April 30, 2012
Posted by redgatefarm under Farm Life
Continued from Part 7 (or start at Part 1)…
So you have a good product, a fair price, and know where you want to advertise, so it’s time for the next step.
- How do you effectively advertise?
Knowing how to advertise is just as important as advertising through the right venues. You can have the most luxurious bar of soap around, or the best goat in the country, and you choose the most public venues to advertise it, but if you are unable to get people’s attention, or unable to convince them that the product is worth further investigation, then it won’t help you sell it. This is where good marketing technique comes in. Mind you, I’m not a professional or expert, but I like to think I have a bit of common sense, and my experiences and training certainly help.
Next time you buy something new, take note of what inspired you to buy. Was it a picture or logo on the package that initially got your attention? How was the product described in the teaser? How were the words written when you flipped it over and read the back? Or, if you purchased something off the internet, what convinced you to buy that particular item over similiar ones? Was it a link to a website? A photo? Were you looking for a particular color or type of animal or a specific bloodline? For what purpose did you buy the item? Was it a cosmetic to help you feel better, a luxury to make your day easier, or an animal for breeding, companionship, or showing?
This is the point where you need to advertise to your target market. I have to laugh when I read advertisements for horses. Most hobbyists or horse-traders will advertise their horses using terms like “potential for any discipline,” “totally bomb-proof,” and so on. If I ever found a horse that actually met that criteria, I would clone it! The fact is, this type of wording tells me that either the person is trying to sell the horse to anyone that will buy, or they are well-meaning, but very uneducated. First off, there is no such thing as a horse that can successfully perform well in absolutely any discipline. Sure, you can train for it, but the fact of nature is that a horse with shorter legs and back will likely be more successful at cutting, while a leaner, long-legged, more balanced horse will be better at jumping. A slower horse is better at western pleasure or equitation, while a more high-strung, higher-withered horse would likely do better in dressage. Just as people have different skills, so do animals. I have also seen the closest thing to a bomb-proof horse. She was a 20-something year old belgian draft mare, who had been a police horse for about 15 years. She had been there, seen it, done it, and nothing ever got to her. She was slow and uncaring about her surroundings, making her ideal for patrolling crowded situations. Then, one day on patrol at the county fair, she spooked at a roller coaster, and started to plow through a crowd. Thank God, no one got hurt, and the rider was able to calm her down. Still.
In order to sound professional, you must use terms that demonstrate you know what you are talking about. Focus on the good points of the product, and write your ad to the people that are looking for that. If I have a goat that would do best at a production dairy, I am going to mention the pounds of milk she produces, the butterfat content, her genetic milking history, her age, her success with kidding, how good she is on the stand, whether she does best hand or machine milking, and so forth. Production dairies don’t generally care as much for color and looks as they do for specific breed, age, health, prodcution, and milkability. On the other hand, if I think my doeling would excel in as a 4-H show goat, then I will write my ad accordingly, focusing on the breed standard characteristics, her bloodline and genetic show history, the points of her conformation that give her the potential to excel, her health and the methods used to raise her, and so on. You absolutely cannot cater your ad to every person. Don’t even try. Rather than sounding like a completely uneducated or desperate person, be easy on yourself and write your ad for the person your product best suits.
I once had a horse that was purchased as a 2-year-old from a backyard-breeder, for a few hundred dollars. The filly had never been away from her dam, was high-strung, and never was good for a beginner rider outside of an arena. She was mixed-breed, grade, average-sized, nothing particularly special horse. When I tried to sell her as an 11 year old, I had done almost everything with her, including her training. We had been on mounted patrol teams, done drill performances, ridden parades, instructed clinics, ponied other horses-in-training, and ridden hundreds of miles of trails all over the country. She was dependable, pretty, had a great attitude, and everyone who met her loved her. I had taught many lessons on her, and she proved to be an very patient lesson horse–as long as she was in a secure arena. Outside the arena, however, she had to have a knowledgeable rider, as her only thrill in life was to run. As fast and as far as she could. I had her evaluated by several other trainers to get other, unbiased, opinions, and they offered their thoughts on her good and bad attributes to me. When I finally had to offer her for sale, I chose to market her on equine.com, as the customers that used that site were the type I was interested in dealing with. I pointed out the good qualities, training, and work experience she had, mentioned that she needed an intermediate to experienced rider, and asked $5500, knowing that most people want to haggle a bit. I got $5000 for her.
I say all that to say, choose your words carefully. Never, ever lie or exaggerate, but there is nothing wrong with focusing on the good points. I recently read on ad for a horse that made the horse sound absolutely incredible–slow, easy going, well-trained under saddle, and so forth. Just about the time I was convinced, the last 2/3 of the description was about all the problems the horse had–wouldn’t load in a trailer, wouldn’t let the farrier pick up his feet, required shoes to be sound, etc. Granted, those are important issues, but instead of focusing the majority of the description on the negative qualities, the seller could have simply mentioned that the horse needed some work in certain areas. This would open the door for a more personal discussion about the issues when an interested buyer contacted the seller. It is much more effective. I help determine what is worht mentioning by how correctable the problem is. If the animal has a chronic problem (ie lameness,etc) that will require lots of effort to repair or maintain, then briefly mention it in all fairness. If, however, the problem is more training related and easily fixable by someone with more experience or time, then perhaps just briefly mention that the animal could benefit from some additional hands-on training. That keeps it honest, but simple and properly focused.
In your description, which should not be too long–preferably just a few sentences–try to mention any of those uniquely good qualities you figured out in the first couple posts. If your item is organic, mention it; if an animal has been blood-tested for diseases, mention it; if you have paperwork of any type, describe it briefly; if you use a unique or secret natural ingredient for you handmade sauce, mention that. These are things that set your item apart and peaks a buyers interest. Describing the natural methods we use to raise our goats is why I could sell an unproven, grade doeling for 4 times the price as the average hobbyist.
Just remember that your ad is a customer’s first impression of you and your product. If it is poorly written, the buyer will be turned off unless they are desperate. There is nothing wrong with being a backyard breeder or hobbyist, certainly, but if you are proud of what you produce, do your best, and really enjoy your job, then there is no reason you have to make yourself sound uneducated, lazy, or untrustworthy. Because of one well-written Craigslist ad with a good photo, I recently paid the same price for an unproven, registered doeling that had characteristics I wanted, but was from a backyard breeder, as I paid for a far more proven goat from a much more experienced and trustworthy breeder. Always give your best. Sure, writing up a good ad takes a little more work, but when you realize that, not just your business, but also your reputation as a seller, is on the line with every ad you produce, it becomes easier to see why a well-written, professional ad is so important.
After you have written your ad or designed your website, go through and make sure it answers most questions that a buyer is likely to have. Most customers are most interested in first, how the product will benefit them, and second, how much it costs. Of course, this is not always the case. I recently had a customer call me over the phone after reading that I had a certain type of doe. She put down a deposit for 2 kids just because she was so interested. It was several days later she contacted me again and said, “Oh, by the way, how much are the kids?” There is the occasional customer that knows what they want, and they will pay what it takes to get it. But most people want to know the price. I HATE having to go out of my way to research a price before I make a purchase. Even in a real store, I have put unlabled things back on the shelf simply because I did not feel like going to the effort to track down how much it costs. Mind you, as a seller, you may not always know the price. However, at the very least, give a price range. For example, on my “Goats For Sale” section of my website, I list a price range for purebred goats. It depends on the goat and the bloodline, but at least the customer has a ball-bark figure to go on.
It’s a bit off-topic, but I want to take this opportunity to mention something that is part of several if these posts, rather than just one specific one….the idea of advertising sales and discounted prices. Be careful. Unfortunately, when you start a business, close friends and family automatically assume that they should get a discount. A lot of newbies also think that having lots of “specials” will be good for business. The problem is, if you want to stay in business, you MUST cover all your costs. You should make an additional profit to make it worthwhile for you in the long run. As a home-based business consultant, I used to counsel new people starting a home-based business to choose who they could afford to give discounted prices to, and that’s it. For the most part, there are no exceptions. However, even with those special few, there is nothing wrong with asking a price that will cover your costs at minimum. It isn’t fair of them to expect you go in the hole for their discount. Of course, you have every right to give them the occasional gifts at no cost. You can at least take the tax deduction that way, and giving the item as an occasional free gift tends to create less expectation, whereas offering a discount tends to create expectation of future discounts. Another thing is to be careful offering sales in general. Putting an item on sale implies that the item may be overpriced to begin with. We bought blinds for our home one time when the store happened to be running an annual 50% off sale. I found out that the retail, non-sale price of the blinds was so incredibly expensive, that, now that I need more, I am waiting for the next annual 50% off sale. If it hadn’t been for that first sale, they would have gotten twice the money from me. Now, I will never buy those blinds at retail. Rather than have sales, a better idea is to offer a “Buy1, get 1,” or extra incentives such as “Buy a goat, get a free goat-keeping class.” These incentives are often more attractive to a serious buyer, more profitable to you, and helps encourage return customers. Obviously, these are general rules, and there are exceptions.
Now that you have everything else figured out, it’s time to sit down and write out your ad. If you have trouble, look at other people’s websites and advertisements for similiar products, and see how they do it to get some ideas. Just go for it. Before you make it public, ask a few friends or family members to proof it for you. Ask them how you can make it better. Then, go from there.
April 27, 2012
Posted by redgatefarm under Farm Life
Continued from Part 6 (or start at Part 1)….
Now that you have some sense of direction regarding your item, you are ready to offer it for sale.
- Where do you think your item would best be advertised?
There are soooo many ways to spread the word about your product. The most common include print advertisements, displays, internet, and word-of-mouth.
Print advertisements are all around us. They include phone books, magazines, billboards, signs, posters, magnetic decals, business cards, flyers, and more. Some methods are extremely expensive, while others are quite affordable. I was once quoted $1200 to run a 1-time add in the yellow pages of the phone book. It was around $200 just to list my business name under the category. Either way, this adds to the cost of your product. That’s a big difference. Sometimes you pay a one-time fee, sometimes a monthly fee, and others require an annual fee. Print advertisements are often the first method people try because it’s what we are used to. However, their effectiveness varies. If you are offering a service such as milling lumber, a spot in the yellow pages may be worthwhile. The business likely generates enough income to pay for the ad, and people are more likely to refer to the yellow pages when they have a lumber issue. If, on the other hand, you are selling soap or milk, chances are pretty good that people will NOT run to the yellow pages to find a soap or milk dealer. Therefore, a print ad may not be a worthwhile investment. Even if you have a small budget, however, be assured even little things can help build your business. When I first started my horse-training business as a college student, all I could afford to do at the time was make up some business cards on my home computer, summarizing my services, and post them in strategic locations such as farm-store bulletin boards. Within a week, I was getting my first phone calls. It helped that I was offering to train horses no one else would touch, so I actually had a nice waiting list at one point. In any case, business cards are a good idea, and flyers mailed to people you know can be both cost-effective and help get the word out. A few tips for print advertising:
- Keep it short and sweet! No one has time to sit around and read an essay about your item. Your ad should be concise, to the point, and professional.
- You don’t have to include prices, but professional terms and formatting are key.
- Be sure to include contact information. If you include a phone number (which I recommend), then be sure it is set up with voicemail and be sure to check it regularly.
- A logo or photo that describes your item pictorially helps your information stick in people’s minds.
Displays can also be a good way to spread the word–especially for smaller products such as homemade items or eggs. The great thing about a booth-type display, such as at a farmer’s market or craft fair, is that they are usually affordable, and it is a great way to get face-to-face contact with potential customers. Home-based business data has shown that customers are more likely to purchase from a seller they have met and talked to face-to-face, and even better when they have been able to see the item, feel the item, ask questions, and gain an overall sense of having that personal customer service most of us prefer. For business that like repeat customers (such as eggs or soap), this personal contact is critically important. Of course, such advertising adds a lot of time invested in your business, and that time has to be added into your total product cost. So make sure you choose your locations wisely, in order to gain enough profit to make it worthwhile. A few tips for booth advertising:
- Be sure to plan and sign up well in advance for your booth space, and mark it on your calendar.
- Have your booth set up and ready for business when the gates open! I have intentionally avoided booths that are still setting up after the doors open simply because it screams a lack of professionalism.
- Try to design some type of sign for your booth that people can see from a good distance away. Not only is it more professional, but if it’s properly designed, it can attract customers to you.
- First impressions are key. You should be well-dressed (appropriate to what you are selling), attentive to your booth and possible customers, and your booth should be neat at all times. If you have a display of homemade items that people can handle, you need to straighten it up regularly so each person can see how serious you take your business.
- Acknowledge everyone that looks your way. I have stood at a counter for several minutes, intending to make a purchase, before walking away empty-handed because the seller was too distracted doing something seemingly unimportant, or because he was so involved with another customer, he never even glanced at me. All you need to do is meet their eye and nod your head, or briefly state, “Hi, I’ll be with you in just a moment!” Trust me, it makes a world of difference and can mean the difference between gaining or losing a customer.
Online is, by far, my favorite way to advertise. Since I spend most of my time at home, it is easier, requires less overall expense (such as fuel costs to drive around), and I can remain home with my family. Since I didn’t have time to personally advertise my book, I ensured Amazon.com had it. While there is no doubt sales would increase with more time and effort invested, the internet at least allows a few sales every now and then. It is also often cheaper to run several internet advertisements than one single print advertisement. I believe, at the very least, any farm business should have a website–even if sales are not the main part of your farm. If you sell or give away anything that is a by-product of your farm, having a website could help increase your profits. I tend to be a researcher, and have had several occasions when I chose where to purchase supplies or animals based solely on a seller’s website and the information it contained (or lack thereof). A great thing about a website is that it can cost you absolutely nothing, or very little, and it is very convenient. Although it takes several hours intially to design and set it up, after that, it simply requires a little time each month to update and maintain it. A website also gives you the ability to plan ahead and even pre-sale items. This past year, I used Craigslist to briefly state that I was selling goats and accepting reservations for spring kids, and included a link to my farm website. This allowed me to limit the details I gave on Craigslist (called a “teaser”–just enough info to get people’s attention), and then my website included all the details they needed to know. As a result, I was able to get a good price for rabbits and goats that I sold, as well as pre-sale 8 spring kids before they were even born! Because of the details I provided, customers gained a sense of trust and sincerety from me as a buyer, most then called to confirm whether I could meet their needs, and with the exception of two adult goats, all were sold sight-unseen. They simply took my word for it. Providing a sense of trustwothiness is critical! It’s impressive how a professional-looking website can do that. In addition to the website advertising, the internet opens the door to other payment options. PayPal is a very common method used today, and I pre-sold several goat kids simply because people trusted the insurance offered by PayPal more than sending me a personal check. Altogether it will cost me only a few dollars of the usage fees in exchange for multiple guaranteed sales. A few tips for online advertising:
- Consider using Craigslist, websites specific to your type of product, post your name/farm in livestock breeder listings, setting up a personal website, or using programs such as e-bay or etsy.
- When writing your ad, keep it short and to the point. Be careful not to exagerate or falsify info, but use professional terminology and formatting.
- If you set up a website, try to include a link to it on any other type of advertising you do. The more traffic you send there, the more likely you are to get sales.
- Use photos whenever possible, as potential customers are far more likely to first consider an ad with a photo over one without. It offers the “personal” touch the internet otherwise lacks. Also, please, please, please, go to the extra effort to get a good photo just for your advertising. Just look through livestock ad photos on Craigslist if you want to know why. If a seller is asking several hundred or several thousand dollars for animal, but can’t take the 10 minutes required to get a good photo, it really decreases his apparent credibility and professionalism–even if he has done other things well. I think it would be better to have no photo and a well-written ad, than a bad or lazy photo, no matter how great the ad. Look at the difference here between 2 bucks being sold on Craigslist (and yes, these were both found on Craigslist in my local area):
Which buck would you be more likely to investigate further? I confess the latter photo was one I took of my buck, Stallion last summer. That photo posted on Craigslist brought us quite a few breeding reservations, and an eventual sale complete with future breeding rights. I hate to belabor this point, but it is soooo very important that you take a little extra time and get a good photo if you are going to use one. Whether the photo is the first impression photo on Craigslist or representing your item on your personal website, it can make or break the sale before the buyer ever contacts you! The only time you might get away with using a less-than-great photo is if you have a “photo gallery” of random, candid photos of your farm. Anything else should be as good as you can get it.
- Be sure to include some type of contact info. There are always folks on Craigslist selling things, yet they forget to attach their e-mail or any other info. It really doesn’t matter what you use. I prefer not to even offer my name or phone number most of the time, but ALWAYS include an e-mail or website link. You could also get an untraceable business-only phone or e-mail address for minimal to no cost to use for ads.
Word-of-mouth is always the absolute best type of advertising available. Of course, it can also be the worst. By that, I mean word spreads quickly. If you gain a customer, treat them well, and they are happy with the service and product, they will talk about it. On the other hand, if they were unhappy, they are even more likely to tell everyone they know! Friends will take the recommendations of their friends over print or online ads any day. Think about when you need auto work done or want to hire a babysitter. Do you automatically go to the yellow-pages, or do you prefer to ask your trusted friends who they use? That is what makes word-of-mouth advertising so powerful. The bad news is that, as a new business, you usually have to use some other type of advertising for a while, before you get to the point that word-of-mouth may help sustain or grow your business. Tips for using word-of-mouth advertising:
- Don’t hesitate to advertise yourself/your business by talking to people about it (just don’t talk to the point that they dread seeing you come over!)
- Remember that a satisfied customer may tell 2-3 friends, while an unsatisfied customer may tell 10. Always do your best to satisfy through excellent customer service, a quality product, and timely follow-up when necessary.
- Try to reward, or at least personally thank, customers who send referalls. Not only does it make them feel special and appreciated that you noticed, but they are more likely to refer more often in the future.
That’s pretty much the long and short of WHERE to advertise. Stay tuned for the next post for tips on HOW to effectively advertise.
April 26, 2012
Posted by redgatefarm under Farm Life
Continued from Part 5 (or start at Part 1)…
You’ve made it this far, so you are building yourself a good foundation to start marketing and selling your item. Thankfully, the next questions you need to answer are much easier than the last post on pricing!
- How much time do you have available to market your item?
- Is your item your sole business, or just one part of a larger business?
These questions are different, but can also be directly related, which is why I mention them together.
In order to build your business, develop a reputation, gain customers, and sell items, customers have to find out about you. You hear about the occasional overnight rise-to-stardom, but realistically, it probably isn’t going to happen to you. More likely, you are going to have to advertise and market your product (and yourself). That takes time.
When my book was published a couple years back, I knew I wouldn’t have much time to market it. I was a full-time homeschool mom, with an infant, and a husband who worked long hours. Our transient military lifestyle meant I didn’t have many babysitters to choose from, as I didn’t know many people. I didn’t think most book-store managers would want to meet with me if I had all my kiddos in tow. I wasn’t trying to make a big profit on my book, though, so I was OK with that. I was happy to cover any costs involved, and I wanted it to be there to help others. As it turns out, I randomly sell some online through Amazon.com, I assume when folks just stumble across it or have heard about it somewhere. I gave a way a few in the beginning to help get word-of-mouth going. There’s no doubt, though, that the majority of my sales came from a book signing I did, and sales through my uncle’s on-the-shelf pharmacy. The latter was helped by the fact that HE talked it up for me.
You need to think about how much time you can invest in advertising. Do you have several hours a day to designate to business? Or would you prefer several hours a week or month? The more time invested, the more success you will likely have. When my home-based scrapbooking business was at its best, I was spending countless hours on the phone with potential customers and many more at events where I had a booth set up. That was before I had lots of kiddos, obviously! The saying that “time equals money” applies greatly here.
The second question helps determine how you spread your time out to advertise your item. If you have one main item you are marketing, then most of your time will be focused on educating customers about that particular item and how it benefits them. If your business has multiple items for sale, however, then you will probably be better off focusing your efforts on advertising the business and yourself, rather than the individual item. Of course, you have side-advertising here and there where you educate about particular items available, but the focus is on informing the customer why he should trust you and buy from you and your business. This gets into more customer relations, but that takes time, and is, therefore worth considering so you can be as prepared and realistic as possible as you start up your business.
You are over half-way to launching (or improving) your marketing, so stay tuned for the next few posts. I promise I will eventually get back to our standard type of farming-misadventure posts!
April 26, 2012
Posted by redgatefarm under Farm Life
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Continued from Part 4 (or start at Part 1)….
Once you have answered the previous questions, you are well on your way to effectively marketing your item. Next, ask yourself:
- How much is your item worth?
Pricing an item can be intimidating to even the most experienced businessman. It usually involves a lot of research, and maybe even a little trial-and-error. You don’t have to be completely overwhelmed, though. There are several factors to consider that will help you develop a fair price. The easiest way is to figure out the following:
- If it is a non-living item, how much did it directly cost to make?
- If it is an animal (or meat from that animal), how much did it cost to purchase, raise, and/or process into meat?
- What indirect costs were involved in making/raising the item?
- How much time did you put into making/preparing for the sale?
- How much follow-up time is involved after the sale?
- How much is your time worth?
If you are making soaps, cosmetics, homemade foods, etc. or raising an animal, you need to know every cost involved. There are direct costs, which most folks consider, but there are also indirect costs associated that many people forget about.
Direct costs would be the animal, raw materials, and/or supplies needed ( jars, lids, labels, ingredients, hay, feed, bedding, etc.) Everything must have a cost assigned to it. For example, if you milk goats for your family, and use some excess to make soap to sell, some people make the mistake of not counting the cost of the milk since it is just their extra. However, that milk is a main ingredient, and it has a value. The easiest way to do that is to look at market value of the raw product. Raw goat’s milk, for example, around here is $10-$18 per gallon (Yes, it really is that valuable!! Truly liquid gold!!) So, if you take an average of $14, then your soap milk would cost $3.50 per quart. Break down or multiply as necessary. Remember, it may be an excess to you, but to price fairly, you have to understand that if you sold the raw milk, it would be worth that much, so it’s still worth at least that when you use it to make your soap. Animal feed can be tricky. For example, I buy hay in a large batch, but I feed it to chickens, rabbits, the donkey, and the goats. In order to accurately figure my cost, I have to estimate a percentage of hay that is fed to each animal (or group of animals), and go from there. It sounds complicated, but it isn’t too bad. Remember I failed the technical courses in school. If I can do this, so can you!!
The indirect costs are things you may already have and use for other items, or things you purchase once and use for a long time. A vehicle and gas to drive to farmer’s market, the barn and fencing, advertisements and signs for your business, bowls, mixing, and measuring supplies, a computer if used for business, and even part of your home if you make the item in your kitchen. Same with electricity. A lot of people don’t consider that, but if you use electricity, it is a cost of making your product. Estimate the wattage used, and assign it a cost. Indirect costs gets really technical, and far too many home-based businesses avoid considering these costs altogether. If you want an accurate account, however, you must. If you have a truck used solely for business, that makes it simple to calculate. If, however, you have a personal truck that you also use for your business, then you have to calculate out a percentage of the truck’s cost that is used for your business. Same for things like your dual-purpose computer, barn, or kitchen supplies. Furthermore, you wouldn’t apply a $1000 computer cost to a single year, because the computer would last you for several years. For long-term costs like that, estimate how long they will last, and divide by that number. I find it much easier to break things down into annual costs for farming and home-businesses.
Then there is the value of your time and efforts involved. The item you are selling is only as valuable as the time and effort you put into it. In order to protect people’s time, our government has set a minimum wage, which at this time, is $7.25 per hour. That is the bare minimum you should consider your time worth. However, you have every right to up that price based on your training, schooling, experience, physical labor involved, and so forth. Many successful folks I know of value their time at a minimum of $10/hour. So, if you select that as an hourly wage, then if you spend 3 hours making soap, you could earn $30 for that time. If you spend 2 hours per day for 180 days directly caring for the animals you will sale, you have every right to earn $7200. If you don’t do it, you would be paying someone else to do it. Now, if you are raising one goat, you probably think I just lost my marbles because you can’t get $7200 for it. Hang with me here. I’m just getting started!
What about follow-up service? That is still time given to the product, the sale, the customer, and ultimately, to the business. If you are selling a bar of soap, you may spend 5 minutes talking to the customer about it and never see them again, in which case, follow-up time is a minute portion. If, on the other hand, you are selling an animal, and you spend several hours demonstrating how to trim hooves, train, groom, tack up, etc. If you are delivering the animal, that adds time, fuel, and wear-and-tear on the trailer as well. All that has value. Add it up. Estimate if you need to.
Now add all those costs up. Then, divide by the number of items sold. You may have heard the concept that it really doesn’t cost that much more to raise mutiple animals instead of just one. The total cost explains why. As I mentioned above, you can’t expect to sell a single goat for $7200. However, if you are spending 10 minutes to throw feed to one goat, it would likely only take you an extra 5-10 minutes to feed 10 or even 20. Although it will up your feed and supply costs slightly, it allows you to use your time more efficiently. So, if a single goat is valued at $7200, you could possibly raise 20 for roughly $8500. Now, however, you could sell each goat for a more reasonable cost of $425 each, and still pay for your value. If you think you can make and sell 400 bars of soap in a year, divide your cost by 400. If you plan to raise and sell 10 goatlings, then divide your costs by 10. The resulting number will give you the minimum you should sell your item for, just to cover the costs involved. You will then have to determine how much to increase that price in order to make a profit of any sort.
Once you have a total cost involved, you will begin to see why so many farms and businesses go bankrupt. Particularly with those indirect costs, it is easy to see what parts of your business become more work than it is worth. Therefore, I highly recommend you do this, even if you don’t plan to set prices by it. You need to know about the true costs involved. I know of a farmer who sold dressed chickens by the pound (I can’t remember the number, but I’m thinking it was around $4-5/lb). They figured they could dress a chicken in under 10 minutes, so a four pound chicken would result in $20 for 10 minutes time, and they were happy with that. They refused all customer requests to skin or cut-up the chicken as a result. A few years later, however, they realized that if they took an extra 3 minutes and packaged the breasts for $10/lb, the legs and thighs for $7/lb, and the rest as dog food for $5 lb, then the same chicken would bring in closer to $35 for just 3 minutes more of their time! At the same time, they realized that cleaning gizzards and offal for human consumption just wasn’t worth the price they could get, it wouldn’t cover their time involved, so they chose not to do it.
At this point, you have to keep in mind that your personal use items start to have value. If your soap is worth $4/bar, and you use 1 bar a week, then either you have to view it as buying $16/month in soap from your business, or you should raise the cost of the other bars slightly so the business will remain profitable enough to cover your own use. This is the same for special offers, gifts, and giveaways out of your business inventory. Some over-generous new businesses go bankrupt quickly because they give away more than sales will allow them to cover costs of.
If you have made it this far, you are likely having 1 of 2 thoughts…either you are seeing dollar signs at the potential you had no idea your product had, or you are thinking more realistically in terms of “There is no way I could sell my item for that much!”
If you are in the former thought process, I’m happy for you. If you are the latter, I would say, “maybe, maybe not.” That’s where marketing comes in. I will get into that more in future posts. If you see other goat soap selling for $1/bar, and you figure your costs to be $4/bar, it is easy to think no one would be interested. Refer back to the previous posts though; you have to make the customer understand how your item is better and how it will benefit him. It is highly possible to get 4-5 times the standard price. I’ll use goats as an example.
If you go on Craigslist, you will likely see backyard-bred goat kids being sold for $10-$50. You may see unregistered (purebred or not) does being sold for $100 or so. At least, this is the case in my area. You could easily build an entire herd of goats for under $300 if you bought from these sellers! Well, for the last year, I kept good records on all expenditures for the goats. When I offered our first doeling for sale, she was a crossbred and unregistered. Her dam had not been shown and since it was her first year as a milker, she wasn’t yet proven to be a good milker. You could say there was nothing special about her, and I suspect most would have sold her for around $30. After I factored in my costs, however, I decided I needed to ask a minimum of $150. You think I’m crazy, don’t you? In order to cover her cost, I had to get potential buyers focused on her good qualities–the unique things about her that would benefit them. More about that in another post. Granted, she didn’t sell right away, but about 2 months later, someone who could appreciate her bought her for my asking price.
Now, here is a very important point. You may have heard the expression that “Buying the horse is the cheap part, no matter how expensive it is!” That’s because of the upkeep costs involved. The same applies to any purchase. You can buy cheapo towels from a discount store and save money, but have to replace them every year or so. Or, you can pay 2-3 times the price and buy towels from a high-quality specialty store. Up front, it seems more expensive, but if you don’t have to replace them for 10 years, then you actually come out ahead of the game. This issue was solidified in my mind after I sold our doeling. The buyers had also purchased 2 other goats a few days before. They thought they had gotten a great deal on a doe/doeling pair for around $75 total. However, within 24 hours, they realized the doe was not well. By the time they called out the vet, paid for all she needed, paid to set up fencing to isolate her, their costs were into the several hundreds. On the other hand, my doeling’s purchase price was it. She was healthy to boot, and there were no unexpected costs involved. Therefore, although more expensive up front, she was far cheaper in the long run. Once you can appreciate this fact, you can have more confidence in selling your item for what it is worth.
Which leads me to pricing animals specifically. Unfortunately, there are a lot of unethical business folks out there. They tend to over-price animals for a profit and/or sell animals that turn out to not be as advertised. As a result, they can drive market prices, or the prices customers are willing to pay, way down. That’s why $30 goats are so common, and it is so difficult to get the true price of even a really good, but unregistered, crossbred goat. No buyer wants to risk it. You, as the seller, have to learn how to overcome that fact of life. One way is through paperwork.
I know, that word might as well be a 4-letter word, but bear with me here.
I learned long ago that papers generally meant nothing in regards to the quality of an animal. I saw registered dogs come into our vet clinic that were so inbred they had every disease known to their breed. I also saw plain ‘ole rescue mutts live healthy and happy to ripe old ages. When I trained horses for the BLM, I quickly learned to appreciate each animal for it’s individual quality more than any old piece of paper. If a horse had good feet and legs, and a strong back, I could do something with it. I had a grade horse at one point that I was able to sell for $5000, simply because of her training and experiences. At the same time though, a friend paid bigtime money for a proven, AQHA-registered show horse, who came up lame shortly after his purchase. After over a year and more money, they couldn’t give him away. It was sad. That being said, however, a new animal raiser with no reputation has to make a choice. Some animals can be sold on individual merit easier than others. Horses for example can go for a higher price based on training than on papers in some cases. Goats, on the other hand can be more difficult to sell on merit. My little doeling never would have fetched the price I sold my buck for because training isn’t really factor, and she was too young to be proven in any way. With dairy goats, it’s all about the milk. With this doe, I just couldn’t make any guarantees. In this case, papers can give a buyer some assurance of what they are buying. Proven milkers can have milk tests and earn their stars. Kids can be sold based on the stars earned by their dam or even grand-dams and great-grand-dams. If a sire or dam did well in the show ring or during a linear appraisal, then a kid is more likely going to have good confirmation and good milking genetics. If nothing else, paperwork showing negative results for some basic blood tests for diseases can provide enough confidence to the buyer and set you apart in such a way that you can ask a fair price. Again, although the kid isn’t proven, the paperwork gives the buyer a pretty good idea of what he can safely expect out of her. That is why we decided to sell out of our cross-breeds and focus on purebred dairy goats. I realized it was going to cost me the same amount to raise each goat, but I could more easily cover all my costs, and possibly even pay for my own milk and meat by selling purebred, registered goats of reputable quality. If I wind up being able to turn a profit, it means my husband may not have to return to working outside the home. Just be sure that if you choose to go for papers, realize that papers still don’t mean anything unless the stock is good quality, and it is reflected on the papers. Then later, once you develop a customer base and a good reputation, you can have the option of selling high-quality, unregistered, or grade stock because your customers will trust you.
Finally, I want to make one last point about pricing, again, in regards to animals. There is an interesting phenomenon in pricing completely irrelevant of true cost, and that is supply and demand. I mentioned in a previous post that, as a seller, you need to be aware of the competition. With animals and meat (among other things), demand is increasing rapidly for the organic, natural, grass-fed, chemical-free husbandry methods. Here is what makes it interesting to the seller…if you raise a herd of animals on a dry lot and feed hay and grain, your cost goes up, whereas, if you raise a herd of animals on intensively managed pasture grass only, your costs drop tremendously. HOWEVER, due to supply and demand, right now, the simple fact that an animal is grass-fed creates high demand, and drives the price up, as that adds value in the customer’s mind. On the other hand, hay and grain fed animals are in high supply, which drives the market price down. So, even though cost and time involved in grass-fed animals is actually less, the final price is much higher. This has to be taken into consideration when setting your prices.
Well, that’s pretty much it for pricing. If you hung with me for all that, you are an amazing person! Headache-wise, pricing is the worst part of a new business. Use these tips, though, and you will be well-prepared for the next steps, as we get into actually marketing your item.
April 18, 2012
Continued from Part 3 (or start at Part 1)…
By now, you have figured out your product, how it benefits the customer, and what sets your product apart from the competitors. The next question to answer is:
- Who is your “target” customer?
One of the biggest mistakes I made in my first business was to try to sell to anybody and everybody. About the only thing it did for my reputation was make me look like a desperate salesman. We’ve all heard the stories of the unethical salesman who could sell fleas to a 3-legged dog. However, most of us are 1, not that good at selling, and 2, want our customers to return for repeat business (which I don’t thing the 3-legged dog did!). In order to get to that point, you must find your “target” customer base.
The simple fact that pertains to any business is that not everyone will be interested in your product. Some folks prefer scrapbooking while others spend on make-up. Some folks prefer goats to cows. Some folks desire specific goats such as Alpines, Boer goats, or even cheap, unregistered mixed-breeds. Some people shop based on price, while others look for specific colors or bloodlines. Veterinarians build their businesses around people who own animals; carpenters look for people who appreciate fine wood-working. It will save you a lot of discouragement and frustration if you just accept right now that you cannot and will not be able to sell to everyone or make everyone happy with your product.
So how do you find your target customer?
The easiest way is to find people like yourself. In my early years, I was once instructed (wrongly) to seek out upper-class people with money, as they could afford to buy the products. There were several problems with this, though. First, I limited myself based on social class. That’s never a good thing. People of all classes will spend on products that are important to them (remember Part 2, when I discussed the importance of getting the customer to understand how your product benefits him?). Secondly, I was intimidated by upper-class people, and did not do well when I met with them–if I got a meeting to begin with. I had the most success with people of my own social class and/or who had similiar interests. That is when I learned to look first for people like me. Later, when my scrapbooking business was built, I was able to enjoy not worrying about social class. I targeted people who enjoyed getting together to chit-chat, who had photos, and who wanted their efforts to preserve memories to last as long as possible. That type of target worked much better for me.
Next, consider who your ideal customer would be. Will you sell your product to anybody off the street? Do you want repeat customers? Do you want to limit your product to local customers, or are you willing to sell long-distance? In the event of long-distance sales, is your product legal to cross state lines? If you are willing to sell to out-of state customers, will you ship, or will you want them to come to your farm to pick up? Are you selling live animals and desire them to go to a certain type of home? Are you wanting to sell animals to established farms, or do you want to help start new farms? Are you willing to help customers out with livestock paperwork and permits? There is no single right answer, but your answer will help determine how involved you need to be with future marketing and customer relations.
Finally, developing a target customer base does not mean you are limited to that type of customer. It just gives you a guideline to build your business around. You will then learn with experience how to cater to people that don’t meet your target criteria, and you may even change your target as time goes by. I see the purpose of the target like an outline for an essay. It gives you focus and direction, helps prevent excess frustration and discouragement, encourages you to be realistic, and can always be changed as drafts are created and finalized.
Now, figure out your target, and you’ll be ready for Part 5.
April 17, 2012
Posted by redgatefarm under Farm Life
Continued from Part 2 (or start reading at Part 1)…
Now that you have figured out an item to sell, how it benefits the customer, and established a basis for your business, it’s time to figure out the next part of your marketing.
- How is your item different than anyone else’s similiar item?
Whether your item is for skin care, metal working, carpentry, or whatever, it must be different to be desirable. The term different doesn’t necessarily mean drastically, but rather, it could be a simple feature. Maybe your soap uses more goat’s milk than your competitors. Perhaps your raw milk or cheese tastes richer or creamier or better flavored than the competitor. Maybe your cows are a “homestead breed” as compared the local ranchers’ “commercial breed.” Or, maybe your grade-quality, mixed breed, unregistered goats are exactly the same as all your neighbors, but you still need to find a way to sell those kids produced each year. If you are the latter, don’t fret!
Differences come in many ways. You may just need to be a bit creative. You may want to consider a different type of farm management to set your item apart. For example, I bought a pregnant, crossbred, unregistered, malnourished doe with nothing special about her. She had complications kidding, was not particularly attractive, and was wild and unfriendly. Although I planned to use her for milk, I wanted to sell the kids. Goats meeting that description around here generally sell for about $30, even as adults in some cases. Milking does go for a little more. So, I looked to where our doe came from and our farm management practices to set us apart.
Within a few months of freshening, our natural style of management had completely turned the doe around. She was doing great. One of her kids was a buckling, and the other a doeling. We decided, based on our principles, that the buckling was not be breeding stock quality, and would therefore be more useful to us as meat rather than sold as a wether. The doeling, on the other hand, had potential. The dam had been bred by a commercial production dairy, so the doeling had good production in her blood. She was also pretty, growing well, and exceptionally healthy because of the methods we used to raise her. We avoided all chemicals with her, with the exception of a tetanus shot when she was disbudded. When it came time to sell her, I listed the young, unproven doeling for the same price I had paid for her mother–about 4 times the average grade kid around here. I also enticed buyers by offering a discounted breeding to our buck. She sold, at the high price I asked, based on those features. There is more to this, but I will get into that in the post on setting fair prices.
If you are a livestock raiser or if you make food or body products, you have realize that what is getting customers’ attention right now is “organics.” I don’t mean government certified organic products necessarily, but I am collectively referring to products that can truly be considered natural, chemical-free, hormone-free, free-range, grass-fed, unadulterated, certified organic, fresh, clean, safe, and trustworthy. You may not be interested in providing that type of product for sale. However, even if your preference is the more traditional grain fed, chemically-processed versions, (which is fine–it’s your business), you have to understand that organics are a major competitor today. While organic, free-range, and/or naturally raised prices are fetching a premium, more traditionally-made product prices are generally decreasing. You have to be aware of it to be successful. If you aren’t marketing organic, refer back to Part 2 in that you will simply have to convince the customer why YOURS is better for him.
So, step two to developing a good marketing plan is to figure out what sets your product apart, and build on that.
April 16, 2012
Posted by redgatefarm under Farm Life
Continued from Part 1….
The first question you should ask yourself is:
- Is my item (or Do you have an item that is) either very unique or one that is very common to your area?
The answer here really doesn’t matter with good marketing, but it does help give you a direction in which to go next. Unique or exotic items can bring in a premium price with good marketing to the right target group of customers, but it can also fail miserably without it. For the beginner, starting a business based on commonly seen items may be easier simply because the customer is more familiar with the item, which means easier marketing requirements on you. At the same time, however, you have more competition, so that can potentially bring a lower, more competitive price.
Take goat’s milk soap, for example. I know of soap makers who look at this item as just “soap”–everyone uses and needs it, so it should be an easy sell, right? Not necessarily. Yes everyone buys soap (at least I hope they do!), but the average person sees absolutely no difference in warehouse-brand soap for $ .20/bar and specialty goat’s milk soap for $4/bar, except the price tag. Naturally, if they think soap is soap, the uneducated buyer would make their decision based solely on price. The same goes for raw milk vs. standard, store-bought milk, and “backyard” vs. specialty livestock breeders/buyers. If you are looking for a dairy goat on craigslist, you have probably seen plenty of this type:
Even if you aren’t familiar with Alpine goats, chances are you have seen them and you know they produce milk. On the other hand, what if you saw this photo in an ad:
Very few folks have heard of a Kinder goat, so they aren’t going to readily be able to identify one, they won’t know how to best utilize it, and there will be more questions. Unless you understand this, you are going to have problems selling this type of goat.
Based on this fact, you need to be willing to educate people accordingly about your product. For example, I’ll pick on soap again. People know about soap and it’s benefits, so it makes the job easier that you don’t have to convince them they NEED soap. You simply have to convince them of why YOUR SOAP is better than the cheap stuff, and why they need your soap instead. On the other hand, if you are an alpaca breeder, most people have no clue what an alpaca is, let alone why on earth they would need one. So not only do you have to convince them they need yours, but first you have to make them understand what an alpaca is and how it is beneficial to them.
Which leads me to one of the most important points of marketing your item. It is absolutely impossible to effectively build a business around an item without first understanding how it benefits the customer. You must have not only an understanding of this, but you must also have the ability to make the customer understand this fact. It is a natural fact of human nature….we are a selfish species. We want what best benefits us personally. Until your customer gets to know you, you are nobody. At first, the customer has no concern whatsoever for you, your product costs, and how great YOU think it is. He is only concerned with how it will benefit him.
Next time you go to a market or an area with product displays, notice the posters and banners. We know they are all trying to gain your business, but really look at HOW they are doing that. You will notice you are drawn more to some than others. Why is this? The ones you are most attracted to are the ones that you think will benefit you most. They may have quick bullet points telling how the item will help you feel better, make your life easier, or create a profit margin for you. Or, maybe you are most attracted by the smell of the 4-H BBQ booth. Still, though, while they may not have bullet points and banners to convince you of why you need their food, you know how that food will fill your tummy and be enjoyable all the way down! It’s all about the customer being convinced. When you understand that, you will have a solid basis to start your business with.
So, think on that for a bit, and stay tuned for Part 3.
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