Survey Customers to Learn about Their Wants, Likes, and Needs

Over the past couple of months, I’ve spoken to audiences of small business owners and during my presentations I’ve stressed the importance of learning about their customers’ needs, wants, interests, etc.

Certainly, I understand the number of responsibilities that a small business owner has and that sometimes the staff is overwhelmed, but how will you know what products to continue to offer, which new product categories to investigate, and whether consumers like your store’s layout and design if you don’t ask them?

I would encourage you, even during this busy time of the retail year, to start learning about your customers, or reacquaint yourself with their preferences and behaviors, by asking them certain questions.  Most likely you have a standard set of questions that you ask to help build a rapport with visitors, but also consider creating a survey that could capture their responses and that you can refer to from time to time.   Begin the process by involving customers on your mail and email lists and those enrolled in your loyalty program.  If you own a tasting room, include questions on your wine club enrollment form or offer to wave the tasting fee if customers fill out a short survey.

             Before stocking something new, ask customers if they would be interested in buying the products.

In a previous post, Learning Directly From Your Customers, I described some techniques for conducting focus group session, but don’t forget that you will want responses from a larger group of consumers to make actual business decisions.  Therefore, consider collecting survey responses via the Internet.  Aside from posting questions on your website and on your Facebook business page, you could conduct an online survey using one of the many tools available: SurveyMonkey.com, Zoomerang.com, and SurveyGizmo.com. 

These and other online survey programs allow users to collect a limited number of responses for free with more features available when an annual subscription is purchased.  Don’t forget to direct customers to the survey by sending links to it in emails, incorporating the link into your webpage, or posting and promoting it on your Facebook business page and in tweets. 

In next week’s post I will provide some examples of questions that you might ask your customers.

Farm Financial Analysis Tool Proves Useful in Analyzing Solvency and Liquidity

By Miguel Saviroff, Extension Educator, Somerset County

For a farmer, making economic decisions may be a stressful task if accounting records and financial statements are not available.  The use of spreadsheets and computerized financial records help farmers relax while making a plan. Penn State Extension Farm Management Educators have used FINPACK as one of the tools in training farmers to evaluate the farm’s financial position, explore alternatives, and make informed farm management decisions. There are, of course, other financial programs that can be purchased for this use.

Dave Van Pelt is fine tuning and monitoring his operation's current financial strategies. He used FINPACK to simulate expansion strategies and analyze the possible new challenges. “My experience with FINPACK was with dairy start-up strategies, it has helped me see the level of production needed to support a herd large enough to meet financial obligations,” said Van Pelt.

The road map of a farm financial analysis starts at the beginning of the year with a beginning balance sheet. Once this point of reference is set, a monthly cash flow is planned and compared with the actual at the end of each month. At the end of the year, the accounting cycle closes and an ending balance sheet is prepared. Both balance sheets are used to calculate inventory changes and a year-end analysis leads to an Income Statement. Financial performance can be assessed using three concepts: Profitability, Liquidity, and Solvency.

In the FINPACK program using the data entry mode, a complete listing of assets, liabilities, and ownership equity is fed into the system, and the program creates the beginning balance sheet. Assets and liabilities are listed as current, intermediate, and long term. The output section presents this balance sheet with assets in order of liquidity in one section, and liabilities and net worth in the other section, with the two sections "balancing."  Owner’s Equity (aka Net Worth) is the difference between the assets and the liabilities, and it should be more that 50% of total assets. For example, assume my total assets are worth $800,000 and my total liabilities are $320,000. My owner’s equity would be $480,000 ($800,000 - $320,000). Owner’s equity should increase between 2 consecutive balance sheets. An owner’s equity growth rate should be at least 6% annually. If the business does not grow it could be a sign of liquidity problems, such as an income decrease.

FINPACK provides a suite of tools that guide producers 
and ag professionals to sound financial decisions. 

Two financial ratios obtained from the balance sheets are found in the FINPACK output screen. They are the liquidity and the solvency ratios. The liquidity ratio states the ability of the farm to pay its short term obligations. The liquidity ratio is also known as the current ratio and is obtained by dividing current assets by current liabilities. For example, if your current assets are $20,000 and your current liabilities are $16,000, then your current ratio would be 1.25 ($20,000 / $16,000). We interpret this ratio as follows: you have $1.25 of current assets (cash, savings, etc.) for every $1.00 of obligations (i.e. loan payments, line of credit or accounts payable) you owe within the upcoming year. A ratio greater than 1.7 is “Strong”; a 1.7 to 1.1 would fall in the “Caution” range; and less than 1.1 would be “Vulnerable.” A “vulnerable” situation can have potential causes, such as a farm expansion, low returns and high costs, and rapid debt payments. Strategies to get out of this “liquidity crunch” include raising cash by partially liquidating (selling) non-current or non-essential assets or borrowing to meet the current liabilities. Restructuring current debt into non-current debt reduces current liabilities. Debt restructuring should not be the first alternative in trying to solve liquidity problems. Other alternatives may need to be tried to provide a faster infusion of capital.

The solvency ratio indicates the financial position of the farm, and whether the business can cover its total debts with its asset base. A business is “insolvent” if it has more debts than it has in assets. The Debt to Assets ratio measures a farm’s solvency and is calculated by dividing total liabilities by total assets. From the above example, my debt/asset ratio would be 40% ($320,000 / $800,000). This measure helps us compare our solvency to similar operations.

A Debt to Asset Ratio less than .3 (30% debt) should be comfortable; between .3 and .6 (30% to 60% debt) is a medium to heavy load; and over .6 (60% debt) becomes heavy and if high enough, impossible to service. Overcoming a poor solvency measure will depend on the cause. A new operation will be expected to have a poor solvency. It will require hard work, strong cash flow, and solid profitability over time. In general, selling unneeded assets and using the proceeds to pay down your debts, can work. Refraining to take on additional debt can possibly help. You will need to increase your asset base by reinvesting your profits in the operation or bringing in outside investors. Also important, is taking good care of the assets by preventative maintenance, so they will hold their value longer.

In my next blog article,  I will discuss cash flow, financial efficiency, repayment ability, and profitability, which are highly important areas when looking at the overall financial condition of an agribusiness.

For information on Farm Financial Management educational programs, or if you have questions on financial aspects of your farm business, contact Miguel Saviroff at Penn State Extension in Somerset County at 814-445-8911 extension 144.

Pinterest Secret Boards - Make Use of Them for Your Business

Pinterest recently unveiled their newest feature - secret boards.  Here are a few pieces of information about secret boards and how you can make use of them in your business.

• You can have up to three of these secret boards (in addition to your public boards). 
• You can not make an existing board secret. 
• You can make a secret board public, but you cannot change it back to secret status.
• Only the creator of the secret board can make it public.
• Other people see your secret board through invitations you send allowing them to contribute to the board.
• There does not appear to be a limit on the number of invitations you can send to make people contributors to a secret board.

If you have a business where you deal with clients and need to show them pictures of things you are discussing (flowers, designs, packaging, labels, etc.) or even need a central place to archive links to articles and other online information (provided it's pin-able), these new secret boards may be a valuable tool to enhancing customer relationships and improving communication. 

A secret Pinterest board could also be handy as a tool for internal communication, idea sharing, and brainstorming.  Since original photos can be pinned, you, your family members, employees, or anyone you want to get involved, could pin photos of things they see away from the business to spark discussions or for future planning.

Since you can only have up to three secret boards at a time, managing your use of them will be important.  You can delete boards as you complete projects, allowing you to create a new secret board.  Your other option is to simply add and remove contributors.


For more information about Pinterest's secret boards, click here.  We invite you to visit our Pinterest boards here.  Do you think secret Pinterest boards will help you in your business?

Keeping Detailed Records Can Improve Marketing Decisions

The other week I attended a field day at a PA dairy farm that has a creamery enterprise processing their own cheese.  Having attended numerous field days, I expected the day to be spent covering the production aspects of the business.  A fair part of the days was, in fact, spent on dairy and cheese production.  However, what impressed me was the time and detail spent on record-keeping and marketing for the cheese enterprise. The manager shared several examples of the charts created from data they track - everything from milk usage to customer (outlet) trends to sales by type of cheese - all over a multiple year span.

I've created an example, below, (with non-existent data) to illustrate how detailed record-keeping can assist in making marketing decisions.

Example chart of cheese sales ($) by type

The chart easily illustrates for each cheese type how sales have changed over the five-year period in question.  Anyone looking at this can quickly see that sales of cheeses A, D, and G, after reaching a peak in 2010, dropped in 2011.  This should tell the business owner that those are cheeses that should be closely watched during the coming year to see if sales continue to drop.  The owner might additionally want to do some investigative work to see if he/she can identify a specific reason behind the drop in sales.  Alternatively, the significant sales increases for cheeses B and E may lead the owner to increase marketing for those types, or to leverage their popularity to assist with sales of the cheeses with decreasing sales.

Whether it's cheese or another product, having sales data organized in a fashion like this can easily assist with identifying trends among your customers and help you make production and sales decisions.