Requirements Analysis
Checklists work – only if they are comprehensive
Create a document containing your wish list and property requirements. Determine which requirements are mandatory, which would be nice and which you would like, as well as those deal killers that may appear.
Table of Contents
Ensure your requirements are written
The job is not done until the paperwork is done. Just thinking about it is a trap. The discipline of committing the analysis to paper ensures that itis thought through.
Is it properly done? Could you pass the paper to a skeptic and support each statement with the words and numbers on the paper? Slackers repent at leisure. Do it right and get it right.
What are your homesteading goals?
One man’s joy is another man’s slavery. The goals are yours and must be appropriate to your chosen lifestyle. Ensure that you involve your partner and family in the choice. They will live there too.
Homesteading can mean either a large lawn to mow, a productive hobby farm, or a full on farming enterprise.
Your choice – your goals – your life.
What sort of property do you want?
Firstly and most importantly – you must love your property – or it is not the one for you. It must have that special something that can inspire you.
It must be pretty.
It must also be able to produce a lifestyle for you. That means it can produce a viable income from your chosen endeavour.
How much land do you need?
How much profit do you want and need?
How much profit can be provided per acre utilising your chosen product? This will tell you clearly how much land you need. Usually 25% of the land (house, roads, sheds, creeks etc) will not be used so add this on top of your calculation.
This is your minimum.
Should you buy an on-grid or off-grid property?
This is a lifestyle choice.
It is like a second hand car – you will still pay the same amount whether it is purchase price or in repairs. In this case set-up cost for the infrastructure is paid up front as opposed to utility fees. The payoff comes later.
There is more to off-grid than solar electricity and a vege garden. It implies a higher degree of self sufficiency and less visits to the supermarket. It also involves more work.
What is the best location for a homestead?
I am sure that you have a preferred area that is close to friends and family. This is ideal if the land in that area suits your preferred enterprise. What to do if it does not suit?
Either change the enterprise or change the area. There is no correct answer here – it is a personal choice. The choice of another enterprise will involve learning new techniques and products. How steep is the learning curve? Are you up for it?
Can you afford the property?
Create a budget and cash flow to show:
- the purchase cost
- the cost to upgrade
- your expenses until you see a profit
- how long it will take to see a profit
Remember, it always takes longer and costs more than you think – so leave some wiggle room! A 2 year contingency fund is the minimum.
Your CHOSEN purchase price is the absolute maximum you are prepared to pay. To pay more, or eat into the contingency fund will create years of hardship trying to build back up – DO NOT DO IT!
More businesses fail due to insufficient starting capital than for any other reason
How much income do you require?
Write down your current and projected expenses including tax. Total them then multiply that number by 3. This is the minimum target nett income. Your first and most important goal.
This may sound excessive but it leaves some wiggle room. Life always works out to be more expensive than you think it will be.
How are you going to make an income?
Now you need to create a list of income and expenses for potential enterprises – plural. This will help sort your likely products. Look for an integrated list.
You need a minimum of 3 income streams – 5 is better. When one enterprise is up, another will be down, and the remainder are in the middle. Next year is the same – but with different enterprises. We live on the average effect.
Do not be caught producing only one product with 1 year up 2 years in the middle and the remaining 3 down. That is struggle country with the only winner being the bank.
What products can provide the income?
Consider production in two phases:
- Interim income
- Final income
Most businesses have a period before they start to pay well. Your interim income must cover this period profitably.
Interim Income
A clear example is an orchard. High value, low risk annual cash crops (maybe garlic and flowers) grown in the alleys will provide an income until your trees are producing well. Be creative here – there are some cash crops with a good ROI.
Final Income
This is your main production activity. Consider diverse income streams to balance the ups and downs and be efficient. Fruit cider is an excellent way to use damaged fruit.
Further, consider multiple use of resources – an example is cropping in the alley between the trees as well as crops grown under the trees that provide an income and assist the trees.
I have seen pine needles sold as a mulch for acid loving gardens. They are easy to harvest and bale if the pine trees are in a row. Think outside the square. This concept applies to all enterprises.
Let the neighbours laugh. Just remember that when you buy the new car and machinery, they will be all copying you in 4-5 years. Just be ready to stay in front of their game.
What microclimates do you need?
Once you have identified your main and secondary products, determine the environment needed to optimally produce them. Now you know the primary parameters for your land. What can be done in the likely area to properly produce your choice?
The parameters will include:
- Climate
- Growing season
- Soil type
- Water availability
- Altitude
- Access internally and externally
- Slope of the land
What soil do you need?
In the Scale of Permanence, soil is the easiest to change.
Most soils can be made productive inside 5 years with the correct treatments. Applying compost tea and worm tea as well as an appropriate cover cropping regime can rapidly boost soil micro life. This will lead to increased fertility at low cost. The best part is that this can return an interim profit.
How much water do you need?
After climate and access, water is the most important consideration – both quality and quantity.
Keyline Systems, swales and in-ground water storage can improve the land by creating soil depth and upgrading the micro life.
Determine how much water you need for your proposed production. Is it available? Can it be captured and stored?
Pollution
Avoid being downstream or downhill of the municipal dump or any industry. Other negatives are district specific.
This is an utter deal killer.
Author’s Note
Starting finance is critical – I KNOW! – I lost 2 businesses due to foolhardy optimism before I learned that lesson. The secret to success is income not capital value. Asset rich, cash poor is hard!
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In Summary
Determine clearly what you want to produce, what is needed to produce those products, how much land you need etc Write it down – THEN go looking for suitable land. Do not wing it – ever.
Prior to devoting my time to Properly Organic and Designer Acres, I served as a contracted super tech in the bleeding edge of satellite imagery, business management and accounting software, then telecommunication software bringing SMS and Mobile Application Protocol into Australia. I then decided to return to the land. I quickly discovered that apart the shape of the bales and the colour of the tractors little had changed.