Agriculture Business – A Good Investing Option

By: Jono Craven
Agricultural businesses are diverse and cover much more than a large farm or ranch. A person looking to start a business or buy an existing business in this area will need financing as well as particular knowledge. The accessibility of land to start a new agricultural business is a limiting factor these days as there just is not that much land still not being refined. This means that a new owner will usually have to find an agricultural business that is for sale. There are always family businesses for sale, but they do not become available at low prices these days.

The land is valuable and the obtainable equipment if in good repair is also not contemptible. New equipment is priced like new cars are these days. The prices are higher and higher and out of prospect. Most new owners of ranches or farms were born into the family business and are just taking over the running of a family or corporate venture. There are other related agricultural businesses that can be started from scratch or purchased from an existing owner. These include farm supplies, farm equipment, nurseries, small special crop farms, pest control, a niche winery, crop dusting companies and horse or cattle ranches. All of these businesses can usually be found on the market. The problem, as with any other purchase of a business, is this. Can the buyer come up with enough money to interest the current owner and will the current owner carry back some of the paper. There are many very solid reasons that a new owner should consider buying an existing operation rather than starting a new company. The cost will be higher usually with a running business, but the existing business will have customers or a history of production.
Many of the related agricultural businesses will not take the capital to get started or to buy that is desirable for the purchase of a large ranch or farm. Farming now days is a capital concentrated business and this is one of the reasons that family units are always coming on the market. This opens the door for chance for the person looking to buy, but it also means that the buyer must have the capital or credit to make the purchase. A proposal for a potential buyer is contact brokers who specialized in these businesses and see what is being offered and the terms of the offers. This will quickly notify the buyer what they are going to need to make a sale ensue.

If you are interested in buying an agricultural business that supports the farming community, then your capital expend may be considerably lower and may show a higher percentage return on investment. Farming has a low return on invested capital since the price of land and equipment has sky rocketed in this current market. Some of the other particular businesses can be purchased or started with less capital and the percentage return is significantly higher. These are factors that should be considered by a potential new owner. One of the reasons that the family units come to market is just this fact. The old owners die or wish to retire and their children do not with to continue the business. So they put it up for sale, knowing they can get a better return on their money without the work or the risk of farming. Brokers usually know why a property is being offered and this knowledge can help the buyer make a better deal with the old owner. Maybe just as a matter of principal, they want to see their farm remain a family farm and not part of a large agricultural corporation.

The greatest advice that a potential owner can get is study the market and make sure you have the desired money to pull off whatever deal you are looking at. Find a knowledgeable broker and ask lots of questions. Use the Internet to look up answers to questions that you come across.