When Business Plans "Take on a Life"

by Winifred McGee, Extension Educator, Dauphin Co.

At the Food for Profit workshop last week, I talked about researching and writing a business plan (as opposed to the "mental plan" for which many entrepreneurs settle).  After listening to me for a number of minutes, one of the participants asked: "How long should you plan? Couldn't trying to create "the perfect, complete plan" keep you from ever starting your business?"  What a good question!

Planning ahead is great -
but you need to get off the ladder to live!

Since my days as a Small Business Development Center consultant, I have believed that having written goals, objectives and strategies is essential for having a successful business.  However, writing the plan is just the tip of the iceberg.  If you want to have more than a "great novel," you have to progress from planning to action!  In Extension's food and farm business planning class, Your Future in Focus, we discuss 4 M's: Mapping, Move, Monitor and Modify.  The idea is, while having a plan is a great thing, it is not an end in itself.  The planning process includes a regular checkup of results, evaluation of the business' health, and revision where warranted.  Those other three M's are just as important as the initial mapping process to have a vibrant venture.

The SBA Blog Spot has a great article by Tim Berry, Founder and Chairman of Palo Alto Software and bplans.com that addresses this very subject.  Mr. Berry says that the assumptions in our plans can change very quickly in today's world, so we should see a business plan as a tool that we manage while running the business.  He suggests the following steps:

First, do a plan that has concrete specifics you can track.  Include not just the obvious numbers for sales, costs, and expenses, but also other manageable numbers like web traffic, visits, leads, presentations, calls, downloads, likes, mentions, updates, and whatever else drives your business.

Second, set a regular schedule for reviewing plan vs. actual results.  Have a monthly task to look at progress and identify problems.

Third, learn to distinguish problems of execution from changed assumptions.  If assumptions have changed, then the plan should change.... Usually, unexpectedly good results are a good reason to look at shifting resources towards the positive; unexpectedly bad results are a good reason to shift resources to correct a problem.

So, should you have a plan? Yes - absolutely.  Should business planning BE your venture? Not at all!  To do that would be similar to opening the promotional materials for a cruise, reading them, looking at the pictures and saying "Now I've been to the Bahamas!"  If we really wanted to see the Bahamas, we'd read the literature, talk to others who have visited there, contact a travel agent, and get a great wardrobe to wear on-ship as preliminaries - the point is to get on the boat!  And, having taken the trip, consider what you'd do differently in future trips.  In much the same way, business planning is not the end, but only a means, to a great (ad)venture.

Developing a Roadside Farm Market

by Michelle Kowalewski, Extension Educator, Susquehanna Co.

Thinking of growing and selling your own product?  A roadside farm market can be a great outlet to sell products directly to consumers.  Retailing directly to consumers can be a viable alternative marketing strategy and means of increasing profits for any small-scale ventures.  However, marketing through a roadside market needs careful planning and thorough examination of a wide range of topics.

First, as with any business venture, it's important to research! Explore potential competition, customers, and products.  What will make your roadside market different from another and what will entice people to stop and buy your products?  The increasing trend to buy local products is certainly in your favor if you can make a great first impression and encourage customers to stop again.  What products will you grow to sell at your market?  What is your expertise and how does it match up with what your target customers want?  Remember, quality is important to consumers and will be one of the main reasons that they continue to shop at your stand.  Develop a plan, including production schedule of what items might be in season, when, and for how long.  An option if you cannot produce all the items you wish to sell, is to consider supplementing your market with offerings from other local growers.

It's always important to check on regulations.  There are many regulations to operating a small business and a roadside stand is no exception.  Check with local municipalities or officials to check on zoning in your area or township.  Location is a key consideration for a roadside market.  Spend time observing traffic flows in the vicinity of your potential site.  And remember, signage is important.  No matter how nice your market looks, people must be able to find it, so use directional signs to help customers locate your business.  Signs must be eye-catching and easy to read from a distance.  It's less important to list all the products available on the sign than to direct customers to the market.  When people arrive at your market it's important for parking to be easily accessible and safe.  See this past blog on signage for more.

Now that you have customers to your market, remember to keep your displays attractive.  Shoppers like to see displays of fresh vegetables in a high quality, clean environment.  Remember, a positive first impression will keep shoppers coming back for the next visit!  Roadside markets are often selling an image and experience as well as physical products.  Help your customers think about traditions and warm thoughts - old crates, tools, scales, or simply photos can help create a "moment" for the shopper that makes them feel connected.  It's all about selling your story and your products!

A simple, yet attractive, display on something like this old time sleigh,
can trigger warm, nostalgic feelings in customers, bringing them back.

Customer service is important - be sure to listen to your customers as well as educate them about the products that you are producing.  Be friendly and courteous and always handle complaints in a professional manner.

There are a lot of other key factors to consider when developing a roadside market:

• Size - are you building a new structure or remodeling an existing structure? Do you ever envision expanding?
• How will you price your products?  
• Do you need to consider advertising?  
• How will you staff your market?  
• What type of records should you keep?  

To learn more about developing a roadside market, read Penn State Extension's Ag Alternatives fact sheet on Developing a Roadside Farm Market.

How's the Produce Competition Doing?

by John Berry, Extension Educator in Lehigh Co.

U.S. consumers have benefited from an increasing volume and variety of fresh produce at both retail and food service outlets.  There has been a significant accompanying growth in imports, particularly since the 1990's.  The produce section in today's grocery store often has dozens, if not hundreds, of different fresh fruits and vegetables on display all year around.  This product typically comes from all corners of the globe as additions to our domestic fresh fruit and vegetables.  Improved logistics, technology, and transportation have allowed this increase in availability.

Did you know nearly two-thirds of our fresh produce imports from from Mexico, Chile, and Costa Rica? Additionally, California, taking advantage of its diverse geography and climates, is the nation's largest fresh-market producer.  The State is the nation's leading producer of fresh-market grapes, strawberries, peaches, and a major producer of a wide variety of fresh vegetables and greens.

What does all this have to do with me as a local produce farmer?  As we continue to finalize 2013 and develop a growing and marketing plan for 2014 - we may wonder how the upcoming season will treat us compared to previous years.  Could there be any impact from this produce typically coming from outside our local area?

Precipitation is forecast to be in short supply in 2014.

A recent Wall Street Journal article noted that, "Record-low precipitation in 2013 has worsened California's drought, draining reservoirs, forcing farmers to keep fallow thousands of acres of fields and leaving some ski resorts high and dry during the busy holiday season.  Urban and agricultural customers, including Southern California's huge Metropolitan Water District, have been told by the state to expect to receive this year, on average, just 5% of the water they historically request, after a year in which rainfall totals hit record lows in many parts of the state.  Last year, customers received 35% of requested supply, on average."  Additionally, checking NOAA drought monitor data, we see most of Mexico and much of South America are currently rated at "dry" or "drought" status also.

As our customers expand concern for healthful foods and build increased awareness of local farm-food sources we may expect another strong demand year in 2014.  Local distribution is also seeing some growth.  Not only are there examples of local food distribution systems starting to mature, the many established food brokers are carrying more and more local produce as their conventional customers demand.

Of course, no one can predict the future - but - if growing conditions in the southeast U.S. and South America are not ideal, perhaps east coast growers will be able to fill more of the expanded regional demand for fresh produce in 2014.  Will we be prepared?

Remember to consider participating in the 2014 Mid-Atlantic Fruit & Vegetable Convention January 28-30. There are many educational sessions appropriate for those of us in the commercial produce business.

* This article includes information from FTS-356-01; Economic Research Service/USDA

Open Season for Farm Revenue Insurance

by John Berry, Extension Educator, Lehigh County

Crop insurance has become the risk-management tool of choice for many farmers, because it works. The program was created to ensure that the private sector would help shoulder part of agriculture’s risk.

Crop insurance not only prevents taxpayers from shouldering the full burden of a farm disaster, but also gets payments to farmers relatively quickly. Mother Nature does not just strike large crop farms and a crop-insurance indemnity does not make a farmer or rancher ‘whole’ any more than a check from an insurance company replaces a house lost in a tornado. However, the AGR and AGR-Lite insurance products are intended to benefit the diverse and sometimes modest sized farms on the east coast.

Crop insurance is a public-private partnership, designed to ensure that when disaster strikes, the private sector – crop insurance companies – are there to help shoulder the risk and the financial burden of rebuilding.  Crop insurance policies are purchased by the farmer and suited to the farmer’s needs, comfort with risk and financial situation.

USDA’s Risk Management Agency (RMA) recently announced the Adjusted Gross Revenue (AGR) insurance for farmers and ranchers is again being offered for 2014. The application deadline is January 31, 2014.  Current AGR policyholders also have until January 31, 2014, to make any changes to existing contracts.  AGR provides whole farm income protection under an umbrella-type policy that covers income from all crops and some livestock, provided the income from livestock and livestock products does not exceed 35 percent of total farm income.

Unlike traditional crop insurance guarantees based on yields, AGR provides a guarantee against a significant decline in overall farm income from the average of the most recent five years (2008 – 2012).  As a result of substantial premium subsidies provided by the USDA, AGR can be a very affordable way to guarantee an income flow from your farm operation.

In addition, a similar product called AGR-Lite, which crops and covers livestock and has a limitation of $1,000,000 in coverage.  AGR-Lite is available in almost all counties for the states listed above for 2014.  The sales closing date for new AGR-Lite contracts is March 15, 2014.  Current AGR-Lite policyholders also have until January 31, 2014, to make any changes to existing contracts. 

Farmers are strongly urged to contact a local crop insurance agent, as soon as possible, for more information and premium quotes for both products.  For a list of crop insurance agents, farmers may contact their local USDA Farm Service Agency office or log on to the following Risk Management Agency web site: http://www3.rma.usda.gov/tools/agents/

Research First, Act Second

by Michelle Kowalewski, Penn State Extension Educator, Susquehanna Co.

I recently received a call from a local dairy producer who is currently in business with his father.  His father plans to retire from the business in several years and the son would like to explore options with beef cattle production.  The reason for his call was to find our more information about certified organic.  The producer was very unfamiliar with the process to become a certified organic operation, but this is where his research began - by asking the question!  Whether you are already in an agribusiness or just looking to develop a business, it's important to research your industry.  Ask yourself the following questions:

• What products and/or services should I consider?
• What will it take to start this business enterprise?
• What is the current economic landscape for this business?
• Who will be my customers?
• What are my options for reaching my customers?
• What potential revenues can I expect?

Once you have considered these questions it's time to start your research.  Take a broad look at the industry (agriculture) in your area and then narrow in on the specific product you'd like to produce or service you'd like to provide.  Try looking at past, current, and future trends and try to understand how your product can fit in the marketplace.  Sources for your research can include:

• Trade publications related to your area of interest
• Visit federal, state, and local agricultural websites
• Educational classes or webinars
• Case studies

Attend educational workshops to learn about your area of interest

Perhaps one of the best methods of research is to conduct a farmer interview.  There is no better way to learn then from firsthand experience.  Talk to producers who are willing to share their experiences, both good and bad, is invaluable.  To find a farmer to interview, think of people you know or get names of potential producers from service providers in your area.  Once you've identified the person(s) you'd like to interview, come up with a list of questions and call to see when they would be available.  Try to pick a time during their "slow" season.  It's best to talk with multiple farmers - all will have different opinions and this will help you weigh out your decisions on what enterprise might be best for you.

Proper market research will help assure your that your preliminary market plan is addressing everything you need to do to prepare, promote, and sell your products.

Winter is a Great Time to Make Your Social Media Plan

Winter provides farm and food business owners the opportunity to reflect on the year past while planning for the coming year.  While you are planning planting and/or production quantities and schedules, updating financial records, attending professional development events, and evaluating marketing outlets, consider developing your social media presence and strategy as well.   And if you are using social media, remember that your presence shouldn't go into hibernation even though the ground outside may be covered with snow.

Don't let your social media presence go 
into hibernation, like this bear, 
during the winter months.

I read this article yesterday that provides a timely reminder about the importance of creating a social media strategy and maintaining your presence year-round.  The author also provides a couple of helpful tips:

• Plan a schedule of topics for posts during the coming year.
• Use scheduling tools offered with many social media tools to pre-load content.

If you have an active social media presence during the growing and selling seasons, you want to maintain that visibility during the off-season.  Followers unfamiliar with farming and food production may be interested in learning about what goes on "behind-the-scenes" that makes what is visible, and easily shared during the summer months, happen.  You can easily recruit followers to provide their input for decisions and options you're weighing.  Larger packages vs. individual servings? Heirloom tomatoes vs. standard breeds? Which new products to offer? Ask! Read about how one farm marketer did just this.

Interested in creating a social media presence for your business or jump starting your existing presence with a social media strategy?  Check out Penn State Extension's Social Media Boot Camps for Ag Businesses.  Registration for the first two ends on Dec. 3, 2012.