How to Start a Christmas Tree Farm

Christmas is a time to spread joy! Wouldn’t you like to spread joy by providing Christmas trees that delight young and old?

With a Christmas tree farm, you could do just that, and make a nice profit at the same time. The US Christmas tree market has nearly doubled in recent years, which is why Christmas tree shortages are not uncommon. You could take advantage of all that unmet demand with your own tree farm!

No business comes without challenges, however, even one as simple as a Christmas tree farm. Fortunately, this step-by-step guide will give you all the insight and information you’ll need to put you on the path to becoming a santa-preneur!

Step 1: Decide if the Business Is Right for You

Pros and cons

Every business has pros and cons, and they need to be carefully considered before you decide if a Christmas tree farm is right for you.

Christmas tree industry trends

As many as 30 million Christmas trees are sold in the US each year, with about 350 million trees growing at any given time.((https://realchristmastrees.org/education/quick-tree-facts/))

Demand remains strong for real Christmas trees, yet supply is low due to supply chain issues and climate change.((https://www.cnbc.com/2021/11/16/christmas-tree-shortage-because-of-supply-chain-issues-climate-change.html)) This is good news for small Christmas tree farmers, giving them an advantage over the big stores like Lowe’s and Walmart, which rely on traditional supply chains. It’s also good news because it’s driving up prices by as much as 25%.

Industry size and growth

• Industry size and past growth – Pre-pandemic sales of real Christmas trees in the US reached $2.56 billion in 2018.((https://www.statista.com/statistics/278007/us-christmas-tree-retail-value/)) 
• Growth forecast – The North American Christmas tree market is projected to grow at least 4% per year through 2027.((https://www.mordorintelligence.com/industry-reports/north-america-christmas-tree-market))
• Number of businesses – The US is home to nearly 15,000 Christmas tree farms.
• Number of people employed – Christmas tree farms employ more than 100,000 people.

Trends and challenges

Christmas tree industry trends include:

• Buyers of real Christmas trees are younger, with the average age at 38 years old in 2020, 4 years younger than the average age of buyers in 2019((https://realchristmastrees.org/2021/06/02/2020-season-overview-the-impact-of-covid-19-on-real-tree-sales/))
• More urban dwellers are buying trees as the number of urban customers increased 8% in 2020 compared to 2019
• Millennial households prefer real Christmas trees because these are biodegradable and sustainable

Challenges in the Christmas tree market include:

• Tight supply as trees need 8-10 years to mature
• Climate change and natural disasters

Consumer spending

• Average consumer spend – The National Christmas Tree Association says US consumers spent an average of $76.87 on a real Christmas tree in the past decade.((https://www.statista.com/statistics/209238/mean-average-dollars-spent-on-rea-and-fake-christmas-trees-in-the-us/))
• Potential customer base – More than 26 million Americans got a real Christmas tree in 2019.((https://www.statista.com/statistics/209249/purchase-figures-for-real-and-fake-christmas-trees-in-the-us/))
• Average prices – In 2021, live Christmas trees cost $78 each while fake trees cost $104, according to the American Christmas Tree Association.((https://www.christmastreeassociation.org/resource-hub/2021-frequently-asked-questions))

What kind of people work in a Christmas tree farm?

An arborist is a tree doctor who treats tree diseases and other problems.

• Gender – 93% of arborists in the US are male, while 7% are female.((https://www.zippia.com/arborist-jobs/demographics/#gender-statistics))
• Average level of education – Nearly half, or 45%, or arborists hold a bachelor’s degree.((https://www.zippia.com/arborist-jobs/education/))
• Average age – The average age of an arborist is 41 years old.((https://www.zippia.com/arborist-jobs/demographics/#age-statistics))

How much does it cost to start a Christmas tree farm?

Startup costs for a Christmas tree farm range from around $4,000 to $85,000. The high end includes purchasing land for your farm, so if you already own land you’re ahead of the game. If you don’t have land, you could potentially enter a sharecropping agreement with a landowner. That means that you would essentially be a tenant of the landowner, grow your trees, and split the income.

You’ll need a handful of items to launch your Christmas tree farm successfully. Here’s a list to help you get started:

• Tractor (or you can pay a farmer to prep your land)
• Mower
• Pruning shears

How much can you earn from a Christmas tree farm?

Setting aside the cost of farmland, the cost to grow a single tree is about $1, while the same tree can be sold for about $80, resulting in a more than 95% profit margin.

With 10 acres, after 8-10 years you could produce 1,000 trees. Assuming they all sell, you would bring in $80,000 in annual revenue and $76,000 in profit. As your brand gains recognition, you could add acreage and sales could climb to 1,500 trees a year. With expected annual revenue of $120,000, you would make about $114,000.

What barriers to entry are there?

There are a few barriers to entry for a Christmas tree farm. Your biggest challenges will be:

• Land – Acquiring land if you don’t already have it
• Location – Your land must be convenient for a large market of people
• Time – It takes 8-10 years for the trees to mature

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Step 2: Hone Your Idea

Now that you know what’s involved in starting a Christmas tree farm, it’s a good idea to hone your concept in preparation to enter a competitive market.

Why? Identify an opportunity

Research your area for Christmas tree farms and identify which types of Christmas trees are most popular. Right now, in many areas the most popular types are firs and blue spruce. You’ll need to find out which trees grow best in the climate and soil type of your area, and then determine what trees you want to grow.

You might consider targeting a niche market by specializing in one type of tree.

This could jumpstart your word-of-mouth marketing and attract clients right away.

What? Determine your products or services

In addition to trees, you could increase your revenue by selling other items. If you have enough land, you could even grow other types of trees and plants so that your business is less seasonal. Additional products might include:

• Wreaths
• Poinsettias
• Christmas blankets and stands
• Tree decorations
• Christmas lights and other decorations

How much should you charge for Christmas trees?

The cost of a live Christmas tree is between $65 and $95 with the average tree costing around $80. Your costs of growing and selling your trees should be very low, so your profit margin will be quite high.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be broad, but it will be mainly families who celebrate Christmas. You’re more likely to reach families on a site like Facebook, rather than on Instagram.

Where? Choose your business premises

If your farm is in a location that’s convenient for a lot of people, you won’t need a commercial space. If you are in a more rural area, you may need to rent out part of a parking lot or other outdoor space for your stand. You can find commercial space to rent in your area on Craigslist, Crexi, and Commercial Cafe.

Step 3: Brainstorm a Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better
• The name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “Christmas trees” or “holiday trees,” boosts SEO
• Choose a name that allows for expansion: “Jim’s Bakery” over “Jim’s Cookies”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
• Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
• Product and Services: Describe your offerings in detail.
• Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
• Competitive Analysis: Analyze main competitors, assess their strengths and weaknesses, and create a list of the advantages of your services.
• Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
• Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
• Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
• Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
• Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to Christmas tree farms.

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your Christmas tree farm will shape your taxes, personal liability, and business registration requirements, so choose wisely.

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just needs to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using ZenBusiness’s online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship, you can simply use your social security number as your EIN.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.govto learn which might work for you.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a Christmas tree farm. You might also try crowdfunding if you have an innovative concept.

Step 8: Apply for Licenses/Permits

Starting a Christmas tree farm requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your Christmas tree farm as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.

You might want to use industry-specific software, such as Hectre, conservis, and Granular, to manage your harvests, sales, inventory, and more.

Accounting 

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Marketing

Some of your business will come from the casual passerby or online visitors, but still, you should invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness. 

Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products: 

• Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area. 
• Instagram: Same benefits as Facebook but with different target audiences.
• Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now.” This can sharply increase purchases.
• Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.

Kickstart Marketing

Take advantage of your website, social media presence, and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:

• Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as a free poinsettia with a tree purchase.
• Signage – Put up eye-catching signage at your farm and website.
• Flyering – Distribute flyers in your neighborhood and at industry events.
• In-Person Sales – Offer your products/services at local markets and trade shows.
• Post a video – Post a video about your Christmas tree farm. Use humor and maybe it will go viral!
• Email marketing/newsletter – Send regular emails to customers and prospects. Make them personal. 
• Start a blog – Start a blog and post regularly. Change up your content and share it on multiple sites.
• Press releases – Do press releases about new products, sales, etc.
• Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
• Pay-per-click marketing – Use Google AdWords to perform better in searches. Research your keywords first.
• Influencer marketing – Pay people with large social media followings to promote your Christmas tree farm. You can find micro-influencers with smaller followings and lower rates.
• Testimonials – Share customer testimonials about how they love your trees.
• Create infographics – Post infographics and include them in your content.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your Christmas tree farm meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.

Global pizza chain Domino’s is renowned for its strong USP: “Fresh, hot pizza delivered in 30 minutes or less, guaranteed.” Signature USPs for your Christmas tree farm could be:

• Spruce up your holidays with a Spruce tree
• Christmas trees and all the décor – one-stop shopping on a farm
• Doesn’t get any fresher than fresh cut!

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a Christmas tree farm, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in Christmas tree farms for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in Christmas trees. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

You may not need any employees since Christmas trees require very little maintenance. But as your business grows, you may need workers to fill various roles. Potential positions for a Christmas tree farm would include:

• Laborers – Help with farm maintenance
• Clerks – To sell the harvested trees
• Marketing Lead – SEO strategies, social media, other marketing

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Step 13: Start Making Money!

Demand for real Christmas trees has been growing steadily, despite the many artificial options. For many people, nothing beats that fresh pine scent. Besides, real trees are biodegradable and better for the environment than plastic trees.

Since Christmas trees can be hard to find right now, if you get started right away you can help fill that gap when your first harvest comes in. While waiting, there are many other things you can do in your Christmas tree farm.

You’ve done the right thing by seeking guidance, and you’re now ready to start your sleigh ride to Christmas tree success!