Building a business plan based on a differentiated product that is in demand is essential to the success of any business. “You can’t sell the same thing cheaper than a big box store.”—Adam Moody.
Identifying and understanding today’s consumer-driven and changing food market is paramount to building solid business and branding strategies. Direct marketing agriculture’s mindset of more margins per acre or animal is a 180° shift from production-oriented commodity agriculture.
Differentiate or stay on the farm
Moody’s Butcher Shop dry ages beef and has grown to five shops in and around Indianapolis. Adam Moody believes if you want diversification to be successful for your farm or ranch business, you must sell a product that is truly different in a niche market.
Since you will be asking the consumer to pay more than they might for a product at the local grocery store, there needs to be a reason for them to do so. It also has to be a product they care about.
Ways to Differentiate Your Product
- Quality and flavor. It is easier to do than before because of innovation, but you must know what the consumer wants and how to communicate that to your customer.
- A local product. Consumers like to know they’re supporting a local business, industry and family.
- Sustainability. Adam works with a rancher who uses the unmarketable offal from Adam’s processing plant in a biodigester to produce electricity. The final product from the biodigester is fertilizer the rancher uses on his farm. This results in no environmental footprint, a fact which the rancher uses to market his beef and pork.
- All-Natural. Adam cautions the ‘All-Natural’ differentiation is being reduced because consumers expect it from every product.
- Organic. However, consumers are tired of being duped with terms like organic, gluten free and all natural.
Stages of Building the Business
- Anger - This was Adam’s first entrepreneurial motivator. One Easter he was selling pork at $.09 per pound. Ironically, that price didn’t allow him to afford an Easter ham from the local grocery store. It made him mad and drove him to the decision to open his first butcher shop in hopes of capturing more profit from the beef and pork that he raised.
- Passion - This is the only good motivator. Passion for your business will get you through the tough times when you can't make your payroll. Adam believes that you have to portray the passion of what you are doing to build your brand.
- Trends - You may have a trendy idea that allows you to start a business, but it’s important to determine if the idea is part of a niche big enough for sales to support the business.
Farm Market Levels
- Hobby – Your business is fun and social. You have limited engagement, effort and capital.
- Farm Market Level – More engagement, time and capital. You generate some cash, but doesn’t support a vocation. This level may include multiple farmer’s markets or a farm stand or shop. You will deal with some inspection from various agencies.
Vocation – This is the big jump! This is your job! There is a brutal learning curve mostly due to the critical mass of sales needed to make a living.
It's All In the Numbers
Business – At this stage, you will need to reduce your business to numbers. The need for additional capital will lead you to become very familiar with numbers in the form of business plans, pro forma reports, profit and loss statements, balance sheets, making payroll and everything you need to attract investors and secure financing.
Employees – At this point you – scream. When you grow to the point where you need to hire employees to meet demands, as backwards as it seems, employees will own your job. Good employees are hard to find and bad employees will demand a lot of your daily workload.