Lessons Learned on Sabbatical Leave: Cash is King

I am (sort of) on sabbatical leave from my regular gig at Penn State.  I am working half-time at the Small Business Development Center (SBDC) at Penn State.  (So, I went all the way to the other side of campus.)  My goal is to enhance my educational programs with the experience of working closely with entrepreneurs on a regular basis.  I am keeping a journal of my activities/experiences many of which are simply empirical applications of what has been theory to this point.  (That is, I have taught it but haven't experienced as much of it as I'd like.)

Yesterday, I met with a business owner who has a great product that could be widely adopted within a certain industry. (All details must be withheld to maintain confidentiality.)  The business has received lots of funds from goverment and non-government agencies/organizations because the product has a strong probability of succeeding.  Lenders have also supported the business because there is a good probability of a large payout in the not too distant future, but all of that might go unrealized if they can't cash flow the operation.

This particular business, like many others, operates on tight timelines with respect to managing cash flow.  Expense payments are scheduled around expcted receipt of funds from invoices, operating loans, etc.  If those funds come in late, then expenses (including payroll) might be late.  While some employees might be willing to wait a day or two for a paycheck, they probably won't be happy about doing that on a regular basis.  Suppliers might choose to reduce credit availability if there is a history of late payment.  Overall, it's just bad for business to get out of whack on cash flow.

Entrepreneurs MUST plan and manage their cash flows closely.  As the gas that keeps the engine running, you don't want to run out of cash before you reach that profitable destination.

Selling your ag products to the Muslim market

As an ag entrepreneur, there are many, many different niche markets to explore. Religious beliefs can play a big part in product choices for many Americans, and you as an entrepreneur may see this as an opportunity to market your product. According to the article "Tapping the Growing Muslim-American Market", Muslim-Americans are an under-served audience.





There are an estimated 6 to 8 million Muslims in America with an estimated market value of about $200 billion. When purchasing products, a major concern for Muslims is Halal certification. Halal means "what is permitted" in Arabic and can include food as well cosmetics,personal care, and cleaning products. Muslims may only consume goods and services which are Halal. Some estimates show that 70% of all Muslims worldwide follow Halal principles. To learn more about what Halal means and how to obtain Halal certification, please download this publication.

Lisa Mabe, principal of Hewar Social Communications, a digital marketing agency in Washington D.C., describes marketing to Muslim-Americans. "When companies target the Muslim community in their marketing communications, we see them flock to engage with that brand -- not only to purchase its products, but to become loyal brand advocates."

As an ag entrepreneur, are you looking for new niche markets? Have you explored marketing your products to Muslims? If you currently market to Muslims, how would you describe the Halal certification process? Has Halal certification grown your customer base?

Can new packaging get customers excited about your product?

Pizza boxes are pretty much the same no matter what restaurant you go to. A new design though may change people's view of the "standard pizza container". A company called Environmentally Conscious Organization, Inc (ECO Inc) has developed a pizza box that can be broken into 4 plates and a leftovers box. The video below shows how this box, better known as the GreenBox, is used.



The GreenBox hasn't yet hit the market, but it has already gotten many people excited. In April 2009, asylum.com posted an article about the GreenBox. According to digg.com (a social networking site that allows users to bookmark websites and send them to friends), the GreenBox article has been Dugg (or shared) more than any other article in the history of the site.

As an agricultural entrepreneur, have you changed (or thought about changing) your packaging recently? How has this affected sales? Have customers asked for more eco-friendly packaging? If there was a great social media buzz about a new type of packaging available for a product you produce, would this affect your decision-making in packaging choices?

As a consumer, do you think the GreenBox is an innovative design? Would you like to see more packaging designed like this? Would you choose a restaurant specifically because they use GreenBoxes?

Selling your product/service online, part 2

Continuation from last week's post...

By selling through your own website, you can forgo the sales commissions, but you will need to set up the actual online store. You can do this by using free, open source e-commerce software like Zen Cart or Pretashop or you can hire a web developer to do this for you. Setting up an e-commerce system does take some technical skill, so if you don't feel comfortable doing it yourself, hire a professional (keeping in mind that a web developer may charge $50-$100+ per hour).

If you currently accept credit cards at your brick and mortar store, your credit card processor can most likely also process your online sales. If you don't have a credit card processor, look into services like Google Checkout and Paypal. These services are very easy to use and implement on your site, but also be sure to compare their transaction costs with traditional credit card processors.

Once you have considered the costs of processing payments, you will also need to consider shipping costs. Rates can vary significantly between shipping carriers. Be sure to research prices and services including shipping insurance. Also, ask each shipping carrier if they provide free shipping materials. By using a free box provided by the shipping carrier instead of buying boxes yourself, you may save $1 or more per shipment.

Since you (or an employee) will be spending a good deal of time at your computer once you start selling online, there are some equipment issues to consider. Is your computer able to handle your ordering system? Having a slow, outdated computer can lead to ordering system crashes and lost orders. When choosing a new computer, be sure to also buy a large monitor since you will be looking at it for long periods of time. When packaging your products, you will need a laser printer to quickly and professionally print packing slips (as well as sales reports for your own records), a scale for weighing packages, and a label printer for printing postage.





As an agricultural entrepreneur, have you started selling your products online? If yes, how has selling online changed your connection to customers? Have online sales affected brick and mortar sales? If you have not considered selling online, what has stopped you?

Selling your product/service online, part 1

Last week, Sarah blogged about mobile marketing and the role smartphones have in purchasing decisions. If you have explored or are already using mobile marketing, you are probably also interested in selling your product or service online. In a February article on openforum.com, author Gregory Go ("8 Financial Considerations of e-Commerce") discusses what you, the entrepreneur, will need to think about if you want to start selling online.

Your selling price is very is important in your online marketplace. Customers can comparison shop within seconds, especially with retail giants like Amazon. If you are unable to compete price-wise with other retailers, you aren't necessarily out of luck. Become a niche seller that specializes in one product category. Provide excellent customer service and customers will come back to your online store for your specialty. For example, a honey producer who sells her honey for $10/jar can't compete with Amazon who sells a 12 jar case for $30, but she can market her online store as a gourmet honey specialty shop. She can provide her customers with photos of the honey being harvested, and offer unique flavors like lavender and key lime. If you are able to compete with the prices of the retail giants and want to be selling in a large marketplace (Amazon and Ebay for example), you will need to budget for sales commissions which may be 10% or more.




I'll continue blogging about selling online next week!

Supermarkets & Farmers Markets - An Opportunity to Work Together?

The following note from The Lempert Report was shared by a colleague after a recent discussion that several of us had while discussing opportunities for farmers selling their products locally. The text of The Lempert Report follows.

Do Farmers' Markets Grow On You?

Supermarkets ought to stop looking at
farmers' markets as quaint gatherings of like-minded growers that appeal to a
segment of buyers who want their produce fresh, fast and local. They should also
stop looking at them as competition to their own showpiece departements.

Rather, by hosting farmer's markets in
their parking lots or other adjacent spaces, they could project a fairly
unassailable image of wholesomeness, of having high regard for local food
sources, and respect for their shoppers - who might just become more prone to
buying more dressings, accompaniments and center-plate foods inside the store to
accompany their earthy scores of fruits and vegetables.

Better still, we believe at The Lempert Report,
if a supermarket with the right physical setup were to schedule these as regular
branded events, they'd draw increasing traffic and motivate farmers to become
regulars too. Imagine all that face time for growers to cultivate customers, and
with no need to open their own physical store or give up a percentage to a
distributor. They do need to pay something, and they do. According to the Los
Angeles Times, vendors at a popular Hollywood farmers' market pay 6.5 percent of
their sales as rent to the market, and "many of the 100 produce stands take in
about $400 on Sundays, while a few make as much as $2,500."

Should supermarkets shun their potential to build
buzz and a rental revenue stream with such events? We think not, since consumers
are looking to eat healthier, and they often like to support local
grower-entreprenerurs. Moreover, celebrity farmers bring co-branding
opportunities, as do restaurateurs who might be inclined to organize themselves
to ensure their supply of quality produce, such as the Batali-Bastinanich
Farmers' Market in Las Vegas.

Think about Ralphs, Bruno's, Stew Leonard's and Balducci's, and realize
these stores attained celebrity status because their namesakes knew food well
and were credible to their customers. The Lempert Report believes it is
absolutely possible that with nurturing branded or co-branded farmers' markets
could experience similar local and regional successes.

If you're a farmer or food entrepreneur, is there an opportunity for you or the farmers' market you participate in to approach a local grocer about partnering in a fashion similar to that described above? They may already be considering such possibilities and this would be a perfect opportunity to demonstrate willingness to work together, demonstrating shared values to local consumers. If groceries in your area haven't thought about partnering, this note provides several points that can be used to illustrate the advantages for both them and you.

Mobile Marketing?

Food Systems Insider today had an interesting commentary regarding the role smartphones play in consumer purchasing behavior. Smartphones, such as Blackberries and iPhones, allow users instant access to all sorts of information.

Many social networking sites also have applications allowing people to access their accounts through their phones. A consumer with a smartphone can let their friends know where they are through foursquare, send a tweet and post a status update about their experience, and post pictures of a product they purchase to Facebook and Twitter.

With the continuing rise in the use of smartphones and the possibilities they offer for connecting with consumers, mobile marketing is yet another facet that ag entrepreneurs should consider as part of their marketing and PR strategies.

Check out the article via the link below.

Got milk? Check the smartphone