partially
    • What needs to be accomplished? Have not found a web developer.
  • Start compiling a mailing list, including both businesses and consumers. A good place to start is with current customers. Keep names and contact information for anyone or any business who orders a product through the mail, catalogs, telephone, or website.
    • Goal: Develop a working mailing list. Want to develop a spreadsheet to track who is buying what and how often. Will use this to market new products and promote existing products.
    • Was the goal accomplished? X Yes O No O Partially
    • What needs to be accomplished?
  • Develop a list of specialty food brokers you want to contact during the next year.
    • Goal: Identify five specialty food brokers. Select a broker to carry Tar Heel Hot Sauces.
    • Was the goal accomplished? X Yes O No O Partially
    • What needs to be accomplished?

This simple checklist provides a means of developing marketing strategies, recording them, and tracking their implementation. It is important to set goals, work toward them, and successfully complete them. Remember, as an entrepreneur, it is up to you to successfully market your products and services. You have to be your company's cheerleader.

Developing Paid Advertisements

Paid advertisements for your agritourism enterprise should be developed to reach your target audience and designed around your enterprise's positioning statement. Advertising is effective only if the message reaches your target audience and registers with them.

Paid advertisements, like all other promotional materials, should portray a consistent image for your enterprise. The development and use of an appealing business name and an attractive logo will help to build awareness and recognition of your enterprise and to create consistency in marketing efforts. A graphic artist could assist you in the development of your logo. You may choose to trademark the logo so that it cannot be used by other businesses.

Preparations for paid advertising should begin at least two months prior to the time when the advertisements will be run. This includes contacting media for costs and scheduling information. If you plan to outsource the development of the advertisements, more time will be needed. If possible, advertisements should be developed by the same source to maintain consistency.

Consider this six-point advertising strategy when developing paid advertisements. This strategy will assist in creating a focused and comprehensive advertisement that will effectively communicate needed information to potential customers.

SixPoint Advertising Strategy1

  1. Primary Purpose—What results do you expect from the ad? Why are you advertising?
  2. Primary Benefit—What unique benefit can we offer customers? What customer value or need can my enterprise meet?
  3. Secondary Benefit — What other key benefits will customers receive from our products or services?
  4. Target Audience—To whom (what target audience) are we aiming for this advertisement?
  5. Audience Reaction—What response do we want from our audience (e.g., coming to the operation, visiting a Web site, calling an information line)?
  6. Company Personality — What image do we want to convey in our advertisements?

Once an advertisement has been developed, make sure to double-check it for grammar and spelling errors. You may choose to test your advertisements with a small group of customers to determine whether they have the desired effect.

1Adapted from: Marchall, Maria 1.The Marketing Mix: Putting the Pieces Together. Purdue University. July 15, 2004.

Brochure Development

Brochures can be effective paid­ advertising tools for agritourism enterprises, depending on the target audience. They can be used as rack cards in visitor centers, chambers of commerce or other businesses; distributed personally at speaking engagements; or used as direct mail pieces. Brochure design is critical to catching the attention of potential customers. Effective brochures will present pertinent information in an organized and easily understood format.

Catching Attention

The top one-third of the front cover should contain your business name and logo. For rack cards, the back cover should also include the business name and logo on the top one-third, in case the cards get turned backwards.

Photographs really are worth a thousand words. Using them on the cover and throughout a brochure helps in catching and holding attention. Photos should be of good quality, honestly depict your products and/or services, be current, and include people when possible.

Paper weight and quality are important. Brochures need to stand up in racks or withstand mailing. A brochure size of 4 inches by 9 inches fits in racks, can be mailed easily and is easy for customers to carry.


The design should be appealing to the eye and easy to read. Color of paper, text and pictures should be attractive to your target audience. Although bright, neon colors are attention grabbers, these colors can make brochures very difficult to read.

Typeface and font size are also important. Text should be in at least 12-point type. If your target market includes senior citizens, your font size should be even larger. The type should be clear and easy to read. Serif typefaces are considered more legible in blocks of text than are sans serif typefaces.



Information to include

Top 1/3 front

  • Business name and logo
  • City, state

Middle front

  • Days/hours of operation
  • Picture
  • Keywords, phrases or short text to describe activities, producers, services

Bottom front

Contact information

  • Business name
  • Mailing and street address
  • Phone and fax
  • E-mail and Web site

Top 1/3 Back

  • For rack cards: same as top 1/3 front


  • Map and directions with easiest route

Bottom back

  • Contact information
  • Month and year printed (To avoid confusion with reprints)
  • Alternative back
  • Mailing panel with logo and return address "To:"

The brochure may also contain other information if space is available, such as in a tri-fold brochure. This may include

  • More detailed information about products and services
  • Information about your family or operation history
  • Price lists

Planning a Successful Direct Mail Campaign

4Direct mail can be an effective way to target a specific group of customers with advertising flyers, brochures, postcards, specials, price lists and countless other types of promotional materials. As with all promotional strategies, careful planning and implementation are important.

Although a number of factors are critical to implementing a successful direct mail campaign, the single most critical factor is having an accurate and well-targeted mailing list. One simple and inexpensive way to generate a mailing list is to collect basic information from customers (name, address, city, state, zip code, telephone number and e-mail address). You may be able to do this by using a guest book or by assigning an employee to collect information from visitors as they enter or exit your enterprise.

Other methods to obtain mailing lists do exist but are much less effective and often more expensive than developing your own list from customers. Mailing lists can be obtained through list brokers, organization membership lists, news articles, magazines, trade lists and show exhibitor lists. You may also be able to work with your post office to deliver a mailing to each residence in a specified area. Be careful to choose a method that will allow you to reach your target audience. Response rates for residential mailings are often only one in 1,000, while responses to a target-customer list may be more than three per 100.5

Besides the careful compilation or selection of a mailing list, a number of other factors can significantly impact the success of your direct mail campaign. The basic elements6 to consider are

  • The product and/or service offer
  • Presentation of the offer
  • Envelope considerations
  • Mailing considerations

Product and/or service offer. The focus of the mailing should be a product/service offer that must somehow appeal to potential consumers and entice them to visit your operation. The offer must convince them that you can provide a benefit they want and/or need.

Presentation of the offer. The presentation of the offer is critical to a successful mailing campaign since the recipient is not able to

evaluate the product in the traditional manner (i.e., taste, touch, see or smell the product). Therefore, the presentation of your company and product/service is critical to build the customer's perception of your enterprise. The material should emphasize product and/or service benefits, be presented in a professional manner and clearly written so your potential customer can easily and fully understand your offer. Pictures of people enjoying activities at your enterprise are an effective way to help in the presentation of your offer.

Envelope considerations. The envelope (or outside of the direct mail piece if no envelope is used) should look professional and avoid the appearance of junk mail to decrease the chances of having your mail tossed out unopened. Although the envelope should not look like junk mail, it should create some level of curiosity. If recipients are curious about the contents of the envelope, you increase the chances of them opening it. Hand writing the address on the envelope may arouse recipient curiosity.

Mailing considerations. First-class mail is less likely to be perceived as junk mail and is more reliable than bulk mail.

4Adapted from Wolfe, Kent. Planning aSuccessful Direct Mail Campaign. University of Tennessee Extension Center for Profitable Agriculture publication ADC Info #44. March 2000.

5 Attard, Janet. Using Direct Mail to Build Business. July 19, 2004.

6 Adapted from WGSC Publications. Direct Mail Works Like Magic. Phone: {909} 924-8831, FAX: (909} 924-8431

Coloring Your Marketing Message

Color choice is an important consideration in developing marketing materials. Colors have a psychological effect on people and can be used to your advantage (or disadvantage). Consumer studies have found that some colors affect males and females differently. This may be related to the visibility of the color, the retention of the color, the preference for the color and the feelings associated with the color. For your marketing materials, choose colors with high visibility, retention, preference and positive associations your target audience, if possible. Reactions to basic colors by gender are described in the following table.

Reactions by Consumer Gender to Basic Colors 1
Color ConsumerGender Visibility Retention Preference Association
Blue Female Low Low Low Depressing, Business-Like, Leadership
Blue Male Low Low High Reliable, Intelligent, Secure
Pink Female Low Low High Therapeutic, Feminine
Pink Male Low Low Low Calm, Relaxing, Feminine
Black Male and Female Low Low High Male= Rich Female=Sensuous
White Male and Female High Low Low Pure, Clean
Red Male and Female High High High Male= Danger, Bargain, ExcitementFemale= Warm, Intimate
Yellow Male and Female High High Low Sun, Outdoors
Brown Male and Female Low Low High Rich, Earthy
Green Male and Female Low Low Low Money,Leisure
Gray Male and Female Low Low High Security
Orange Male and Female High High Low Healthful, Warm

1Adapted from Bill Gallagher, "Winning Colors and Shapes for Your Company," June 10, 1996.

Media Relations and Publicity

1The media, particularly local media, can be a friend to agritourism entrepreneurs. Newspapers, television programs and radio spots can help publicize special events, new products and awards. Through coverage of special activities or exceptional employees, the media can also raise public awareness of services or products or of the enterprise's community-minded goals. For the plugged-in public, media Web sites can be vital links for news and information about an organization and its products and services.


The trick to getting publicity or media coverage is to match your organization's needs to those of each of your chosen media outlets. Here are seven tips to help you determine how your organization can best use the media.

  1. Determine your organization's needs. For most businesses, the need for publicity will fall into one of four categories:
    • Announcement of a special event or new product.
    • Article about an award (for the organization or an employee).
    • Feature article about something associated with the business and also related to the community. Examples might include autumn events, school projects or holiday-specific products. A feature about something unique going on with the business like a new product line or a building expansion may also be of interest.
    • News. Whether an item is news is best determined by the media outlet. Small businesses should submit a news item as an idea for a feature story.The news outlet will determine the best usage for their audience. If they really think your item is newsworthy, they will contact you or send a reporter. Newsworthy stories have a demonstrable impact on the target audience. For example, a 50-percent-off sale is not news. Businesses have sales all the time. News would include an event where you donate your profits to disaster victims.
  2. Identify which media outlets suit your needs and will value your information.
    • It is best to research your chosen media outlets. Does the newspaper have a special section that lists meeting announcements or specialize in community-related articles? Does the TV or radio station run business announcements on a daily or weekly basis, say between their weather and sports segments? How far in advance of the event do you need to submit information?The research method is simple: read, watch, listen, and scan websites.
    • Submit routine items (announcements and in­ formation regarding awards or special events) by the methods described in the newspaper or magazine or outlined on the outlet's Web site. Often, these submission procedures involve sending an e-mail or filling in a form available on the Website. List events in the calendars featured on local radio stations (usually public stations), TV news shows that list community activities, local cable access TV and newsletters of other similar organizations in the community. Such entries are generally free of charge, except for your personnel time involved. Keep a record of calendars used for future reference.

    • If your organization or employee has won a significant award, consider informing the local media in advance of when the award will be conferred. They may choose to send a reporter to cover the event if it's local.

      1Contributed by Patricia Clark McDaniels, The University of Tennessee Institute of Agriculture, Marketing and Communications Services.

      The author recognizes the contributions of her colleague Charles Walker, who is well known to the UT Extension community as a retired member of the Marketing and Communications Services news and information team. Charles authored the original version of the publicity portion of this manuscript. His original work has appeared in many forms in various UT Extension publications, particularly the Master Gardener Handbook. Chuck Denney, a producer with UTJA Marketing and Communications Services, also provided valuable Input.

Website Development

Why Develop A Website?

  • A website is a powerful and effective marketing tool for advertising your business and sharing information
  • It provides colorful interactive presentations and material, describing your products and/or services
  • Local and international markets can be reached 24 hours a day, 365 days a year
  • It is a cost-effective form of advertising
  • Almost limitless to the amount of information that can be displayed on a website
  • Information is easily updated
  • Allows customers to pre-shop

What to have on the Website

There are four major components a website should contain:

  1. Domain Name—The domain name is the name of your website. For example,
  2. Site Map—The site map is a "road map" of how your site is set up. It shows the navigation of the site and where different elements are located on the website.
  3. Look and Feel—The look and feel of your website is the design aspect of your website. How do you want it to look? What colors do you want to use? What kind of images do you want displayed? These are the types of questions to ask yourself when thinking about building a website.
  4. Content—Many websites have a history about their business, the people who run the business, and what they offer ("About Us"). For example, if your business has been family-owned for 3 generations, talk about it. A list of your products and/or services ("Our Products"), with detailed descriptions (pictures are always helpful). Contact information ("Contact Us") is crucial. Include all contact information that you have, including address, phone, fax, and e-mail.

Other components of a website:

  • Logos: Do you have a logo or something that is used on your business stationery or envelopes? Family crest? If so, make sure they are displayed throughout the website.
  • Links: Are there some links you feel [ would give your customers more information or that they may be interested in?
  • "What's New" Page: This could be upcoming activities or events taking place at your business including dates, times and locations.
  • "In the News" Page: If your business has been in the paper or a magazine with good comments, add it to your website so that your customers and guests can read about what others have to say.
  • "FAQ" (Frequently Asked Questions) Page: If you get a lot of e-mails and letters asking questions about your business, display the questions on the website so that your customers and guests can learn more.
  • "Feedback" Page: It's always nice to get good reviews from your visitors. Take advantage of the opportunity and show the positive feedback to others.

These are just a few suggestions, but the possibilities are endless when it comes to websites. If you are thinking about developing a website, here are some things to think about:

  • Search the Internet and look through other websites
  • Start to think about how you want yours to look and feel
  • Make sure the information is easy to find

Tips for Building Marketing and Community Partnerships

Establishing relationships and cooperative alliances with your community is a key element of long-term success.

  1. Speak about your project early with neighbors, family, and local businesses. Share your ideas. Listen to their concerns and feedback. Address any problems early in the development of the project.
  2. Develop a comfortable level of public presentation. Have a clear focus of your mission and expected outcomes. Don't let yourself become overburdened by the administrative aspects, the mies and procedures of your project. Keep your eye on the outcomes.
  3. Speak about your project at service clubs, association meetings, and other gatherings. Get feedback, modify your presentation. Join the local Chamber. Offer to write a regular column for your local newspaper.
  4. See your shortcomings or weaknesses as future partnerships. Inventory your community and seek out those who have what you need to complete your goals. Return the favor.
  5. Define who shares potential customers with you. Align yourself with other businesses, attractions and openly discuss potential customers, Develop exchange promotions and track where your leads come from.
  6. Be innovative. The greatest achievements happen outside the "system." Don't break laws or burn bridges, just be creative.
  7. Local ordinances-like your mother, government listens to commitments, not complaints. And so do your neighbors. If you cannot turn a negative situation into a positive passion, don't.go there. Work through compliance issues as required by law and in the spirit of cooperation with surrounding properties and interests.
  8. Engage any adversaries. Most simply want to be heard or are afraid of the unknown impacts. Sit down one-on-one and listen. Address the concerns, don't whitewash over them.
  9. Keep your business plan and marketing plan in the daylight. Make them work for you. If they aren't, then change them. Use them to support your actions and efforts.
  10. Work to foster a sense of community and personal responsibility among citizens.
  11. Manage physical growth of your operation to ensure quality of life for all citizens affected.
  12. Work with other businesses to encourage small town character and support of locally-owned businesses.
  13. Build on the agricultural, timber and other resource-based assets in the area.
  14. Maintain and enhance historic structures.

Top Marketing Ideas for Agritourism Operations

Adapted from a fact sheet written by Mike Wetter

  1. Happy customers are the most important key to success. Customer service is the most critical element. The level of. customer service will determine repeat visits and "word-of-mouth') advertising. Learn their names. Remember what they like and have it ready for them. Keep a database if you can't keep it all in your head. The little touches make all the difference.
  2. Develop a mailing list. Get names from outdoor magazines, associations, ODFW and other sources of people that like outdoor activities. Your mailing list is your most important asset. Mail to your customers at least twice a year,
  3. People don't come to hunt or fish or ride a horse or tractor. They come to have fun and relax. You are in the hospitality business -take care of your customers and you will succeed. Always ask your customers what they liked about their stay and what could be improved.
  4. Cater to as "high-end" a customer as you can and don't be afraid to charge for your service. This is not a volume business, so you can't go Jaw-end and make money. If you target people with money and charge more for your service, people will expect more from you. You don't have to be upscale, but you do need to offer a quality experience.
  5. Take care of the details. Make sure that your telephone is answered professionally ("Anderson Ranch" rather than "heIIo'). Your answering machine should have a professional message. Return caIIs promptly.
  6. Let your neighbors know about you. Join the Chamber of Commerce, talk to gas station owners, cafes, Elk dubs, motels, and neighboring farms. Give people your brochure and make sure that people in your area know about you. Start close to home at first and move out gradually. It is much less expensive to attract a client from Pmiland, Boise, or Seattle than from Japan or Germany. Get listed in the Complete Guide to Ranching Vacations in North America ((916) 583-6926).
  7. Send information about your company to magazines and newspapers. Send them news releases and story ideas. Invite them out for a free stay. Follow mailings with personal calls. Think of things that will interest them. The Oregon Tourism Commission has a media guide, available for $6, which will provide ideas for how to work with the press. Call (503) 986-0000 to order a copy.
  8. Obtain brochures and literature from other operations that are similar to yours. See what they are offering and what it costs. Look at their brochures to see what you like and don't like. Improve your materials accordingly. Get addresses and phone numbers of operations from outdoor recreation magazines. Owners are generally willing to give you a half-hour of free advice. Call them and tell them you are just starting out and ask if you can have a few minutes of their time to ask some questions.
  9. Put signs on your property that are visible from the road. Make sure people can find you and have a way to contact you. Call the Travel Information Council about signage on state and federal highways at (503) 373-1042
  10. Produce quality brochures and PR materials. On brochures, less is more. Don't clutter it with lots of words. Use photos. Hire a graphic artist or get lots of feedback from other business people before you go to print. Don1t use a photocopier. Color is costlier than a black and white brochure, but it shows a commitment to quality and attracts a lot more attention. Another option which may be more useful than brochures are websites. More and more people are using websites to plan vacations and get information. Discuss the importance of developing and maintaining a dynamic website.

Section 5: Legal Rules and Regulations

Skip to Section 5: Legal Rules and Regulations

Nearly all marketing activities are affected by federal, state, county, and city ordinances, rules, or regulations. They are simply a fact of life. In view of the current public interest for a safe-quality environment, it is just good business to be aware of regulatory necessities and to show good faith in attempting to comply with them.

Because each direct marketing enterprise is different, and because regulations vary from location to location, it is impossible to provide a complete list of regulations that will apply everywhere all the time. However, it is possible to provide a generalized list of common laws and regulations that direct marketing operators work within the process of operating their businesses.

A few general rules that almost always apply in any situation:

  1. Always check with local, state, and federal authorities before trying to market any product, especially food items. Food items are almost always carefully regulated.
  2. Check with the officials before you start so that there are no unpleasant surprises down the road. Make yourself knowledgeable about rules and regulations far enough in advance to allow adequate time to comply with them.
  3. Rules and regulations are constantly changing, so communicate regularly with local and state officers. Keep abreast of changes.
  4. Make government inspectors your allies rather than your adversaries. They will often give you valuable free advice on many aspects of your operation. If you are constructing a building, for example, your consultations with inspectors will ensure that what you are building is something they will approve.
  5. Nearly all regulations add time, effort and cost to your marketing operations. These can have an undesirable effect on your ability to do business. If you feel that certain legal requirements are extraneous or detrimental, bring this to the attention of the proper authorities and work with them to resolve the situation. You may be able to obtain a waiver in certain situations.
  6. Remember that safety is always of paramount importance. You can improve the opportunity for success if you will 1) make your enterprise as safe as possible for clientele and 2) carry adequate insurance for the size and type of your operation.

In case you are inspected:

When you are inspected, accompany the inspector while he/ she is walking around your property.

  1. Ask questions and seek advice and assistance in meeting any regulations that apply to your business.
  2. Ask for a business card. It is important to know how to contact the inspector for follow­ up purposes. You may need to obtain copies of regulations, clarify a specific situation with an inspector, or speak with someone else in the agency.
  3. In case of violations or citations, find out completely as to why you are being cited. Read the regulation so that you understand it thoroughly and how it applies to your situation. If the warning is obviously justified, communicate to the officer that you understand and will comply. If you feel you are being wrongly cited, talk to the enforcement officer.
  4. If there is still disagreement, follow up with the appropriate agency and ask for help from their representatives. The next step is to go to your board of supervisors and try to work the problem out. As a last resort, call or write your elected state senator or representative. He or she may be looking for a case, and all of them are sensitive to public opinion, especially when a bill is coming up for a vote.
  5. In all cases, be polite but persistent. Agency representatives have regulations they have to abide by. If we get angry or overbearing with them, our attempts at working through difficulties can have an adverse outcome.

Zoning and Health Considerations in Agritourism

Agritourism businesses are subject to zoning and other regulations related to individual and environmental health. Such regulations are determined and enforced by federal, state, county, and/or municipal governments. Regulations can vary greatly by region, and it's important to be aware of and comply with regulations related to operating an agritourism business.

Zoning Considerations

Zoning is "the division of a city or county by legislative regulations into areas (zones), specifying the uses allowable for the property in these areas." Zoning ordinances can often be seen as a hurdle for beginning agritourism businesses. One survey found 13 of agritourism businesses surveyed had difficulties with zoning (University of Tennessee Extension 2005), and an online survey found that more than 50 had difficulties (Eckert 2007). Ordinances may prohibit particular commercial activities or require that specific facilities and/or structures be present. In some regions, ordinances have been altered to be more accommodating for farms involved in agritourism.

Zoning ordinances are generally handled by county or municipal governments. You can contact these entities (see backside) to determine which ordinances may be in place in your area. The nature of zoning ordinances and the ability to obtain zoning variances will vary greatly with each locality. For a discussion of zoning and home-based businesses visit Entrepreneur online.

Examples of Zoning Ordinances:

  • Limiting or prohibiting specific commercial recreational activities in an area
  • Requiring flush toilets and other facilities for sanitation
  • Prohibiting attractions, restaurants, or bed and breakfasts in certain areas
  • Regulating location and size of structures

Health Considerations

Like zoning, there are legislative regulations in place aimed at protecting the health of both individuals and the environment. Health regulations will vary from place to place, but generally your county/local health department will handle these. Food preparation and safety, and waste disposal regulations, are often especially important considerations. Licenses and permits are generally required. Your County/ Local Extension Agent should be able to provide the necessary information.

Examples of Health Regulations:

  • Limiting the number of visitors allowed on a "home stay'' farm or ranch
  • Requiring one or more persons involved with food preparation or handling to obtain food handlers' permits or certificates
  • Requiring certain types of equipment needed for food storage
  • Requiring a certain amount of drinking water be available for visitors and placing requirements on water quality
  • Enforcing specific requirements for septic systems and sewage disposal

The Bottom Line

Due to the variability of zoning and health regulations, it is important to check with local, county, state, and federal governments and other organizations to identify which regulations may apply to your agritourism business. Useful agencies to contact include:

  • Chambers of Commerce

  • Secretary of State's Office

  • County/Municipal Health Departments

  • Tax Commission or Department

  • County/University Extension Offices

  • U.S. Department of Agriculture

  • Zoning or Planning Boards

  • Agritourism Organizations and Cooperatives

  • Economic Development Offices

  • Tourism or Visitors' Bureaus

  • State Farm Bureau

  • Federations State Agencies or Departments of Health/Agriculture

References and Sources for Further Information


Adapted from Agritourism on Focus: A Guide for Tennessee Farmers

Disclaimer: The information contained in this chapter is deemed correct and information utilized at the time of their review. Not all regulations governing agritourism

enterprises are discussed, however. This chapter is for educational purposes only and is not an interpretation of any laws.

Agritourism enterprises may be affected by a wide variety of regulations depending upon the type of attractions offered, location of the enterprise, whether employees are hired and a number of other actors specific to each enterprise. These regulations may be imposed at the federal, state and local levels of government. It is important to investigate all regulations applicable to your agritourism enterprise in order to avoid penalties, fines, or interruptions to your business.

This section provides an introduction to a number of regulations that may impact agritourism operations. Regulations discussed here have been organized into three categories:

  1. General regulations – regulations that likely impact a majority of agritourism enterprises
  2. Employment regulations – regulations that impact enterprises employing personnel
  3. Permits and licenses for specific attractions – regulations specific to certain types of attractions

General Regulations

Nearly all agritourism entrepreneurs must comply with several general regulations, which include, but are not limited to, zoning ordinances, business licenses, sales tax collection and remittance, and the Americans with Disabilities Act.


Zoning ordinances may dictate

  • The location, height and size of buildings and other structures
  • The percentage of a lot which may be occupied
  • The size of yards, courts and other open spaces
  • The density and distribution of population
  • The uses of buildings and structures for trade, industry, residence, recreation or other purposes
  • Use of land for trade, industry, residence, recreation, agriculture, forest1y, soil conservation, water supply conservation or other purposes
  • Regulations for signage and parking

A 2003 survey of 210 agritourism entrepreneurs found that 27 operators (12.8 percent) had at least "some difficulty" with zoning for their enterprises. The addition of structures, increased traffic, type of activities offered, length of season, operating hours and feelings of neighbors may all be impacted by zoning regulations.

Some areas in the United States are amending agricultural zoning ordinances to allow some value-added agricultural activities, including agritourism.2 The ordinances may specify requirements for access from various road types, parking area surfaces, or bus parking. Special—or temporary-use permits are used in some areas to authorize agritourism activities.

Traditional farm operations are typically zoned specifically for agriculture. While agritourism retains some characteristics of agriculture, it may go beyond what are thought to be traditional production agriculture activities.

You should consult the appropriate zoning authority for your location before investing in an agritourism operation or adding additional activities to an existing one. If your plans are not consistent with current rules, you may need to seek a change in zoning status for your land or a portion of your land.

Sales and Use Taxes

Sales and use taxes are imposed by state government and often by county and city governments. Sales and nse taxes are imposed on the retail sale, lease or rental of tangible personal property, the gross charge for specified taxable services and the gross sales for amusements. Although the tax is imposed on the purchaser, the seller is liable for collecting and remitting the taxes.

Your agritourism enterprise may be responsible for sales and use taxes depending upon the types of activities and services sold. You may, however, benefit from sales tax exemptions for the sale of farm products grown or produced on the operation. Some generic agritourism circumstances and corresponding sales and use tax liability are described below.

Americans with Disabilities Act

All businesses are required to comply with the Americans with Disabilities Act (ADA). The ADA ensures equal opportunity in employment as well as accommodation in public places, commercial facilities and transportation for persons with disabilities.

Title I of the ADA prohibits discrimination against persons with disabilities in employment by businesses having 15 or more employees or by state and local governments.13 Title I, with respect to private employers, is enforced by the Equal Employment Opportunity Commission (EEOC). For employment issues related to the ADA, contact the Equal Employment Opportunity Commission at (800) 669-4000.

Title III of the ADA prohibits discrimination against persons with disabilities in commercial facilities and places of public accommodation.14 Commercial facilities include office buildings, factories and warehouses. A place of public accommodation is a facility whose operations affect commerce and fall within at least one of the following categories:

  • Place of lodging
  • Establishment serving food or drink
  • Place of exhibition or entertainment
  • Place of public gathering
  • Sales or rental establishment
  • Service establishment
  • Public transportation terminal, depot, or station
  • Place of public display or collection
  • Place of recreation
  • Place of education
  • Social service center establishment
  • Place of exercise or recreation

Public accommodations and commercial facilities must

  • Provide goods and services in an integrated setting, unless separate or different measures are necessary to ensure equal opportunity
  • Eliminate unnecessary rules that deny individuals with disabilities an equal opportunity to enjoy the goods and services of a place of public accommodation
  • Make reasonable modifications in policies, practices and procedures that deny equal access to individuals with disabilities, unless a fundamental alteration would result in a change to the nature of the goods and services provided
  • Ensure effective communication through the use of auxiliary aids and services when necessary, unless an undue burden or fundamental alteration would result
  • Remove architectural and structural communication barriers in existing facilities where readily achievable
  • Provide goods and services through alternative measures when removal of barriers is not readily achievable

When private owners of places of public accommodations or commercial facilities design and construct new facilities or alter existing facilities, they must comply with the ADA Standards for Accessible Design, a handbook is available online.

Title III is enforced by the U.S. Department of Justice. More information may be obtained from the ADA Website or by calling the Department of Justice ADA Information Line toll-free at (800) 514-0301, voice, or (800) 514-0383, TDD.

Employment Regulations

If you employ personnel for your agritourism enterprise, you will be affected by several employment regulations. These employment regulations vary according to the type and size of your enterprise, the nature of an employee's job and the number of employees you employ.

The Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) of 1938, as amended, establishes standards for minimum wage, overtime compensation, equal pay, child labor and certain mandatory record keeping affecting your full­ and part-time workers.

Minimum wage rates are set by the U.S. Congress and are periodically adjusted by statute. As of May 2005, the minimum wage rate is $5.15 per hour.

Overtime pay is set at a rate of not less than one and one-half times the regular rate of pay. Overtime pay is required after an employee works 40 hours during a calendar workweek.

Specific provisions apply to agricultural operations. Employees who are employed in "agriculture" are exempt from overtime pay provisions. The FLSA17 defines "agriculture" as farming in all of its branches, including:

Cultivation and tillage of the soil

  • Dairying
  • Production, cultivation, growing and harvesting of any agricultural or horticultural commodities
  • Raising of livestock, bees, furbearing animals or poultry
  • Any practices (including any forestry or lumbering operations) performed by a farmer or on a farm as an incident to or in conjunction with such farming operations including preparation for market, delivery to storage or to market or to carriers for transportation to market

"Agriculture" does not include work performed on a farm that is not incidental to or in conjunction with the farmer's agricultural operation.

"Agriculture" also does not include operations performed off a farm if performed by employees employed by someone other than the farmer whose agricultural products are the basis of the work. Any employee who falls under these two sets of circumstances must be paid overtime when the proper conditions are met.

Equal pay requirements prohibit differences in wages based on gender. Men and women employed in the same establishment, doing jobs that require equal skill, effort and responsibility and which are performed under similar working conditions must be paid similar wages.

Records should be kept on employees' wages, hours worked, and other information (such as age, gender, entrance pay, and job duties) as specified by the Department of Labor record-keeping regulations.

It should be noted that the FLSA does not regulate the following areas (i.e. as the employer, you determine):

  • Vacation, holiday, severance or sick pay
  • Holidays off or vacations
  • Premium pay for weekend or holiday work
  • Pay raises or fringe benefits
Child Labor Act

The Child Labor Act prohibits the employment of minors in certain occupations and, in particular, working conditions that may be hazardous. Child labor regulations differ depending on a youth's work activities and the type of agritourism enterprise providing employment.

  • A minor must have a thirty-minute unpaid break or meal period if scheduled to work six consecutive hours.
  • Breaks cannot be scheduled during or before the first hour of scheduled work activity.
  • Minors 16 and 17 years of age may not be employed
    • During the hours the minor is required to attend classes.
    • Between the hours of 10:00 p.m. and 6:00 a.m. on Sunday through Thursday evenings preceding a school day, except with parental or guardian consent. Even with consent, the minor may work until midnight no more than three nights Sunday through Thursday.
  • Minors 14 and 15 years of age may not be employed
    • During school hours.
    • Between 7:00 p.m. and 7:00 a.m. if the next day is a school day.
    • Between 9:00 p.m. and 6:00 a.m.
    • More than 3 hours a day on school days.
    • More than 18 hours a week during a school week.
    • More than 8 hours a day on non-school days.
    • More than 40 hours a week during non-school weeks.

Note: The U.S. Department of Labor does not allow 14- and 15-year-old minors to work past 7:00 p.m. from Labor Day to June 1.

In farm work, permissible jobs and hours of work, by age, are as follows:

  • Youths 16 years and older may perform any job, whether hazardous or not, for unlimited hours.
  • Youths 14 and 15 years old may perform any non-hazardous farm job outside of school hours.
  • Youths 12 and 13 years old may work outside of school hours in non-hazardous jobs, either with a parent's written consent or on the same farm as the parent(s).
  • Youths under 12 years old may perform jobs on farms owned or operated by parent(s). With a parent's written consent, they may work outside of school hours in non-hazardous jobs on farms not covered by minimum wage requirements.

Minors of any age may be employed by their parents at any time in any occupation on a farm owned or operated by the parents.

Occupational Safety and Health

The Occupational Safety and Health Administration (OSHA) works to ensure a safe and healthy workplace for all citizens, regardless of age. All employers are covered by the provisions of federal and state OSHA regulations. If you employ eleven or more employees, you must maintain records in accordance with OSHA rules.

OSHA requires the employer to

  • Provide a safe working environment
  • Inform employees of safety regulations
  • Warn employees of existing hazards
  • Supervise employee activities
  • Supply and maintain necessary equipment inherent in the workplace Records should be kept on any hazardous materials that may be encountered or used by employees. In addition, records should be maintained on any injuries or illnesses that may have occurred during employment or on the job.
Workers Compensation

If you have five or more full- or part-time employees, you are required to obtain workers' compensation insurance for your employees. This insurance protects a business from lawsuits filed by an injured employee and provides insurance benefits to employees injured while on the job. Family members who work for your agritourism enterprise are considered employees. Businesses are responsible for obtaining coverage from a licensed insurance carrier.

Unemployment Insurance Taxes

Unemployment insurance taxes provide benefits to unemployed workers who have lost their jobs through no fault of their own.

As an employer, you are not liable for unemployment insurance premiums if you are self-employed and also the sole employee, a sole proprietorship without employees, general partners without employees, or general partners in a limited liability company without employees. Wages paid to workers under the H-2A Temporary Agricultural Worker Program are not subject to unemployment insurance since these workers are not eligible for unemployment benefits.

Employers must pay federal unemployment taxes if they pay cash wages totaling $20,000 or more in any calendar quarter to an employee or employees or if, in each of 20 different calendar weeks in the current or preceding calendar year, there was at least one day in which they had 10 or more employees

performing service in agricultural labor. The 20 weeks do not have to be consecutive weeks, nor must they be the same 10 employees, nor must all employees be working at the same time of the day.

Income Tax Withholding

All employers are required by the federal Internal Revenue Code to deduct and withhold taxes on wages paid to their employees. You may need to use either the tax guide for agricultural employers or the tax guide for small business entrepreneurs depending upon whether your employees are involved with the agricultural activities or other activities of your operation. It may be important to contact your personal accountant for more information on these taxes.

The IRS provides The Farmer's Tax Guide (Publication 225) for agricultural employers. It includes the necessary information and forms to withhold federal income taxes. The Farmer's Tax Guide can be found online or by contacting your local IRS office.

The IRS also provides a similar tax guide for small business entrepreneurs (Publication 334) found online or by contacting your local IRS office.

Permits and Licenses for Specific Attractions

You may be required to obtain a special permit or license for your agritourism operation depending on the type of activities being conducted on your enterprise. There are several permits and licenses that are required for only specific types of attractions.

Food & Drug Administration Good Manufacturing Practices Highlights

Source: Center for Agribusiness and Economic Development

The following abbreviated list should not be used as the only reference when building, planning or considering a commercial food operation. It should merely be used as a resource to gain a better understanding of the types of practices that the act specifies.

The entire act itself should be studied. It is also a good idea to use the good manufacturing practices as a guideline to "draft" a sketch, diagram or blueprint of your planned facility. The sketch can then be submitted to the GDA inspector in your area for review and comment.

  • All persons working in direct contact with food, food-contact surfaces and food­ packaging materials shall conform to hygienic practices while on duty to the extent necessary to protect against contamination of food.
  • Workers should wear garments suitable to the operation, maintain personal cleanliness, washing hands, removing all unsecured jewelry and wear gloves.
  • Workers should wear hairnets, headbands, caps and beard covers where appropriate and should take precautions to protect against contamination of food.
  • The grounds shall be kept in a condition that will protect against the contamination of food.
  • Roads, yards and parking lots should be maintained so that they do not constitute a source of contamination.
  • Areas that may contribute to contamination should be adequately drained.
  • Operating systems for waste treatment and disposal should function in a manner so that they do not constitute a source of contamination.
  • Sufficient space should be provided for placement of equipment and storage of materials for maintenance.
  • Operations in which contamination is likely to occur should be separated.
  • Floors, walls and ceilings should be built as to be adequately cleaned and kept clean and in good repair.
  • Aisles or working spaces should be provided between equipment and walls, adequately unobstructed and of adequate width to permit employees to peiform their duties and to protect against contaminating food.
  • Adequate lighting in hand-washing areas and in all areas where food is examined, processed or stored and where equipment or utensils are cleaned should be provided
  • Safety-type light bulbs should be used.
  • Adequate ventilation should be provided to minimize odors and vapors.
  • Adequate screening or other protection against pests should be provided.
  • Buildings, fixtures, and facilities shall be maintained in a sanitary condition and kept in repair.
  • Toxic cleaning compounds and pesticide chemicals shall be identified and stored in a manner that protects against contamination of food.
  • No pests shall be allowed in any area of a food plant.
  • Effective measures shall be taken to exclude pests from the processing areas and to protect against food contamination.
  • Food-contact smfaces, including utensils, shall be cleaned as frequently as necessary to protect against contamination of food.
  • Cleaned and sanitized portable equipment with food-contact surfaces should be stored to protect food-contact surfaces from contamination.
  • Each plant shall be equipped with adequate sanitary facilities and accommodations including a water supply sufficient for the operations intended
  • Plumbing and sewage system should be of adequate size and design.
  • Each plant shall provide its employees with adequate, readily-accessible toilet facilities and hand-washing facilities shall be adequate and convenient
  • All plant equipment and utensils shall be so designed and of such material and workmanship as to be adequately cleanable, and shall be properly maintained.
  • All equipment should be so installed and maintained as to facilitate the cleaning of the equipment and of all adjacent spaces. Food-contact surfaces shall be corrosion-resistant when in contact with food.
  • Equipment that is in the manufacturing or food-handling area and does not come into contact with food shall be so constructed that it can be kept in a clean condition
  • Raw materials and other ingredients susceptible to contamination with aflatoxin or other natural toxins shall comply with current Food and Drug Administration regulations, guidelines, and action levels for poisonous or deleterious substances before these materials or ingredients are incorporated into finished food. Compliance with these requirements may be accomplished by purchasing raw
  • materials and other ingredients under a supplier's guarantee or certification, or may be verified by analyzing these materials and ingredients for aflatoxin and other natnral toxins.

Section 6: Risk Assessment, Management and Safety Considerations

Skip to Section 6: Risk Assessment, Management and Safety Considerations

Source: Agritourism - Virginia Cooperative Ext. Service, Nov., 2001

Risk Assessment and Management

Operating a farm carries some inherent risks. Generally, farmers are aware of these risks and, normally, they are insured against these risks. In an environment where tourists are added to the farm, as visitors or as workers, additional risks arise. Because of the potential for added risk you first should identify the agritourism activities that you are going to offer, then examine the additional risk those activities may create. For example, you may decide to add hayrides on your farm. A hayride is not risk-free since there is always a possibility that a customer will fall off the wagon. However, by establishing some rules and modifying the wagon you can protect your visitors from potential risk. To make the hay ride as safe as possible, you can make sure that all riders remain seated and keep their arms and legs inside the wagon during the ride. You can construct railings around the wagon and maintain a low speed with the tractor. Assessing and managing risk is something you should never do alone. Before adding any additional product or service on your farm, you need to contact your insurance agent and your lawyer first. Make sure you have a good, honest, working relationship with these professionals. You must be able to trust them with every aspect of your protection and your customers' safety.


Farmers must understand that they might be liable for injury or property damage to a third party because they acted negligently, because an employee was negligent, or because of special circumstances in which the law allows recovery even in the absence of fault on the part of the defendant. In other words, a farmer may be liable for personal injury or property damage to a third party when the farmer's failure to be careful is the cause of an injury or an accident. However, despite the fact that a person cannot prevent a lawsuit from being filed, you must make sure that your operation is as safe as possible and must have appropriate insurance coverage. Safety precautions and insurance coverage are two of the best ways to manage liability risk.

The following is a list of different kinds of legal liabilities. You should consult with your attorney about how these issues relate to you and your agritourism enterprise.

  • General liability: Financial loss because of bodily injury or property damage to employees or customers caused by negligence.
  • Personal injury: One of your customers slips on your porch and breaks an arm.
  • Property damage: Conducting your business, you break the window of a customer's car while trimming trees.
  • Product liability: While having lunch at your restaurant, a customer breaks a tooth eating one of your products. Product liability laws are not uniform, but your attorney or insurance agent should be able to help you determine what your needs might be.
  • Professional liability: This provides protection for a business that provides a service to customers, such as a bed and breakfast or a restaurant. The service provided causes personal harm. For example, your waitress or one of your family members splashes hot coffee on a customer and burns his arm very badly.

Risk assessment

Naturally, some activities are of greater risk than others. It would be wise to identify all of your activities and recognize the potential risks that would occur due to the presence of tourists. You can ask other members of your family, other farmers, or consultants to help you identify the added potential risks. This process will allow you to reduce or eliminate many of the hazards on your farm. You may be familiar with this process as it pertains to crop production: you insure your crops against the risk of bad weather or poor production in a given year. The concept is similar for the tourism side of your business: you need to insure yourself and your farm against the risk of you, an employee, or a guest becoming injured on your property. The exercise of a risk assessment should help you to:

  • Define the risks related to the new activities on your farm
  • Rate the likelihood of loss due to those new activities, and
  • Rate the size of potential loss for your farm products and/or services.

While it may seem impossible to eliminate all potential hazards, maintaining a proactive safety strategy and providing your insurer with documents proving your safety efforts may protect you legally in the long nm.

The following table may guide you through the risk assessment process. Please note that it is not an all-inclusive assessment; it is an example that should help you to initiate risk assessment thinking. Nobody can pretend that identifying potential hazards on paper will eliminate every real risk. You should maintain a constant evaluation and assessment of risk on your farm.

Risk management

Inviting people onto your farm as guests invites additional risk to your farm as well. The first step you can take toward managing risk is to recognize the potential risks and hazards that you are creating. Generally, there are four basic ways to handle risk: avoid it, reduce it, accept it, and/or transfer it to another party.

Taking precautions to avoid accidents by customers should be a top priority for agritourism enterprises. However, in the event of an accident, agreements made prior to a visit on the farm may dictate the legal responsibility. Following are explanations for four legal practices that should be understood, adopted from Sound Advice for Functions and Events by the Nonprofit Insurance Alliance of California, P.O. Box 8507, Santa Cruz, CA 95061-8507; (800) 359-6422. These and other proactive risk management practices should be discussed with legal counsel.

Hold Harmless Agreement: A hold harmless agreement between two parties states that one party will assume the risk of legal liability associated with an event for the Animal Welfare other party.

Usually, landlords will include hold harmless language in leases to protect them from being sued if an accident occurs on their property. Farmers may ask onsite vendors to sign hold harmless agreements that release farmers from liability should a vendor-related accident occur on the farm.

Participant waivers: Typically, participant waivers are used when minors are involved in school or camp activities and would be appropriate for on-farm school tours. The minor's parents or guardians are required to sign the document agreeing to release the farmer from any responsibility for injury to their child. However, the waiver does not absolve farmers from liability for injuries directly caused by their negligence.

Incident Reporting: If an incident occurs, the safety point person on your farm should fill out and file an accident report, including contact information of witnesses and accident-site photos, for future reference. Should a claim be presented later, the file should provide sufficient information to begin the investigation. The safety point person also should follow up with the injured party. Many small claims can be averted by demonstrating concern for the individual.

Vendors and other Independent Contractors: If the activity provided by vendors or other independent contractors requires a license, check the license to see if it is current. Make sure independent contractors carry insurance before you allow them on your farm.

Avoiding risk

The first rule in risk management is to avoid risk. You must assess the potential risks involved in adding different activities or services to your farm. If you identify an activity that will add risk to your farm, the safest way to insure yourself against the risk is to avoid it altogether. If you really wish to add an activity that you believe will add risk to your farm, then you will need to consider another method of risk management.

Reducing risk

By carefully analyzing each component and step of an activity and by taking appropriate safety measures, you can reduce potential risks. It pays to play the "What if?" game in regard to the potential hazards on your farm and to plan ahead for any accidents that may occur. It is very important that you remember to discuss each and every new activity with your insurance agent before implementing the activity. Your insurance agent can help you identify places where you can reduce risk and can design an insurance plan that provides you with the best liability coverage.

Accepting risk

You may not always be able to avoid, reduce, or transfer risk. Sometimes you have to accept the risk and make sure that you are protected by insurance coverage. Perhaps, you may want to establish an emergency fund to cover deductibles on insurance policies.

Transferring risk

Transferring a risk means that another party will reimburse you in the event of a financial loss. This promise of reimbursement usually comes with an insurance plan. At this point it is important to consult with your current agent. If he or she is not willing to or cannot cover your new activities, you may need to consult another insurance broker. You should develop a close, trust-based relationship with your insurance agent and your attorney so that you fully understand the details of your insurance plan.

Table 4: Risk assessments (example)

Risk Potential

Scale 1 to 5 (Five is the highest)

Safety Measures Insurance Needed Estimated Cost to Adapt or Modify Activity
Hay Rides 31 Add rails to wagon, limit speed Consult your insurance agent $50
Corn Maze 22 Maybe it will be a good idea to fence the maze perimeter if there is a risk that someone will get lost beyond the maze field Consult your insurance agent
Horseback Riding 53 Require helmets, guided walking trails, guides must have safety training Consult your insurance agent It is a major investment when considering horse, barn, and other related expenses

1Hay rides represent a risk of injury by falling from wagon. However, safety measures: (railing, low speed) reduce those risks.

2Corn maze represents low risk of injury (cuts or bruises from falls).

3Horseback riding is a high-risk activity.

Bio-security & Animal Welfare

Farms can be both a source and recipient of contaminants. Livestock and crop enterprises can be damaged by the introduction of diseases carried on the shoes and car tires of tourists.

Similarly, farms can also harbor contaminants, chemicals and diseases that could be harmful to visitors. While sanitation and extreme safety steps help minimize problems to the farm and to farm visitors, some farms are simply not good candidates for public tours or entertainment farming activities. Biosecured poultry and hog farms should carefully weigh the pros and cons of an entertainment farming enterprise before implementation. Animal welfare is another issue that should be carefully considered. Most farmers understand the relationship between the well-being of their livestock and production yields and, therefore, provide safe, sanitary, and healthy conditions. However, livestock operations that do not provide adequate conditions seem to command more publicity. The general public perception that farm animals are mistreated is a growing concern. Therefore, farm operations should implement livestock management practices that are generally accepted and defensible. A livestock operation that is going to also be involved with an entertainment farming enterprise may want to consider asking representatives of the local Humane Society to visit, inspect and evaluate the operation. Almost all entertainment farming entrepreneurs have stories to tell about a discussion with an animal rights activist. Such confrontations should be expected. While the flavor of such conversations can be uncomfortable, the situation can be turned into an opportunity for the farmer to learn and to teach. The entire labor force of an entertainment farming operation should be prepared to take advantage of such teachable opportunities.


Liability issues for farms that host the public are generally resolved with appropriate insurance. Insurance needs will vary by operation. Neil Hamilton's book The Legal Guide for Direct Fann Marketing provides guidance on choosing and consulting with an independent insurance agent. Insurance representation can provide guidance on specific steps for reducing risks of your operation. A new database on farm injuries can be found on the National Safety Council website.

You will want to shop around for various insurance plans, seeking advice from other farmers and Extension agents in your area. Not all insurance policies will fit your agritourism farm. By obtaining two or three different quotes you can get better coverage and prices. It is your responsibility to negotiate with insurance carriers and to make sure that you are well protected.

Examining Insurance Needs Is Essential to Marketing

Source: Rural Enterprise Magazine, Summer, 1992

Farmers' markets, roadside stands, U-Pick vegetable and fruit operations, and Christmas tree farms are on the upswing. Consumers enjoy selecting from freshly picked produce, and many like picking it themselves.

For anyone to begin one of these operations or to continue an existing one, the usual business considerations must be made. One must determine the market and know how to serve it. You also need the manpower, facilities and finances to make your operation a success.

Insurance is also an important part of the financial picture. Although insurance may be expensive, you'll only be gambling everything you own if you try operating without it. Insurance is as necessary as quality products, good help and a good location in operating a direct marketing business.

While there are many optional insurance coverages available (and needed by some operators), there are some basics which every operator should have. They are: (I) Product liability insurance for injuries which may arise out of products that are raised and/or sold by you. (2) Premises liability insurance to protect you if you should cause injuries to the public or damage property belonging to the public. (3) Employer's liability insurance (either legal or statutory) to protect you in event of injuries to your employees. (4) Physical damage ­insurance to protect against loss to the property owned by the operator, such as buildings, equipment, and merchandise.

Although more options may be available, these items are certainly the basics on which to build a solid insurance program. It is always wise to consult your attorney and your insurance representative to help determine your particular insurance needs.

Product Liability

Chemical use: Are the chemicals safe for application to produce destined for consumption or contact by humans? And, have you followed the manufacturer's application instructions carefully? Selecting an inappropriate chemical or the misapplication of that chemical may place the entire burden of liability on you.

Shelf life: All operators are aware of the need to keep bad produce off the shelf. Yet, while this seems obvious, sometimes they forget to keep an eye on the products they have purchased from outside sources for resale. Often, these are prepackaged items, such as honey, salad dressings, jellies, jams and other similar items. Check all products regularly to be sure they are not outdated.

Food preparation: It is extremely important that employees handling food do it properly and that your operation conforms to the health standards of your local municipality and/or state. Monitor the ingredients and the quality of the products carefully. Do not create situations where an ingredient can accidentally be put into the food product that would contaminate it.

Clearly label all stored ingredients. Again, doing things the right way and being able to prove it will certainly help if a problem occurs.

Premises Liability

Condition of parking area: It is advisable to have a paved parking area, preferably concrete or asphalt. If you use gravel or stone for your parking facility, be sure that you use very small stone or gravel. The larger rocks increase the chance of someone twisting an ankle, falling and being injured. In addition, having parking along a highway or road certainly can create safety problems. Traffic congestion with inappropriate parking facilities could put you in a contributory liability situation. Another area of concern is utilizing an open field or lot. Often, these areas have holes, ruts, or mounds of dirt, which can cause a fall. All unpaved areas should be maintained regularly to keep them as smooth as possible.

Steps, ramps and handrails: Steps always present problems, whether located along sidewalks, at building entrances or inside a building. Ramps also present problems, but, if kept gently sloping, they generally are better. Whether you use steps or ramps, always make sure strong and solid handrails are in place. It is a good idea to follow a regular routine of checking the steps, ramps and handrails to be sure that they remain in good, safe condition.

Equipment and animals: Farm equipment and animals are often close to the market. Children tend to look at farm equipment as something to climb on and animals as something to pet. Consequently, it is advisable to take precautions to try to keep the public, especially children, away from both. Since children frequently do not recognize the dangers associated with farm machinery and animals, responsibility for injuries could be absolute.

Unusual hazards: Each operation may have a hazard that presents a unique exposure. You should look for ways people can be hurt and then look for sound methods of protecting against injuries from those potential problem areas. Some common hazards are:

  • A wood stove that a person, especially children, could brush against or touch and be burned.
  • Playground-type equipment which is provided for the customers' children. An insurance underwriter would certainly discourage the use of this equipment, even though customers seem to prefer it.
  • Hayrides, pony rides or buggy rides. Again, these present the possibility of absolute liability. These operations are usually discouraged by underwriters. However, these may be the attractions you feel are needed for your operation. In this case, it's important to understand the tremendous responsibility potential these present and the accompanying insurance expense for this exposure.
  • U-Pick or U-Cut operations often provide rides to the field. The ride may be on wagons, trailers or special carts pulled by horses or tractors. These methods of transportation can present some serious liability exposures. Some suggested ways of controlling these are:
    • Do not cross a public road with these types of vehicles. Do not use the vehicle if it is muddy enough to create ruts. (Remember, tomorrow that same ground may be dry, and ruts can make the ride very rough and hazardous.)
    • Do not use the vehicle in areas where there could be a sharp drop-off. A drop-off of just a few inches could cause the vehicle to overturn if the wheel leaves the path.
    • Do not operate the tractor at high speeds. Pulling wagons, trailers or cars at a slow speed is usually best. These units seldom have springs, and hitting a rut or hole can jostle the passengers severely or throw them off the unit, which can cause injury.

In addition, some wagon-type units do not trail well at the higher speeds and are subject to whipping

  • In U-Pick orchard operations, the public should be allowed to pick only from the ground. The use of ladders, whether they belong to your or the customer, can cause some serious liability exposures.
  • In a U-Cut Christmas tree operation, customers should not be allowed to use chainsaws, whether they are yours or their own. In fact, you should do the cutting- not the customer.
  • In U-Cut operations, the field should be checked daily and the remaining stumps cut off at the ground. Untrimmed stumps may cause t1ips and falls.

Liability to Employee

The employee situation is one to be extremely careful about. In some states, worker's compensation is mandatory. In others, the employees may not be covered by the worker's compensation act unless the farmer has opted to bring them under the act. This is an area of interpretation in some jurisdictions. It is always advisable in cases where statutory participation is not required that you discuss this matter very carefully with an attorney well­ versed in your state's law concerning employer responsibilities. Most hazards relating to employees can be minimized with a thorough training program and the use of proper safety equipment (shields on machinery, safety glasses, masks, ect.) True the added training and use of safety equipment will take a little more time and money, but it can sure save a lot of grief (and money) in the long run.

Property Insurance

Theft and vandalism losses can usually be avoided or at least minimized by being able to secure the building or sales area. However, there is not a lot you can do about produce that you leave out in the open.

From a fire standpoint, wiring should be checked to ensure it is in good condition and that circuits are not overloaded. In addition, heating with p011able heaters requires special caution. The area in which they are to be operated should is examined carefully to determine if combustible materials are nearby. If so, heaters should be moved or relocated to avoid combustibles.

As far as wind is concerned, you should attempt to try to make everything as secure as possible. Do not leave doors standing open. Either they should be closed and latched or, if left open, they should be secured in the open position. Anchoring outdoor signs and other items that might easily blow away is usually relatively easy. Properly securing such outdoor items also reduces potential liability claims.

These are the very basics. The items are simple and common, but it's surprising how often they are overlooked. But the most common question asked about liability insurance is, "What limit of liability should I buy?" This question is not easily answered because of the changes in awards made by juries in recent years.

In the past, net worth was considered a good limit of liability. However, courts now tend to ignore this and base the award on what they perceive the injury to be. This could be in excess of the limit you have purchased. Because of these uncertainties surrounding liability claims, it is best to buy all the liability insurance you can.

Cost of Insurance

The cost of this insurance is decided by several factors. These include the size and type of the operation, and unusual hazards which may exist (such as hayrides, playground equipment, pony rides, farm ponds, etc.).

Some farm owners' policies include coverage for the operation of a small roadside stand, while others may not. Ask your insurance agent. When the coverage must be purchased separately, the cost can vary from a few dollars to thousands of dollars. It depends primarily on the size of the operation and the type of hazards involved.

Property insurance is easier for most people to establish. Here, you need to determine amounts of insurance, perils desired, and the deductible best suited to your financial position.

The amount of insurance is relatively easy to determine. You insure for what the property is worth. Remember that most policies provide coverage on an actual cash value basis and not on the replacement cost. Replacement cost coverage may be available only as an option and on certain types of property (usually only on your dwelling).

The operator should consider a policy which provides protection against loss caused by fire, wind, hail, explosion, smoke, vehicles, vandalism and theft. Broader package policies may be available. The larger the operation, the more important the broader perils may become.

You should also examine the cost of at least a couple of deductible options. These can help keep your premium more reasonable. The cost will vary by the type of policy and may run anywhere from as low as a few cents per $100 of coverage to several dollars per $100 of coverage. The amount of insurance, perils, and deductible selected will affect the cost. How­ ever, other factors which may be beyond your control can also influence the cost, such as fire protection and available water supply.

After reading this article, you may feel that roadside stands and similar operations may not be on the upswing. It really is not as bad as it may seem. Most of the insurance-related items mentioned have common-sense solutions. In fact, common sense is the best guide to controlling hazards associated with a farm market or, for that matter, with any farm operation.

The hazards and insurance needs are real. Don't be lulled into a false sense of security because you have a farm owner's policy. Learn to read your policy and ask your insurance agent when you have questions. You could stand to lose everything if you take your insurance for granted.

Insurance is as important to direct marketing and farming as good equipment. In fact, insurance is the one piece of farm equipment that works for you 24 hours a day.

Before making a major change to your farming activities, it's important to visit with your insurance agent and your attorney. Both can offer good, sound advice that will pay big dividends. And that's what direct marketing is all about.

by Don Cook, manager, Farm Underwriting Dept., Farm Bureau Insurance, 130 East Washington St., P.O. Box 1250, Indianapolis, IN 46206. Phone: (317) 263- 7200.

How Growers Can Reduce Liability Risks

Fruit and vegetable growers, like other businessmen and women, face some liability risk every time they make their produce available for public consumption. But there are basic business practices they can use to help reduce the likelihood of liability suits being filed.

"Regrettably, there is no way to prevent a lawsuit being filed against you in most circumstances," says Donald L. Uchtmann, a professor and acting head of the University of Illinois' Department of Agriculture Economics and an Extension agricultural law specialist. "A consumer may believe that pesticide residue on fruits or vegetables made him sick." A U-pick customer or delivery person may break a leg on your property and believe it's your fault. An employee may be injured on the job or your dog might bite a neighbor. Or, while driving your truck to town, your employee may hit a pedestrian.

"While growers can't anticipate every potentially damaging circumstance, growers can increase the chances of successfully defending the suit if and when it is filed. They can also insure against remaining risks that are unavoidable."

Before addressing these steps, growers need an understanding of the overall legal issues involved in liability. Growers may be liable for injury or property damage to a third party because they acted negligently, because an employee was negligent, or because of special circumstances in which the law allows recovery even in the absence of fault on the part of the defendant.

Types of Liability

Uchtmann says it is important that growers have a reasonably clear definition of the legal terms. For example, negligence can be defined as a lack of care under the circumstances.

"This is an imprecise definition because the very concept of negligence is intended to be flexible," he says. "In essence, growers may be liable for personal injury or property damage to third parties when their failure to be careful is the cause of an injury or an accident."

A blatant example of negligence would be to knowingly allow a defective ladder to be used in a U-pick operation.

"Whether a grower acted carelessly is usually a question that a jury answers using its collective common sense, unless an out-of-court settlement is reached," he says.

Respondent superior is another legal concept that places liability for an employee's negligent acts upon the employer.

"A key provision is that the act occurred in the performance of the employee's duties or within his or her scope of responsibility," Uchtmann says. "The law broadly defines within the scope of employment, so an employer cannot escape liability simply by ordering the employee to do all the work carefully."

Premises liability is another component of negligence. Uchtmann says the general rule is that landowners or tenants are not liable for someone injured on the premises unless the landlord or tenant is at fault. Landowners could be at fault if they were negligent, or if they intention­ally injured the entrant.

"If the entrant is a trespasser, the probability of the owner or tenant being liable is very low, but liability could arise if 'excessive force' is used to remove the trespasser or if the trespasser is intentionally injured."

Product liability laws are also important to those growers who sell directly to consumers. Plus, product warranties can be expressed or implied.

"Express warranties" involve a positive statement about the product. One example would be a label noting that "This fruit has not been sprayed with Pesticide X in the last 10 days." Implied warranties arise automatically, such as the implied warranty that fruits or vegetables sold are of reasonable quality.

"If a product does not live up to the express or implied warranty, and if the consumer is injured as a result, liability can arise," he said. "In contrast, strict or automatic liability does not require evidence of either breach of warranty or fault. Strict liability may be present whenever a product is sold in an unreasonably dangerous condition. Fruits or vegetables with certain pesticide contamination could be viewed as unreasonably dangerous."

Workmen's Compensation

Workmen's compensation laws provide an example of liability even though the person has not been negligent. Where such laws apply, the employer is automatically liable for specified amounts when an employee is injured on the job.

"Agricultural employment is exempt from workmen's compensation laws unless the employer hires more than 500 worker days of labor per fiscal quarter," Uchtmann says. "Growers involved in direct marketing operations should be aware that the sales activities of employees working at roadstands and other marketing facilities are not clearly agricultural in nature, which means direct marketers may not be able to use the agricultural exemption."

Dog bites provide another potential for liability without show of negligence. In Illinois for example, a dog that attacks without provocation and injures people peacefully conducting themselves in places where they may lawfully be exposes its owner to automatic full liability for any injuries.

Recent changes in Illinois law have also affected a grower's potential liability. Several changes were made last summer in the liability law in response to the "alleged insurance crisis" in the state.

"Under prior law, if an accident occurred and the defendant (say, a grower) was 10% at fault and the injured party was 90% at fault, the injured party could still receive 10 of his damages from the grower," says Uchtmann. "Now, under the comparative negligence rule, defendants cannot be held liable unless they are more than 50% at fault."

Other changes include some limitations on claiming punitive damage (compensation exceeding actual damages), procedural changes which discourage frivolous suits and modification of the joint and several liability rules. Uchtmann says fruit and vegetable growers from other states can contact their extension agricultural law specialist for more specific information.

Protecting Against Liability

"With this background, a grower is ready to take some steps to protect against liability," says Uchtmann. "I recommend several simple and basic actions."

"First, be very careful and cultivate a safety consciousness among those who work in your business. People who are concerned about safety and are constantly reminded to be careful are less likely to be negligent."

"Growers should also make the premises as safe as possible. If the premises are safe, the probability of injury to a customer, delivery man or others is reduced. They should avoid extra label use of pesticides. In particular, don't apply pesticides not approved for the particular fruit or vegetable, and don't apply approved pesticides too close to harvest."

"A grower should also create as much goodwill as possible. If someone is injured on the premises, be as helpful as you can. And last, keep your dog away from customers."

Uchtmann says being careful is not enough. It is important for fruit and vegetable growers to appreciate the risks of liability inherent to their businesses and to take appropriate steps to insure these risks. Adequate insurance protection is a must.

Growers should thoroughly discuss their operations with their insurance carriers, paying particular attention to any possible need for premises liability, product liability and workmen's compensation coverages.

"You can't prevent the lawsuit," says Uchtmann. "But making sure your operation is as safe as possible and having appropriate insurance coverage are the best two ways to manage the liability risk."

For more information, contact Donald Uchtrnann, Agricultural Law Specialist, Cooperative Extension Service, 151 Bevier Hall, University of

Illinois, Urbana, IL 61801 or call (217) 333-1829

Checklist for Managing Risk

  • Contact State or Local Agritourism Organizations and Key Consultants
    • Key consultants to determine your needs are lawyers, insurance agents, financial managers, and accountants. See backside for available resources and technical assistance.
  • Understand Local and State Health and Safety Laws and Regulations
  • Inventory Areas of Possible Risk
    • Site Safety: Consider physical site hazards, including visitor activities and attractive nuisances such as farm equipment likely to attract children
    • Product: Consider what you are selling or producing and any health or safety regulations or considerations
    • Employee-related: Know your employees and know what will be required on-site to safeguard their health and safety
    • Financial: Consider current record-keeping, billing processes, assets and debts
  • Develop a Risk Management Plan
    • Site Safety
      1. Post rules for customers and conduct regular inspections
      2. Post and implement employee mies and regulations
  • Product
    1. Establish a labeling protocol for products
    2. Establish a protocol based on state regulations for handling products
  • Decide on the right type and amount of insurance coverage
    1. Business liability
    2. Product liability Workers' compensation
    3. Workers' compensation
  • Consider using preventative measures like waivers or product warnings if warranted.

National Resources

USDA Risk Management Education Agency

Develops educational materials for 50 states. 202-720-7441

Digital Center for Risk Mgmt Education

National Ag Risk Library at the University of Minnesota) St Paul) MN, Toll-free 800-234-1111

Regional Risk Management Education Centers

Northeast Center for Risk Mgmt Education. University of Delaware, Phone 302-831-6540

North Central Risk Mgmt Education Ctr. University of Nebraska, Phone 402-472-2039

Southern Region Risk Mgmt Education Ctr. Texas A&M University, Phone 254-968-4144

Western Center for Risk Mgmt Education. Washington State Univ., Phone 509-477-2168

State Resources

Your State's: Department or Agency of Agriculture) State Agritourism Organization, Department of Marketing or Tourism, University Cooperative Extension Service, and directories from the National Association of Resource Conservation and Development Councils. and Natural Resources Conservation Service. (2004 Alternative Enterprises and Agritourism Liaisons Directory and Economic and Rural Community Development Directory).

Health and Safety Guidelines

National Institute for Occupational Safety & Health, Centers for Disease Control & Prevention (NIOSH). Toll­ Free: 800-35-NIOSH 800-356-4674

NIOSH Agricultural Research Center.

National Safety Council

Farm safety & workplace fact sheets. 630-285-1121

The National Children's Center for Rural and Agricultural Health and Safety Under Resources. Toll-free 800-662-6900

Risk Management Planning

"Farming for Profit and Sustainability Resource Manual" and "Taking the First Step: Farm & Ranch Alternative Enterprise & Agritourism Resource Evaluation Guide:"

Natural Resources Conservation Service (NRCS)­ Alternative Enterprises & Agritourism. 202-720-2307

"Don't Break A Leg... Managing Risks on Your Small Farm," "Managing Marketing Risks" and other Risk Management Artides,

The Small Farms Program-Cornell University. 607-255-9227

Articles on Risk Management Planning-

USDA Alternative Farming Systems Info Center National Education Library 301-504-6559 DC Reference Center 202-


Insurance Information

North American Farmer's Direct Marketing Association —member's liability insurance list 62 White Loaf Road, Southhampton, MA 01073, 413-529-0386 "Understanding Farmers Comprehensive

Personal Liability Policy: A Guide for Farmers, Attorneys and Insurance Agents." National Ctr for Agricultural Law, Research, & Information, University of Arkansas, School of Law 479-575-7646

''The Legal Guide for Direct Farm Marketing"

Des Moines, IA: Drake University 515-271-2947

References: Agritourism and Nature Tourism in California, Univ. of California Agriculture & Natural Resources Pub No. 3484; In the Eyes

of the Law: Legal Issues Associated with Direct Farm Marketing, Univ. of Minnesota Tourism Ctr.

Liability and Insurance Considerations

Adapted from Agri-Tourism Workbook, Agribusiness Council of Oregon

Liability should be one of your major considerations when you enter into a fee­ recreation enterprise. In general, if you decide to impose a fee for any recreational activity conducted on your land or land you are in possession and control of (rent or lease), you are exposed to greater liabilities for any injury of visitors that may occur. Meet with your attorney and insurance agent to determine the extent of liability and insurance needed and to develop a risk management plan,

The landowner or user in possession and control of the land is obligated to make reasonable use of the property, which causes no unreasonable harm to others in the vicinity. Liability equally applies on land you may be renting or leasing - ownership is not the key factor.

The extent of your liability toward a person who enters the property and who has potential of being hurt depends on the status of the visitor.

There are a number of ways to reduce liability exposure, such as:

  1. Knowing the statutes and regulations that apply to fee recreation land use
  2. Having a formal fee-recreation property use agreement with clientele
  3. Having adequate liability insurance that covers all fee-recreation activities
  4. Incorporating the business
  5. Selecting the clients that use your property; and,
  6. Providing a tour of the property to all clients and explaining any known potential hazards.

Trespasser: Someone who enters the property of another without consent of the owner. Possessor of the land (expressed or implied). Consent is simply the owner/possessor's willingness to let the other person enter or remain on the land. Someone you ask to leave, but who stays, becomes a trespasser. Someone who walks past a "No Trespassing" sign is generally a trespasser.

Trespassers enter the property for their own purposes and not for the performance of any obligation to the landowner. In Oregon law, trespass may be classed as intentional, reckless, negligent, or without fault. Since the trespasser has no authority to enter the property, the landowner has no duty to warn about dangerous conditions or activities on the property.

Exceptions are where significant numbers of trespassers are known to frequent the area or where young children are involved.

In general, the landowner is not liable for injuries to trespassers caused by a landowner's failure to exercise reasonable care to put the land in safe condition for them, except if there is willful, wanton, or reckless action on the part of the landowner (actions by the landowner intended to cause injury or reckless disregard or indifference to human safety).

Licensees: A licensee is someone who comes onto your land with consent. The licensee generally is on your premises without business or commercial reason. Social guests fall in the category of licensee. A public officer who enters a premise in the line of duty is a licensee.

The duty owed to licensees depends on whether the injury is caused by a condition of the land or activities on the land. As a condition of the land, a possessor/owner is liable for willful or wanton acts or gross negligence. As to activities on the land, the possessor/owner has the duty to exercise reasonable care for the protection of the licensee. You are not required to put the land (natural conditions) in safe condition for licensees, but must warn licensees of dangerous conditions and activities.

The licensee classification is especially important with respect to the use of land for recreational purposes. Recreationists using the land with permission but without a fee imposed would likely be considered licensees in Oregon.

Invitees: Someone who enters or remains on the property at the expressed or implied invitation of the owner/possessor for the benefit of the inviter, or the mutual benefit of the owner/inviter and the invitee.

Invitees come in two forms: public or business.

A public invitee is a person who is invited to enter or remain on the land as a member of the public for the purpose to which the land is held open to the public. A business invitee is a person who is invited to enter or remain on the land for a purpose directly or indirectly connected with business dealings.

In general, the landowner's liability obligations are the highest under an invitee situation, less with a licensee, and even less with the trespasser.

In the case of the invitee, the owner/possessor's obligations may include inspecting the property, warning of dangers, removing dangerous conditions, curtailing dangerous activities, etc. The owner must exercise reasonable care to make the premises reasonably safe. Merely posting warning signs is not enough.

Other Forms of Liability:

Alcoholic beverages: Other activities associated with a fee-recreation event or activity may result in additional types of liability. For example, if intoxicating beverages are served at a cost, the owner/operator is required to carry liquor legal liability insurance (see additional information on liquor licensing)

Transportation: If transportation is provided (carrying paying guests around in a personal automobile), a commercial auto policy is needed. Your regular auto coverage will not cover commercial use of the vehicle.

Vicarious liability: Additionally, the possessor of land is not only responsible for his/her own actions, but also for the acts of persons acting on their behalf This may include an employee or even an independent contractor (pack guides, boatmen, for example).

Off-farm liability: If an activity sponsored on the farm causes harm, hazard, or injury to people outside the farm, other forms of liability are involved These are the customary issues of trespass, chemical drift, spread of fire from one party's property to another, seepage of water onto adjacent lands, mining onto another's property, projecting a foundation across a boundary line, etc. Some activities may also cause a nuisance to an off-farm party that causes liability. The risks identified may seem onerous and discouraging, but there are insurance companies willing to work with you to protect your interests through policy coverage.

Business Structure

Incorporating a recreational business may be one way to ease the burden of liability. In theory, an individual is not liable for any assets other than those he or she has invested in the corporation. Other types of organizations with some potential for limiting liabilities of their owners are limited partnerships and limited liability companies.

Liability Insurance

Adequate liability insurance is imperative. Most policies that cover general farm and ranch activities do not cover recreational activities on the land. You will either need to add a rider to your existing policy or get a new policy with one of the companies that provide insurance for your particular activity.

Liability insurance coverage for a fee recreation activity is generally written in $100,000,

$300,000, $500,000 and $1,000,000 packages. As a rule, you should maintain enough liability insurance coverage to protect personal assets as much as economically possible. Additionally, if you plan to hire a hunting, fishing, or packing guide for your operation, Oregon statutes require the guide to have minimum liability coverage of $300,000.

Premium rates vary among insurance companies, based on the exposure of risk for a particular fee-recreation activity. The rates are affected by the portion of the enterprise devoted to recreation and type of activities. Additionally, your managerial capability as an operator appears to be significant in determining premiums.

Some questions for consideration regarding insurance for your enterprise are:

Is the difference between the premium for the insurance and the income gained enough to offset each other and still allow a sufficient financial gain to make the venture worthwhile?

Can you realistically pass the costs of insurance on to the customer, or will the cost decrease the customer demand for the activity?

The following activities will be reviewed very closely by an insurance company and will involve special coverage if available:

  • Hunting
  • Fishing
  • Lodging
  • Food Services
  • Alcohol
  • Animals, especially horses
  • Landing strips on the property

Keep in mind that employees who change job functions because of the new activity may be placed in different work classifications, resulting in changes in workers' compensation premium costs as well.

Selecting Insurance Based on Your Recreational Activities

Generally, the following activities will be viewed as Commercial Insurance subject to a separate policy from the general farm or ranch policy coverage:

  • Boating, Canoeing, Rafting

  • Clay Bird Shooting or other Shooting Events
  • Elder Hostel Programs
  • Exotic Animal Farms
  • Fee Hunting and Fishing
  • Festivals, Conce11s, and Special Events
  • Guest or Dude Ranches
  • Horseback Riding; Horse, Mule, and Llama Pack Teams
  • Hunting Dog Trials and Training
  • Hunting Preserves
  • Mota-Cross, ATV, Snowmobile, and Mountain Bike Riding
  • Seasonal Festivals and Celebrations
  • Wineries and Breweries

In general, the following activities can be made paii of a farm or ranch insurance policy by endorsements. Each activity is always viewed on its own merit:

  • Bed and Breakfast
  • Farmers Markets
  • Roadside Markets
  • School Youth Tours
  • Technical Tours
  • Working Farm (viewing and limited participation)

Questions to ask in comparing insurance coverage:

  1. Is there a deductible?
  2. Does the insurance apply to:
    • Your premises and operations liability?
    • Your products and operations liability?
    • Your contractual liability to others?
    • Your personal injury liability to others (libel, slander, invasion of privacy)?
    • Your advertising injury to others?
    • Your property liability damage to others?
    • Incidental medical malpractice liability resulting from aiding an injured person?
    • Non-owned watercraft liability?
    • Host liquor liability?
    • Court costs for defense (above limit or included in liability policy limit)?
  3. Are employees added as additional insureds?
  4. Are there additional charges for adding public land management agencies, such as the U.S. Forest Service, BIM, or Oregon Marine Board as additional insured?
  5. Is the premium a set fee, based on a percentage of gross sales, or client days?
  6. Do you have to join an association to get insurance?
  7. Are there representations in the policy that the guests or operators must adhere to for a claim to be honored?
  8. Does the insurance agent understand your proposed fee-recreation business?
  • Waiver of liability: as an additional protection, you may want to incorporate principles of firearms safety, require successful completion of hunter safety or horse riding basics, prohibit the use of alcohol with certain activities, etc.
  • Acknowledgment and assumption of risk: describe the nature of the property (i.e., wild land with barbed-wire fences, logs, poison ivy, wild animals, uneven terrain, etc.) and the activities (horse riding, fishing, etc.), and then have the lessee/guest accept the risks such activities can have.
  • Insurance: with this provision, you may want to have the user agree to carry liability insurance and to name you in the policy as an insured.
  • Conditions of cancellation, renegotiation, or renewal: a list of conditions necessary m the case either party wishes to terminate, renegotiate or renew an agreement for various reasons.
  • Mediating differences: This arrangement may reduce the probability of disagreements resulting in litigation. Specify that any problems arising from the agreement or the use of the property, including injury, will first be addressed in mediation before either party resorts to legal action.
  • Payment specify the rate to be paid, how payment is to be made-where, when, etc., and the provisions for failure to pay.
  • Damage deposit: this provision would cover damages the lessee does to the property that are not repaired by the lessee. The deposit would be returned to the lessee if damages do not occur.
  • Miscellaneous: other sections or provisions may include gates and fences, trespass enforcement, in-kind services provided by the user (fence construction, wildlife crop planting, etc.), limitations of the number of campers or overnight recreational vehicles in certain areas, use of campfires or cooking fires, garbage, sanitation, other guest policies, etc.
  • Signatures: finally, complete the agreement with the printed name and address of each member of the recreation group, followed by their signatures and the date of each person's signing

Section 7: Customer Service

Skip to Section 7: Customer Service

*Agritourism, Virginia Cooperative Ext. Service, November, 2001

How do I provide excellent customer service?

Customer service includes giving customers what they want and fulfilling their multitude of less obvious needs. Before you begin to learn about customer service, however, it is important for you to remember that you will not be able to deliver perfect customer service all of the time. You will make some mistakes along the way. That is okay. If you put forth your best effort and learn from your mistakes, you will be on your way to providing excellent guest services. You will find many good sources at your local Virginia Cooperative Extension office or most major bookstores.

Customer-friendly attitude

Good customer service begins with a customer-friendly attitude. A customer-friendly attitude begins with the view that the customer is your job, not an interruption of your job. As a manager, you will need to reflect a customer-friendly attitude in your words and in your actions. You can begin by displaying a sincere smile and offering a kind greeting to all guests and co-workers. This will set a good example for your employees.

Service quality

Customer service experts suggest that there are five main dimensions that influence customers' perceptions of service quality. Those five dimensions are reliability, responsiveness, assurance, empathy, and tangibles'. A brief description of each dimension follows:

  • Reliability is your ability to perform the promised service dependably and accurately. For instance, if you operate a bed and breakfast on your farm, you may promise guests that breakfast will be served at 8:00 a.m. each morning. You are providing reliable service if, in fact, you do serve breakfast every morning before or by 8:00 a.m. If you serve breakfast at 8:30 one morning and at 9:00 another morning, your service is unreliable.
  • Responsiveness is your willingness to help customers and provide prompt service. For example, if your agritourism business relies on e-mail to interact with customers, then you would be providing responsive service if you return e-mail requests promptly. If you respond to e-mail requests only once a month, then you are not responsive to your customers.
  • Assurance refers to your employees' courtesy, knowledge of the business, and ability to inspire trust and confidence in customers. For example, if you host school group tours on your farm, you probably receive a lot of questions from the children. If you answered, "I don't know," to every question, you would not inspire trust in your knowledge from the children or teachers. However, if you respond to each question with an appropriate answer, you are assuring the children and the teachers that you are knowledgeable about your farm.
  • Empathy refers to the caring, individualized attention that you give to each customer. In a service business, each customer wants to feel like you genuinely care about his or her needs. For instance, if a customer at your pick-your-own pumpkin business is thirsty, you would be showing more empathy if you escorted the customer to the facility personally than if you simply grunted out directions. In addition, you might want to show empathy by providing water bottles near the picking site.
  • Tangibles are the physical facilities, equipment, personnel, and written materials that your customers see. It is important that tangible items appear neat, clean, and professional. For example, if you develop a brochure for your agritourism enterprise, you will want to make sure that everything on the flyer is spelled correctly and that the images and words reflect the true nature of your business. In addition, you will want all of your customer service employees to wear clean, neat clothes and maintain a groomed appearance.

As you become more conscious of the customer service that you and your employees provide, you will begin to pay more and more attention to feedback from your customers. It is important that you use all comments (both positive and negative) to improve the quality of your service delivery.

Hospitality and Image

Source: Oklahoma Tourism Handbook

Hospitality can make or break you. Customer service, attitude and reliability to perform the promised service cannot be stressed enough. Hospitality can keep your customers coming back for more and making recommendations to friends and neighbors. In the end, the customers' perceived value is all that matters. Think about the best trip you ever took, what made it special?

  • Hospitality starts when you answer your telephone. Answer the phone in a professional manner with the name of your business. State your name and use a friendly tone. For example: Good morning, this is Take Me Home Farm, Jane speaking.
  • Do you offer a 1-800 number for inquiries and reservations?
  • Return calls quickly!
  • Think about how you will greet your customers. You may want to develop a script for both yourself and employees. Welcome to Take Me Home Farm. We have a long history in the dairy business, etc., and we are so happy to have you as our guest today.
  • Know the history of your area.
  • Consider how you can make your visitors more comfortable.
    • Provide your visitors with a suggested list of what they should wear and what they should bring with them. For example: sunscreen, a hat, comfortable shoes - no flipflops, etc.
    • Have umbrellas on hand for unexpected showers.
    • Detail what you have done to make their visit safe and enjoyable. Let them know the rules and regulations you have for the activities they have chosen.
    • If needed, provide alternative modes of transportation around the farm such as golf carts.
  • Don't make promises you can't keep. Your goal should be to give your customers more than they expect, you never want a guest to feel short-changed when they leave.
  • Remember to smile, smile, smile!
  • Every action makes an impression. To promote the image you want to present to your customers, consider:
    • Does your logo represent the image you want to present?
    • How are you and your employees dressed?
    • What does your business card say about you? What image does it present?
    • If you use stationery, does it consistently promote your desired image?
    • When you drive into the entrance of your location, does your signage and landscape look inviting?
    • Are your physical facilities neat and clean and promote a quality destination?
  • Neither you nor your employees can ever take a bad day out on the guest.
  • In the end, ask yourself:
    • How did you make the guest feel special and welcome?
    • Have you done everything necessary to make them want to recommend your location to others?
    • How will visitors remember their experience on your farm or ranch?
  • You may want to provide something for your guests to take home with them to remember their visit, such as:
    • Pictures you took and developed while they were there
    • A small gift with your business logo on it
  • If you provide lodging, what services will you offer?
    • Maid service? Laundry service? etc.
    • In-room television and telephones?
  • Keep a list of activities, services, and phone numbers guests may need, such as:
    • Other local attractions. Are there restaurants, hotels/motels, art galleries, museums, fairs, community events, sporting events, rodeos, craft shops, parks, etc. that your guests might be interested in visiting?
    • Local hospital/doctors
    • Auto repair shop
    • Banks
    • Post office
    • Churches

1Wreden, Nick. How to Recover Lost Customers. 14 July 2004.

Customer Service

Customers are the lifeblood of your business so the happier they are, the better for you.

Customer satisfaction is often linked to customer service, and customer service is a major factor in customer retention and whether you receive positive or negative word-of-mouth referrals. Customer retention is important to the bottom line: research shows that it costs three to five times more to replace than to keep a customer.1 Customer service is also one area where you can gain a competitive advantage.

This chapter will help you create a customer service plan for your agritourism enterprise by helping you

  • Develop customer service policies
  • Establish methods to train employees
  • Learn to evaluate customer service
What is Customer Service?

Customer service is defined as an organization's ability to meet the needs and desires of its customers. Excellent customer service is a vital part of marketing for agritourism enterprises. It is the ability of an organization to consistently exceed the expectations of its customers.

Customer service is displayed in the presentation of your agritourism enterprise and facilities as well as in the attitude, knowledge and behavior of you and your employees. Customer service begins before a customer arrives and ends long after the customer leaves your enterprise.

What is a Customer?

A customer is the most important

person ever in this office —

in person or by mail.

A customer is not dependent on us —

we are dependent on him.

A customer is not

an interruption of our work

he is the purpose of it.

We are not doing a favor

by serving him —

he is doing us a favor by giving us the

opportunity to do so.

A customer is not someone

to argue or match wits with.

Nobody ever won an argument with a


What is Customer Service?2
Customer service is: Customer Service is not:
Attention Neglect
Courteous Words Sharp Replies
Smiles Bored Looks
Enthusiasm Dullness
Response Indifference
Warmth Coldness
Understanding Closed Mind
Patience Irritation
Sincerity Being Mechanical
Consideration Annoyance
Remembering Details Forgetting Details
Facts Arguments
Creative Ideas Humdrum
Giving Receiving
Action Delay
Appreciation Apathy
Components of a Customer Service Plan

The importance of customer service to your agritourism enterprise dictates the need for a comprehensive customer service plan. A customer service plan has five major elements:

  1. Customer Needs, Wants and Expectations - Find out what services your customers need, want and expect to receive from your enterprise.
  2. Customer Service Goals and Objectives - Establish goals and objectives for your enter­ prise based on these needs, wants and expectations.
  3. Customer Service Policies - Develop customer service policies for your enterprise.
  4. Employee Training Policies - Train employees to implement your customer service policies.
  5. Customer Service Evaluation - Evaluate the effectiveness of your customer service plan and make changes where needed.
Developing Your Customer Service Plan

Developing a written customer service plan for your agritourism enterprise may take some time and effort. The effort, however, is well spent as you strive to retain customers and build positive word-of-mouth referrals.

Customer Needs, Wants and Expectations

Your customer service planning should begin with a review of the needs, wants and expectations of your target audience. Does your target audience expect full-service and luxury amenities, self-service with only very basic amenities or something in between? Will your customers require individual attention from your employees to assist them with choosing products, an employee to serve as a guide to a group or just someone to point them in the direction of activities? Do your customers expect to have access to restroom facilities with running water or are port-a-johns acceptable? Do customers expect an employee to answer the business phone during business hours or is a recorded message acceptable?

You may learn more about your customers' needs, wants and expectations by

  • Surveying, interviewing or holding focus groups to ask target consumers questions about their needs and expectations
  • Reviewing customer comments and complaints
  • Asking employees for observations and suggestions
  • Evaluating sales and inventory data for returns and special orders
  • Evaluating wait times for activities, check-out at register and phone calls
  • Considering the service provided by competitors

2Adapted from Ramay Winchester and Lee Curtis. Tennessee Department of Tourist Development.One Visitor/Customer at a Time Hospitality Training Program. April 2002.

Sample Agreement:

Permission to Enter and Use Property for Recreation Purposes

(Guest name) is hereby given permission to enter property known as:

for the following purposes:

on the following dates:

This permission is strictly limited to the above description and is subject to strict compliance with the mies and regulations copied and attached, and other limitations or restrictions which from time to time may be given either orally or in writing.

Release, Waiver, and Indemnity

I have read the above permission and the accompanying rules and warnings, and I understand that participating in (name of activity) results in certain risks, regardless of all feasible safety measures, which can be taken. I am aware of the nature of the risks involved. I will follow any and all rules presented to me. I will conduct myself as a prudent person with regard for the safety of others, and myself and for the property of others.

To the extent proposed activities involve equine activity as that term is defined in state law, I hereby waive the right to bring an action against the equine professional or equine activity sponsor for any injury or death arising out of riding, training, driving, grooming, or as a passenger upon the equine.

I assume the risk of any responsibility of injury, loss, or damage to person or property resulting from my participation in activities on the premises. I will not hold the landowners, possessors, or occupiers liable.

I agree to indemnify and hold the landowners, possessors, or occupiers harmless from any claims or damages resulting from my actions, which may affect the person or property of the landowners, possessors, or occupiers of the premises or any other person.



Section 8: Agritourism Associations and Networks

Skip to Section 8: Agritourism Associations and Networks

Agritourism associations, resources and networks, and other related organizations can provide benefits for farmers and ranchers wishing to diversify their operations. Such associations often provide information and resources, and can prove helpful in three general ways. First, these associations can provide an advertising outlet for your business through websites, brochures, and other media. For example, many associations maintain websites that market attractions in a geographic area or map driving routes to participating farms, ranches, and other agritourism sites. Second, these groups can provide an opportunity to network, interact, and learn from others who are involved in similar businesses. This enables farmers/ranchers to build upon the experiences of others in similar ventures. Third, they provide information on trainings, conferences, trends, and recent research.

Following is a listing of some of the agritourism and related associations, networks, and websites specifically developed for agritourism businesses in order to directly meet identified needs related to marketing their businesses. In addition, there are governmental, non-governmental, and university organizations dedicated to assisting in the development and marketing of agritourism. Online there is a more extensive listing including entries from most states.

Agritourism Associations, Resources, and Networks


Agricultural Marketing Resource Center (AgMRC)


Four Corners Foodsheds / Southwest Marketing Network

Dude Ranchers Association of America



Alabama Department of Agriculture & Industries


Alaska Department of Commerce, Community, and Economic Development


Arkansas Grown


California Agricultural Tourism Online (UC California, Davis Small Farm Center)


Colorado Dept of Agriculture, Market Division


Buy Local Delaware: Agritourism


University of Georgia, Center for Agribusiness & Economic Development


Hawaii AgVentures (Big Island Farm Bureau)


Rural Roots


Illinois Fresh University of Illinois Extensio


The Choose Iowa program (Iowa Dept of Agriculture & Land Stewardship)


Kansas Agritourism (Kansas Agritourism Advisory Council)


Kentucky Agritourism


Get Real Maine (Maine Department of Agriculture)


Maryland Direct Farm Market Association: (farmers' markets & pick-your-own operations)


Association of Roadside Stands and Pick Your Own


Michigan Farm Market & Agritourism Association


Minnesota Farmers' Market Association



New Hampshire

New Hampshire Farmers' Market Association

New Jersey

Visit NJ Farms

New Mexico

New Mexico Farmers' Marketing Association

New York

New York Department of Agriculture and Markets

North Carolina


North Dakota

North Dakota Department of Agriculture Local Foods


Oklahoma Agritourism Program


Oregon Farmers' Market Association


Farmland Preservation Office


Pennsylvania Farm Vacation Association

Rhode Island

Farm Fresh RI


Tennessee Agritourism Association


Texas Network of Farmers Markets Resource Center


Vermont Farms! Association


Washington State Farmers Market Association


Wisconsin Agricultural Tourism Association


Wyoming Farmers Marketing Association

Agricultural Marketing Resource Center 1111 NSRIC, Iowa State University, Ames, IA 50011-3310


Compiled October 2007 by Lisa Chase and Varna M. Ramaswamy, University of Vermont Extension; Steven W. Burr and Jascha Zeitlin, Utah State University Extension; Gary P. Green and Michael Dougherty, University of Wisconsin.

Section 9: Agritourism Resources

Skip to Section 9: Agritourism Resources

This chapter provides a sampling of useful programs and resources in a table format, although not all of them will be applicable to your particular enterprise. As you continue to do research on your venture, you may discover additional resources beyond those listed in this chapter.

Resources for agritourism entrepreneurs can be classified into three major categories: technical, financial, and marketing.

  • Technical resources are available in the form of consultations and educational materials/ publications on production practices, financial management, marketing planning, and business planning.
  • Financial resources are available in the form of loans, grants, and tax incentive programs.
  • Marketing resources are available in the form of promotions and marketing programs.

The following table lists resources in each of these categories. Resource name, category of assistance, description of assistance and agency contact information are included.

Agritourism Resource Table
Program/ Resource Category of Assistance Description of Agritourism Assistance Available Agency Contact Information
Alternative Enterprises and Agritourism Technical
  • Educational materials and publications

National Alternative Enterprises and Agritourism Leader

USDA Natural Resources Conservation Service

P.O. Box 2890

Washington, D.C. 20013

Phone: (202) 720-0132

Fax: (202) 720-6473

Americans with Disabilities Act Tax Incentive Program

  • Tax credit
  • Tax deduction
  • Tax credit for architectural adaptations, equipment acquisitions, and services such as sign language interpreters
    • Tax credit is equal to 50% of the eligible expenditures
    • Maximum tax credit is $5,000
  • Tax deduction for architectural or transportation adaptations
    • A business may use the deduction for the removal of architectural or transportation barriers
    • Maximum tax deduction is $15,000

Internal Revenue Service

Office of the Chief Counsel

CC: PSl:7

1111 Constitution Ave.NW, Room 5115

Washington, D.C. 20224

Phone: (202) 622-3120

Refer to IRS Publications 535 and 334.

Building Better Rural Places Technical
  • Educational publication
  • Resource guide that describes federal programs offering assistance in community development, sustainable land management, and value-added and diversified agriculture and forestry
  • Guide summarizes federal programs on technical and financial assistance in agriculture and forestry

Appropriate Technology Transfer for Rural Areas (ATTRA)

This publication is available in the UNT Library Archives.

Center for Profitable Agriculture Technical
  • Educational materials and publications
  • Consultations
  • Work one-on-one with agri-entrepreneurs and farmers through county Extension agents to evaluate the market potential or feasibility of a value-added venture
  • Aid in developing business or marketing plans
  • Perform market analysis for value-added enterprises
  • Explore regulations for value-added enterprises
  • Coordinate technical production assistance for value-added enterprises

University of Tennessee Extension Center for Profitable Agriculture

P.O. Box 1819

Spring Hill, TN 37174-1819

Phone: (931) 486-2777

Fax:(931) 486-0141


Century Farm Program Marketing
  • Promotions
  • Program identifies, documents, and recognizes farms owned by the same family for at least 100 years
  • Farm is eligible if
    • It has been in the family continuously for over 100 years
    • At least one owner is a Tennessee resident
    • It is 10 acres or more of the original farm
    • It produces at least $1,000 in farm income annually
  • Century Farms receive a certificate suitable for framing
  • Metal exterior sign from Tennessee Department of Agriculture
  • Recognition on the Century Farm Program Website
  • Recognition in Tennessee Farm Bureau News

Center for Historic Preservation

Middle Tennessee State University

1416 East Main Street P.O. Box 80

Murfreesboro, TN 37132

Phone: (615) 898-2947

Fax: (615) 898-5614

Farm Service Agency (FSA} Technical
  • Educational materials and publications
  • Consultations


  • Direct loan
  • Guaranteed loan
  • Informational factsheets are available online about marketing, business management, conservation, and environmental compliance
  • Direct and guaranteed loan programs for farm ownership and operation are available for farmers and ranchers who cannot obtain commercial credit from a bank, Farm Credit System institution, or other lender
Find your local FSA office online. The educational materials and publications are available online on the USDA Farm Service Agency website.

The Business Side of Agritourism

Fletcher, North Carolina

April 27th-29th, 2009

N.C. Cooperative Extension Logo

Center for Agribusiness and Economic Development Logo University of Georgia


Center for Agribusiness and Economic Development
Extension Associate - Farm Management
Agricultural & Resource Economics

Find more information at the following NC State Extension websites:

Publication date: Jan. 1, 2009

N.C. Cooperative Extension prohibits discrimination and harassment regardless of age, color, disability, family and marital status, gender identity, national origin, political beliefs, race, religion, sex (including pregnancy), sexual orientation and veteran status.