Marketing and Economics for Small-acreage Properties UNCE, Reno, Nev. Developed by: Cinda Williams,...
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Transcript of Marketing and Economics for Small-acreage Properties UNCE, Reno, Nev. Developed by: Cinda Williams,...
Marketing and Economics for Marketing and Economics for Small-acreage PropertiesSmall-acreage Properties
UNCE, Reno, Nev.
Developed by:Cinda Williams, University of Idaho ExtensionBob Hamblen, Colorado State Cooperative ExtensionKevin Laughlin, University of Idaho ExtensionSusan Donaldson, University of Nevada Cooperative Extension
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What we’ll learn todayWhat we’ll learn todayReexamine your property goals
Do you want to make a buck?
Can you make a buck?
Business plans
Marketing methods
Keys to success
Resources
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So, you want to make a buck?So, you want to make a buck?
http://fruithome.com/pictures/money_t3.jpg
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Reexamine your Reexamine your property goalsproperty goals
Look at the map you made in Module 1, Lesson 1
You’ve added, revamped and changed the plans for your property
Now comes the time to ask, “Can I make a buck at this?”
Well
Marshy
Stream
Weedy
Septic
Gate
Fence
Trees
LegendAcres = 25
Animals = 6 cows, 1 horse, 3 goats
Pastures = 1
Months animals grazed = 9
Soils = sandy clay loam, siltGrasses present = Tall fescue, orchardgrass, clover, bentgrassWeeds present = Canada thistle, pigweed
House
Barn Barn
Property Map
Manure pile
Water trough
Bare ground
Barn
Legend
Acres = 25
Animals = 2 cows, 1 horse, 10 dairy goatsGrasses present = Tall fescue, orchardgrass, clover, bentgrassSoils = sandy clay loam, silt
House
Barn Bar
n
Property Map
Processing shed
GC
GH Greenhouses (high tunnels) --- Wildlife planting area Hot-wire fence
C
GH
GH
GHGH GH
New gravel road for access
Well
Trees
Weedy
Bareground
Pasture
Marshy
Stream
Water trough
Gate
Fence
SepticManure compost area
Cropping area
Ground cover planted
P
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Reexamine your Reexamine your personal goalspersonal goals
Why do you want to sell a product?
Do you have the skills and resources to grow, raise, manage and market a product on your property?
Why do you want to do this? Is it going to be FUN?
What are you going to sell?What are you going to sell?
www.sustainablepoultry.ncat.org
www.eatapples.com http://blog.americanfeast.com
http://blogs.venturacountystar.com
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Are your physical resources Are your physical resources adequate for the enterprise?adequate for the enterprise?Irrigation water?Soil?Climate?Length of growing season?Vicinity to buyers or consumers?Equipment?Storage?Property access?
yourproduceman.com
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YouYou are a physical resource are a physical resource
USDA NRCS
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Does your family share your Does your family share your enthusiasm for the product enthusiasm for the product
and this venture?and this venture?
Time and moneyTime and money
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What about external factors?What about external factors?
USDA NRCS
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So, you still want to make a So, you still want to make a buck?buck?
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How are you going to How are you going to decide?decide?
Guess
Throw dice
Use a dart board
Use a decision-making process
Use a SWOT analysis
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Another approach: Another approach: Develop a business planDevelop a business plan
Mission statementGoals (short-term and long-term)Marketing planProduction and operating plansFinancial planStaffing and labor plansManagement planContingency plan
Why write a business Why write a business plan?plan?
A business plan becomes the A business plan becomes the road map for your enterpriseroad map for your enterprise
www.internest.com
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It is specific to each It is specific to each particular businessparticular business
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It serves as the basis for It serves as the basis for obtaining financing for the obtaining financing for the
proposed enterpriseproposed enterprise
www.communitybank.net
A business plan is most useful if A business plan is most useful if you put it in writing and can refer you put it in writing and can refer
back to it regularlyback to it regularly
www.realhomebusiness.com
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www.sheepcrc.org.au
70 to 80 percent of new businesses fail in the first year
Failure is often attributed to a lack of adequate planning
Why spend so much time on Why spend so much time on planning?planning?
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Start by knowing your productStart by knowing your productCrops Traditional (acres
of a single crop) Multiple crops Specialty
Livestock Traditional Specialty
Value-added products
NCSU
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Do your product homework!Do your product homework!
Read, research and explore everything you can find about the product
Research similar enterprises
Talk to your family and get their input
Ask yourself: Why might consumers buy my product? What makes it stand out?
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Why buy my product?Why buy my product?
Take five minutes to develop a plan to “tell your story” as a PRODUCER to explain why someone would want to buy product A, B, C, etc.
Then, take five minutes to develop a plan to “tell your story” as a CONSUMER to explain why you would want to buy product A, B, C, etc.
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Understand your marketUnderstand your market
Village Market, Calif.
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An example: An example: niche marketsniche markets
Ethnic vegetables
Kid goats for religious holidays
Heirloom vegetables or fruits
Pesticide-free fruit
Free-range chicken eggs
Duck or turkey eggs
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Direct-marketing methodsDirect-marketing methodsRoadside stands
U-pick
Community-supported agriculture (CSA)
Custom livestock
Restaurants or grocery stores
Institutional customers (schools, prisons, colleges and corporations)
Farmers’ markets
Value-added processing
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On-farm or On-farm or roadside roadside standsstands
Rural Roots
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U-pickU-pick
Farm-fresh treats and U-pick fun
Travel Oregon
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Community-supported Community-supported agriculture (CSA)agriculture (CSA)
Great Basin Basket CSA
Custom livestockCustom livestock
UNCE, Reno, Nev.
Restaurants or grocery storesRestaurants or grocery storesbonappetitnetworks farm to fork Rural Roots
Institutional customersInstitutional customers
bon appetitnetworks farm to fork
Farmers’ marketsFarmers’ markets
Jonathon Demcak
Value-added processingValue-added processing
Lavenderridgereno.com
AgritourismAgritourism
H. George, UCCE
You’re only limited by your creativity and You’re only limited by your creativity and your ability to successfully market!your ability to successfully market!
gunsncoffethestranger.com
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More marketing alternativesMore marketing alternatives
Web-based ordering
Mail ordering
Catalogs
Cooperative partnerships
Cooperative marketing
Etc…
Don’t discount word of mouthDon’t discount word of mouth
UNCE, Reno, Nev.
Collaborate with the Collaborate with the competitioncompetition
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Now you’re finally ready to Now you’re finally ready to develop a business plan!develop a business plan!
Remember, the parts of a business plan are:
Mission statement
Short-term and long-term goals
Marketing plan
Production and operating plans
Financial plan
Staffing and labor plans
Management and contingency plans
What’s What’s your your
mission?mission?
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Examples of mission statementsExamples of mission statements
Our mission is to bring additional net income into our enterprise by providing the highest-quality product.
Our mission is to provide vegetables for local consumption, which increases the financial security of the operation.
What are your goals?What are your goals?
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Examples of goalsExamples of goalsIncrease the sales of apples by 5 percent for the next fiscal year
Increase the overall return on investment by 10 percent for the next fiscal year
Increase the sales volume by 5 percent in a selected region by next fiscal year
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Now you’re ready to write a Now you’re ready to write a mission statement and goals!mission statement and goals!
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Marketing plansMarketing plans
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What’s missing from your What’s missing from your business plan?business plan?
Production and operating plans
Financial plan
Staffing and labor plans
Management plan
Contingency plan
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Production and Production and operating plansoperating plans
To complete a production and operating plan, you need to collect information about:
The cost to grow or produce your product
The average yield for your area
The going rate, or average sales price
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Basic financial questionsBasic financial questions
How much do you want to make? (A gazillion dollars?)
How much will it cost to produce?
What can you sell it for?
What do you need to sell it for? (What’s the net profit?)
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Determining production costs so Determining production costs so you can set a selling priceyou can set a selling price
www.pnwchees.com
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Production costsProduction costs
Supplies
Equipment
Labor
Land
Insurance
Transportation
Taxes
Permits and fees
Advertising and marketing
Wages
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Determining a selling priceDetermining a selling priceWhat does it cost to produce?
What is a reasonable profit? Remember, making a profit is not a crime. Your time has value!
What will the market bear?
What is the price of similar products? What allows you to charge more for your
product?
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What methods of payment will What methods of payment will you accept?you accept?
Cash and carry
Credit/debit cards
Checks
Running a tab (financing)
Barter
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Making a reasonable profitMaking a reasonable profit
How do you figure a profit?
Markup or gross margin?
What is the difference?
What will the market allow?
A marketing exampleA marketing example
If you want to sell a bushel of carrots that cost $50 to produce, what is the
selling price if the markup is 50 percent?
Cost ($50) + 50% Markup ($25) =
Selling Price ($75)
A marketing exampleA marketing exampleWhat is the selling price
if the gross margin is 50 percent?
Selling Price ($100) =
Cost ($50) + Profit (50% of selling price, or $50)
Markup profit is $25
Gross margin profit is $50
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FinancialFinancial plans plans
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Financial plans generally Financial plans generally include:include:
Balance sheet – What you own versus what you owe
Income statement – A snapshot of your income
Cash flow statement (really important!) – Income and expenses for a specific time period
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Funding your enterpriseFunding your enterprise
www.wannanetwork.com
Personal funds
Debt financing
Equity financing
Traditional lenders
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Funding your enterpriseFunding your enterprise
Small, farm-friendly banks
Small Business Administration
Rural economic development agencies
Grant sources
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Staffing and labor plansStaffing and labor plans
www.ces.ncsu.edu/chatham
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Management plansManagement plans
UNCE, Reno, Nev.
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Contingency plansContingency plans
www.sure-it.co.uk
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Keys to successKeys to success
Do something that you love
Provide quality
Start small and grow incrementally
Keep good records – production, financial and regulatory
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Keys to successKeys to success
Provide what the customer wants
Maintain a loyal, preferably local, customer base
Provide more than just a product – consider the social aspects
Involve others
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Keys to successKeys to success
Stay informed and up-to-date
Plan for the future
Evaluate and adjust continually (practice adaptive management)
Persevere
Obtain adequate capitalization
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Where can I get help in Where can I get help in developing a business plan?developing a business plan?
Small Business Administration
Small Business Development Centers
Chamber of Commerce
State Departments of Agriculture, Marketing Divisions
State Economic Development Agencies
USDA Sustainable Agriculture Research and Education (SARE)
Colleges and universities
Libraries
Peer resources Peer resources and supportand support
NRCS
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SummarySummary
Understand your product
Understand your resources
Understand your market
Understand your customers
USDA NRCS
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SummarySummary
Create and use a business plan, and adjust it as needed
Be flexible and open to new opportunities
Check out free resources available to you
Network!
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HomeworkHomework
Select three “new” enterprises that you are interested in exploring for your property.
Fill out the Proposed Enterprise Development Activity Sheet for the three proposed enterprises for your property.
Evaluate each enterprise based upon the site plan you developed for your property.