This post is for anyone who's ever dreamed of starting a farm, or even a little side hustle to earn some extra income. However the fundamental principles laid out herein will apply equally well to any entrepreneur attempting to market and sell their product. So without further ado, let's get down to it!
Know Your Market
This is step one in any entrepreneurial venture; before you start, do your research! Make sure that the product or service you are offering is actually in demand at your given price point. If your product is not currently in demand, would it be if you offered it? For us I'll use our microgreens as an example. When I did my research on the Asheville market I figured mircogreens would be in demand based on the culinary/foodie atmosphere and the fairly health-conscious eating habits of it's consumer base.
Once you determine if there's a demand for your product the next step is to evaluate where your product is being offered and whether or not you want to outcompete the current market provider(s), or venture into an under-serviced/untapped market. As mentioned in Our Farmstead Journey Part 3: Finding a Way to Make it Pay, our current restuarant/farmer's market scene is pretty saturated. However the wholesale market, particularly grocery stores and distributors, had little to no competition. When starting out, I think it's always better to go after the low hanging fruit and build on that success before entering a more competitive space. Remember, when given the choice, take the path of least resistance.
Have a Product that Makes Sense
Before I approached any of these stores I put a lot of thought into what to sell my product for. This is kind of a dance between the grower and the buyer as you always want to get the highest possible price for your product, but at the same time the buyer needs to be able to turn a profit as well. I learned that typically grocery stores like to do a 40-60% markup on all the produce they carry. This allows them a decent margin while also accounting for potential spoilage of unsold product. I had an idea of what the average Asheville consumer was willing to pay for such an item and I also had a rough idea of what we needed to make on the backend to make it worth our while. In the end, the numbers broke down like this:
3oz of Pea Shoots sold wholesale for $3.00/each
-Suggested retail price: $3.99-$4.99
-33%-66% markup
4oz of Sunflower Shoots sold wholesale for $3.25/each
-Suggested retail price: $3.99-$4.99
-23%-53% markup
Since this was an original product that no one else was offering them I was able to get away with a little lower markup than they might've otherwise preferred. For our salad mix however, I knew I'd have to be more competitive, especially since my goal was to outcompete the mass-produced California product. I learned the stores were buying 5oz varieties of salad mix for anywhere between $2.20-$2.75/container. Since our product is 2-3 times fresher than said competition, we decided to go in at $2.75 with a suggested retail price matching that of our west coast competitors. After packaging cost, this put us at $7.80/lb. This is a decent return, however when arriving at a price point we must take into account our total cost of production, which brings me to our next part:
Know Your Numbers
It is absolutely essential to know what you need to make on a given product before selling it. If you're losing money on each transaction the only thing selling more product will do is put you out of business faster. It's also important to take into consideration crop loss and product that goes unsold. Personally I don't calculate all of my inputs down to the penny, but I have a decent idea of my overhead and what each crop costs me to produce.
Pea Shoots
Cost to Produce per tray
Seed: 10 oz=$1.25
Soil: 72oz=$0.60
Packaging + label: $0.25/each
Labor: ~15 minutes per tray @$10/hr= $2.50
Total: $4.35/per tray + packaging
Sunflower Shoots
Seed: 4oz=$1.00
Soil: 72oz=$0.60
Packaging + label: $0.25/each
Labor: ~30 minutes per tray @$10/hr= $5.00
Total: $6.35/per tray + packaging
Salad Mix
Seed: $15.00 (average)/per 100 ft bed
Fertilizer: $10.00/per 100ft bed
Compost: $25.00/per 100 ft bed
Packaging + label: $.33/per container, $1.00 per lb
Labor: ~30 minutes to harvest, 30 minutes to wash and sort (two people), 60 minutes to pack (two people): 3.5 labor hours total @ $10/hr= $35.00
Total: $85.00 + packaging
--Also consider that delivery takes me around 5 hours and uses roughly a 1/4 tank of gas.
Now that we know our cost of production, let's look at how much we're producing.
Pea Shoots
Yield: 16-18oz, 6 clamshells per tray @ 3.00/each= $18.00 gross
Net: $18.00 - $5.85 (cost of production + 6 containers @ .25/each)= $12.15/per tray
Sunflower Shoots
Yield: 16oz, 4 clamshells per tray @3.25= $13.00 gross
Net: $13.00-$7.35 (cost of production + 4 containers @.25/each)= $5.65/per tray
Salad Mix
Yield: 50 lbs, 160 containers @ 2.75/each= $440 per bed
Net: $440- $135 (cost of production + price of 160 containers @ .33/each)=$305 per bed
The numbers I give here are rough approximations. Yields vary with season and crop, but this gives a rough overview of where our numbers sit.
Make a Good Impression
This is probably the most important thing in sales. First impressions are everything and people buy from people they like. Going in with business cards, fresh samples, and a price sheet will go a long way towards making a good first impression. You not only want to show that you have a great product, but that you're someone who can be depended on when it comes to doing business. Furthermore, make sure you go in with a full-head of steam. Be energetic when you give your pitch; after all, if you can't get excited about your product, how can you expect anyone else to?
Before I got into farming I tried my hand at a variety of occupations, one of which had me selling 'integrated office solutions.' To this day I still don't know what that means and thus it isn't very surprising I wasn't any good at it. In fact I just thought I was bad at sales in general. Just the idea of it left me feeling slimy, as though I was trying to 'trick' somebody into buying from me. I later learned I was taking the wrong approach.
First, know your product. When I approach anybody interested in my produce I can list off a string of attributes that I know will resonate with them. These revolve around shelf life, flavor, nutrients, organic growing methods, and the assurance that I stand behind my product 100%. I could also mention that we have commercial liability insurance and that I can deliver high-quality produce on a consistent basis. This is great and all, but I think the biggest selling point is my enthusiasm. Farming is what I love, it's what I'm passionate about and they can see that in my eyes.
Secondly, learn what your product can do for your customer. Sales isn't about 'tricking' someone, it's about offering value and trying to see if your product is a good fit for them. Try and get into their head an ask yourself, "Why should I buy this? What does this product offer me? Could I not find a similar product elsewhere for less? Why should I give my business to this person?" By gaining an alternate viewpoint you'll be better equipped to fine tune your sales strategy and increase your chances going forward. Also, be willing to accept that not every person is a good fit for what you're offering. That's ok. Focus on bringing the customers that are a good fit the greatest value for their money.
Knowing your product exposes your customer to a given set of beliefs, namely, that you have a great product. This is where the marketing component comes in. However, knowing your customer allows you to see where your product fits within their context and what it can do for them. This is where the sales component comes in. Each potential client will have a slightly different context and being able to tailor your pitch to meeting their needs will give you the best possible chance of success.
Offer Multiple Products
Microgreens were a good gateway for us, but most of these stores only take around $30-$60 worth per week; definitely not enough to sustain our farm. The best way to increase revenue without taking on more clients is to offer your existing client base multiple products. This has a couple advantages. First off, the relationship is already established. There is a certain amount of trust that's been developed and it's easier to build off of this than to put the time into developing a new one from scratch. Secondly, it increases your resilience to potential crop failures, as well as changing market conditions.
This year I sold tomatoes, squash, zucchini, cucumbers, and radishes, in addition to our salad mix and microgreens. When I had a slow down in salad production for a week here and there I was able to supplement the lost income with some of these other products. And since we figured we could always eat/can what we didn't' sell, I priced these vegetables at a premium. Surprisingly all of our stores ended up adding at least one of these items to their orders. They were willing to pay a little bit more because they had confidence in our relationship and the products we deliver.
We also were able to provide variety within an existing product line by offering Baby Red Russian Kale, Spring Mix, and our signature Greenshine Mix. These are essentially all salad mix, but having different varieties encourages our buyers to place larger orders and gives us more shelf space in the store. This helps with brand recognition and the more people see your products, the more comfortable they'll feel purchasing it.
Focus on your Moneymakers
Even though we like to offer a good variety of crops, it's important that we focus on the crops that are most profitable. Sunflower shoots, for example, are not really that profitable, at least not for us at our current price. However we continue to offer them because they're quick-growing, consistently in demand, and it helps get our name out there. At the end of the day they are a profitable crop, just not as profitable as something like salad mix.
This is perhaps one of the greatest reasons start-up farms struggle. As farmers, we're passionate about growing food. We get that seed catalog in winter and start circling all the different varieties we plan to grow, yet once we get into the thick of it there's only so many hours to the day and oftentimes we have a tendency to spread ourselves too thin. I enjoy things like potatoes, okra, and sweet corn as much as the next guy, but from a economic perspective, these crops just don't make sense for us to grow in our current context. They require too much space, time, and equipment to do on any type of a scale, and at the end of the day, they just don't sell for very much. We might do a little planting of these in the family garden, but when it comes to growing crops for market we focus on the ones that give us the greatest return.
These crops tend to be things like salad mix, microgreens, tomatoes (particularly heirlooms and cherries), herbs, cut-flowers, mushrooms, etc. If we were to get into a farmer's market next year I would also offer things like carrots, beets, radish, and chard, which are not as profitable from a wholesale perspective, but are always in demand and fetch a decent price when it comes to direct sales. Crops such as potatoes, corn, and okra unfortunately don't make sense for us to do on any type of scale and so we'll reserve those for the family plot.
Conclusion
Again whether your goal is to make a living as a full-time farmer or just to make a little bit of cash on the side, these principles should make up the framework of any successful sales and marketing campaign. There is of course a lot more we could go into, but I hope this gives you something to build upon going forward in your entrepreneurial venture. Remember, don't be afraid to stand behind your product. This is no time for humbleness; let them know why your produce is superior to anything else on the market. Furthermore, do your best to actually ensure your produce is better than anything else on the market. As a farmer, your produce is your business card. If you consistently deliver a high-quality product eventually your customers will do your evangelizing for you.
Furthermore, don't be afraid of money. In this space more than any other there seems to be a guilt complex when it comes to turning a profit. This is a ridiculous concept and needs to be done away with. I'm not saying be greedy, but don't be afraid to price your product at a premium. After all, if it's a premium product you deserve a premium price to compensate your efforts. Profit doesn't have to be evil; profit is what allows us to continue farming so we can deliver high-quality, nutritious food to those in our community. As farmers, we're never going to make Wall Street money, but with a well thought out sales and marketing strategy we can make a good living doing what we love.