If you followed my advice on Becoming a businessman, you are now ready for stage two in the three-stage process of building a sustainable farm enterprise.
As you recall, the first stage is about you the person and how you need to change your self-perception about your status as a business leader.
The second stage is more analytical and focuses on your market — those places where your product or service is delivered to the end user and the pathways or channels it takes to reach the end user efficiently, easily, undamaged, and at the lowest possible cost.
There are three individual approaches to “your market”: First, there is the product to be marketed; you should care about quality of seeds, watering systems, whether you can rent a tractor/piece of equipment at the local agri-hub, available and experienced labour, the richness of the soil for the produce you are cultivating, the need for fertilizers and using the appropriate pest and disease control agents, the expected size/quality of the harvested produce and perhaps the most important part: branding your products.
Back in Step 1, you were advised to brand your farm; now I am advising you to brand your products according to the revenue stream. Set the expectation for profit by revenue stream.
Give your product a name that becomes recognizable with quality, reliability, and trust. Play with colour, packing sizes and weights, labelling requirements, shelf presentation, and optimum modes for wholesale and retail distribution.
Your only goal at this point is to learn from the experts, learn from your competition, and learn by becoming your own best customer. What do you want to see on the shelf or the table? What level of quality or price equates to your brand name?
Analyse the size of the target market and set your market share goals early on again by revenue streams. Calculate gross sales, cost of goods sold, net profit margins, and potential growth projections.
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Second, there is the marketing of the product. If you have no experience in marketing, buy a book or watch YouTube videos and become familiar with the language of marketing and the expenses included in the marketing line item in your budget.
The marketing process represents the form the product takes from inception to final presentation for sale to the ultimate consumer.
Calculate the cost of producing the item, preparing or processing the item, packaging the item, transporting the item, warehousing or shelf life costs, wholesaler and retailer commissions. Add advertising or publicity costs.
Often, the highest cost is transportation. In this case, look for ways you add your products to another’s shipment through a broker. Compare the cost of using brokers to the cost of providing your own transportation.
Your only goal at this point is to understand the market and the marketplace and to minimize normal and abnormal risks due to weather, blight, disease, disaster, or other market interruptions.
Third, there is the customer who actually purchases the product. Most business men and women admit that the largest failure in business is not listening to your customers. Learn how to listen to your customers.
Do you talk to them face to face? Do you invite them to call you on your advertising and packaging? Do you reach out to build loyalty among your customer base?
How do you use their opinions to change the way you serve your customers and clients? Excellence in on-point sales comes from three elements: customers like what they see (name, brand, packaging, positioning), they like what they spend (price equals perceived value), and they speak to others about their buying experience. Referrals are a farmer’s best friend.