The Legal Side to Growing a Business

 

I discovered that starting a business requires research, planning, thought, and decision making, much like plotting out a garden. Participating in the Enterprise for Equity program helped set the course I needed to take to make the leap and open a business in Washington State.

My first course of action was to research resources and interview farmers, lawyers, insurance agents, graphic artists, and tax experts. Most of the wholesale flower farmers I spoke with have chosen to operate their business as a sole proprietorship. This means that their business is owned and run by one person and there is no legal distinction between the owner and business entity. A sole proprietorship is the least  expensive and complicated route to forming a business. I chose to form a limited liability company (LLC) for the added protection and creating a plan that will work for me. An LLC provides owners (members) protection from business debts and liabilities. Creditors cannot pursue the personal assets (house, savings accounts, etc.) of the owners to pay debts. An LLC can be taxed as a sole proprietorship, a partnership, or a corporation. The one drawback to an LLC is the added filing fees, annual fees, and extra paperwork. I will need to keep records of business expenses completely separate from my personal spending. I will also have a separate business banking account.

Before making my final decision I consulted with Barnard Kalikow of Kalikow Law office in Olympia. We discussed my desire to bring a partner into my business in the future and the advantages of sole proprietorship, LLC, and corporations.  We both agreed it would be best to form as a limited liability company for asset protection and the ease of bringing in a future business partner.

I also met with Brian King of Farmers insurance company, he acknowledged that my business was low risk. I do not have people visiting my farm, nor am I selling a product for consumption, however my home policy would not cover incidents are accidents related to the business. The yearly cost for business insurance will be $900.00.

Another helpful and free resource for information was Keri O’Connell from the Washington State Department of Revenue. Keri is a tax information specialist and offers taxpayer services, she was a guest speaker at Enterprise for Equity. I found the Washington State Department of Revenue staff to be approachable and helpful. Their website is www.dor.wa.gov

Filing with the Washington Secretary of State is required prior to filing for a business license for corporations and limited liability companies. They assign a Unified Business Identifier (UBI) number. This is a nine digit number that will be used to file and pay all state taxes and do business in Washington state.

For federal taxes a Unified Business Identifer (UBI) will be assigned as well. This number is for federal tax filings. Both numbers are like a fingerprint for the business.

https://www.sos.wa.gov/

 

The cost for filing a business license application was $5.00 for my trade name, $19.00 for the processing fee, and $30.00 for a general business endorsement fee.

http://bls.dor.wa.gov/

 

 

 

 

 

 

Week Nine

A peony in full bloom.

This week I reflected on my time spent working as an intern at Jello Mold Farm, and contemplating the direction and focus I need to take to grow a sustainable farm based business.  The internship gave me valuable insights into the inner workings of the Seattle Wholesale Growers Market Cooperative, and the realities of farming as a livelihood. The owners of Jello Mold generously shared their vast amounts of knowledge, experience, and advice. They were incredibly open and trusting in sharing their personal financial information. This allowed me to gain a clear picture of the practicalities of running a farm based business.

I was impressed with the lean farm practices implemented in the daily operations at Jell Mold Farm.

A small tool shed centrally located in the fields.

 

Tools and supplies are neatly organized and labeled.
Fellow intern Pam storing poppies ready for market.

Diane stressed the importance of time saving techniques such and organization. Procona cooler buckets are used to store and transport products. Diane uses a color code system to harvest and store the flowers and woody greens. The white and black buckets are for products sold on the market floor. Green buckets are only used for pre sold orders, this helps eliminate mistakes to special order customers.  Wasted time equals wasted money. Small farms operate on a tight budget of time and money, organization saves time and money.

A refrigerated room is essential for storing flowers or food for market. The Cool Bot system can easily be installed for under a thousand dollars.  The unit at Jello Mold is 9 by 16 feet, the cooling system cost $650. Dennis stressed the importance of following the manufacturer’s instructions. Their room is lined with plywood covered in mildew resistant paint, and foam insulation is used instead of fiber.

 

Procona cooler buckets are used to harvest, store, transport, and display flowers and greens.

https://www.pagter.com/en/procona

Moving forward

I feel ready to move forward and officially start a wholesale cut flower business on my property. Going through the Enterprise through Equity program helped me create a comprehensive business plan and map out the necessary steps needed operate a successful small business. It was especially helpful research the start up and operating cost associated with opening a farm based business. I was required to map out a contingency plan to fall back on if my business does not make the money I anticipate during the first years in business. This exercise helped to remove the fear of failure and move forward with starting a farm.

Working as an intern at Jello Mold gave me a snapshot of the realities of making a living as a farmer. I also gleaned some very useful information from farmers who learned through trial and error. Diane and Dennis recommended I consider installing more hoop houses than I had previously considered. They also suggested I buy crop insurance from the USDA whole farm revenue protection plan. I also had to reconsider some of the plant choices I was set on growing, such as Hypericum, Spirea, Limelight Hydrangea, and Snowball Viburnum. Learning and working with farmers offers access to information accumulated through hands on experience.

 

Week 8 Internship at Jello Mold Farm

Rows of colorful foliage at Jello Mold Farm.

I spent the week of May 21 through the 25th working at Jello Mold Farm in Mt. Vernon Washington. My internship proved to be a wonderful learning opportunity that aligned perfectly with my learning goals. Owners Diane and Dennis were incredibly generous, sharing their vast amounts of knowledge gained through years of experience growing flowers for the wholesale cut flower market.

Jello Mold flower stand at the Seattle Wholesale Growers Market Cooperative.

 

I started the week off learning how to harvest and package flowers and foliage for the wholesale market.

Dennis demonstrating the proper way to select, cut, and bundle sweet peas.

Sweet peas are a popular and lucrative crop sold at the Seattle Growers cooperative. Dennis and Diane start their seeds in soil blocks in November and plant out in their hoop house in February. They lime the soil to maintain a ph between 6-7.5, the plants are watered regularly and pinched back when young to encourage branching. String trellis netting is installed from ground to the top of the hoop house roof. Harvesting last from late April to early July.

Sweet Peas are sold 15 stems per bunch, the minimum harvest length is 7 inches. Harvest stage is done when the bottom two flowers have opened. The bouquets can be stored up to five days in cooler before selling. The average vase life is five days for Sweet Peas.

The mission statement displayed in the new office of The Seattle Wholesale Growers Market Cooperative.

On Wednesday morning we were up by 2:30 am to make a delivery to the Seattle Wholesale Growers Market Cooperative. Last year Dennis and Diane purchased a refrigerated truck. This enables them to load their wares the night before, it also allows for easier transport of pre loaded racks.

I was impressed with the cooperative spirit of the market members. Diane introduced me to growers, they shared helpful advice and freely answered my questions on crop selection. Fellow members helped one another unload and set up their displays. The market manager Molly coordinates crop planning with the growers to ensure that there is ample stock and variety for the customers and ensures that the market is not flooded with the same products. This benefits buyers and growers, helping to maintain the cooperative spirit that is the foundation of The Seattle Wholesale Growers Market.

The floor display of Everyday Flowers. Owner Vivian is a founding member of the market.
Gorgeous anemone flowers on display from Everyday Flowers. Anemone is a genus of over 200 species of flowering plants in the Ranunculaceae family.

 

 

 

 

 

Week Seven

An unknown variety of lilac growing on my farm.

I have been researching possible candidates for wholesale cultivation for the cut flower market this week. Two woody shrubs that I am interested in growing are Syringa, better known as lilac, and Viburnum,  commonly called snowball bush.

viburnum opulas

There are over one hundred species of viburnum. Most have one or more ornamental traits that that make them a desirable choice for wholesale production. Viburnums are easy to grow in the pacific northwest, optimal growing conditions are moist acidic soil. Viburnum acerifolium, mapleleaf viburnum is a native to eastern North America. It grows best in heavy shade. It produces stunning fall foliage in shades of pink, red, and purple.

Pros

  • Many early flowering species have highly fragrant flowers.
  • Several cultivars produce colorful fruits or striking fall foliage.
  • Snowball viburnum is among the top ten bestsellers in the cut flower market.

Cons

  • Fragrant species have a short vase life.
  • Harvesting for fall fruit can only be done biennially

Lilac Syringa

Lilac is also one of the top ten sellers, stems command a good price. It does not ship well, this makes it a good choice for the local market, with little competition from international conventional grower.

Lilacs perform best in a sunny location with well drained soil and  ph levels between 6 and 7.5. They need to be fertilized in late fall and again after flowering, with a nitrogen, phosphorus, and potassium ratio of 1-3-5. High nitrogen concentrations must be avoided to produce flowering.

Bacterial blight occurs in spring when there are mild temperatures and wet weather. Symptoms of lilac blight are similar in appearance to fire blight in fruit trees. The flowers wilt, turn brown, and unopened flower buds turn black. The disease starts as brown spots on the stems and leaves of young shoots in the spring. The spots become black and spread rapidly in warm wet conditions. Recommended species for the northwest  that are resistant to bacterial blight include: S. josikaea, S. Lomarowii, S. microphylla, S. perinensis, and S. reflexa.

Pros

  • Lilac thrives in the northern regions.
  • Fragrant flowers in shades of blue, pink, lilac, and white, singles or double flowers.
  • Once established plants can last for decades with minimal maintenance.

Cons

  • Plants have a long juvenile period before production.
  • Stems have hard wood and are difficult to hydrate.
  • Vase life is short, an average of five days.

Deer and Elk Fencing

The elk have returned this week. They will begin calving toward the end of May.

While writing my business plan I realized that fencing will be of the most expensive start up costs in my first year. I have a resident herd of over seventy Roosevelt elk that pass through my property throughout the year. They return in the spring for calving season, and in October for their rutting season. I am always amazed that a herd of animals that are the same size as a horse or cow can appear and disappear so quickly and quietly. I feel blessed to have the opportunity to live with and observe the herd year round. Though they are noble, the elk and deer can wipe out a crop overnight. To manage this problem I opened up a swath of land one hundred feet on each side of Mclane creek, to act as a passage through my property.  Working with the Thurston Conservation District we have established a buffer of native trees and shrubs along the creek. I hope that by offering a wildlife passage they will go around, rather than through  the growing areas.

I am using Rhonda hart’s book Deerproofing Your Yard & Garden, an useful guide for deterring and fencing out deer and elk.

Mapping out my fence.

 

Six Quick Fencing Lessons

  1. When Possible, fence first, plant second
  2. If deer can’t go over, through, or under, they’ll go around.
  3. A fence with a hole is no fence at all.
  4. Fences over bumpy or steep ground are more difficult to install and can be more expensive in terms of both materials and labor.
  5. Pounding beats digging. Post driven or pounded into the ground are more secure than those placed in a hole dug out by hand.
  6. There’s more than one way to fence out a deer!

courtesy of Deerproofing Your Yard & Garden by Rhonda Hart  pg. 154

This week I priced out the cost of materials for fencing off nearly an acre of growing space. The fence will be eight feet tall with two gates. I have yet to decide exactly where the gates will be located. The hardware for the gates are not included in the materials list. I will definitely use an auger to drill the fence post!

Cost of Deer Fence

Prices reflect April 2018

200 feet x 200 feet deer fence eight feet tall

80- 4x4x12 foot post Home Depot $24.57 ea $1965.60

186- bags concrete Home Depot $3.50 es $651.00

5-48 x 330 wire fence Tractor Supply $279.99 $1400.00

Total Cost of materials $4016.00

I attached Plant Pro-Tec repellent clips to my unprotected pear trees to test their effectiveness. The active ingredient is garlic oil

 

I’m testing the usefulness of Irish Spring soap tied in old socks. I’ve hung several soap enclosed socks on my young fruit trees that were defoliated by deer last year.

http://www.americanatural.com/products/insect-animal-controls-repellents/plant-pro-tec-deer-repellent.html

 

Week Two: Internship

Tulip season has begun! My first chore in the morning was harvesting the tulips for market. Flower harvesting for market differs from cutting flowers for a home bouquet. Tulips are harvested for market when the petals are closed and starting to show some color. If the outer petals are green they are left in the field for harvesting at a later date. The stems are cut long and low, down to the bulb. Some wholesale sellers leave the stem attached to the bulb, storing them intact or selling them with the bulb. This practice can promote a longer shelf life. The foliage is stripped, and the tulips are packed immediately into sanitized buckets and stored in a refrigerated cooler.

Tulips picked, packed, and ready for market.

This week I finished up my business plan draft for Enterprise for Equity. I found a lot of recent articles on the wholesale cut flower market. I was able to glean some encouraging data from an interview of Diane Szukovathy, founding member of the Seattle Wholesale Growers Market Cooperative. The interview is in the March 2018 issue of Growing for Market, a monthly newsletter for market gardeners, edited by Lynn Byczynski.

The Seattle Wholesale Growers Market Cooperative was founded in February of 2011. Diane Szukovathy and husband Dennis Westphall, owners of Jello Mold flower farm and 11 other northwest growers formed a growers cooperative with shared marketing opportunities and goals. The first year the cooperative generated $300,000 total sales revenue. Jello Mold’s gross income increased by 84% during their first year. Last year the co-op generated $1.68 million in revenue. In December the market relocated to a larger space that will allow them to meet demand and continue to grow. Nearly 55% of the market sales are from pre-sold orders. 65% of the sales are from members of the co-op, the remaining sales are from consignment sales. New growers are encouraged to sell on a consignment basis their first year. The six member team of full time employees manage operations and lend support to new growers, who are assigned crops to fulfill the growing demand. The co-op does not require members to sell exclusively through the co-op. I plan to target local florists within a 25 mile radius, but my primary goal is to sell on consignment and seek membership in the Seattle Wholesale Growers Market Cooperative during my second year of operation.

Week One: Growing a Farm

On April 4th I met with fellow Student Originated Studies (SOS) classmates in the computer center on campus. We went over WordPress, Zotero, time logs, and internship expectations. I have decided to title my project Growing a Farm, I will set up a farm business from home this quarter based on my studies last quarter with the business readiness course Enterprise for Equity (E4E). I will finish my business plan and follow the steps to create a Wholesale Cut Flower business. My hands on learning will come from working as an intern on the Organic farm at Evergreen State College. I have also applied for a weeklong internship with Jello Mold Farm in Mt. Vernon, working with Diane Szukovathy, one of the founding members of The Seattle Wholesale Growers Market Cooperative in Seattle.  I will round out my learning by taking a botany course through The Great Courses lecture series, entitled Plant Science: An Introduction to Botany by Dr. Catherine Kleier.  https://www.thegreatcourses.com/courses/plant-science-an-introduction-to-botany.html