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Biggest Farm Money Mistakes
0 Playsin 16 hours
In this episode, Barn2Door CEO Janelle invites Farm Advisor Phil from Hopewell Farms to discuss the common financial pitfalls that prevent Farmers from achieving a sustainable, full-time living.
For more Farm resources, visit: barn2door.com/resources
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Transcript
Introduction to the Podcast
00:00:09
Speaker
Hello and welcome to the Independent Farmer podcast, the go-to podcast for do-it-yourself farmers who are taking control of their own business, skipping the middleman, and selling direct to local consumer and wholesale buyers.
00:00:20
Speaker
This podcast is hosted by Barn to Door, the number one business tool for independent farmers to manage their business, promote their brand, and sell online and in person. Let's dive in to today's Independent Farmer podcast.
Barn to Door's Mission and Goals
00:00:42
Speaker
Welcome to the Independent Farmer Podcast. I'm Janelle, CEO of Barn to Door and your host for today's episode. As you may be aware, Barn to Door is all about helping independent farmers make more money, get the office work, and look like a pro. By getting a system in place to sell direct, market under their own brand and manage orders,
00:00:59
Speaker
farmers can skip the middleman and build a strong local business with recurring sales. And we just debuted helping farmers with local delivery. In today's conversation, we'll get into the biggest farm money mistakes.
Phil's Award and Marketing Opportunity
00:01:11
Speaker
Today, I'm happy to welcome Phil from Hopewell Farms, who is part of our Farm Advisory Network and has worked with us for a number of years. And if I'm not mistaken, did you just get nominated, voted or anointed Farmer of the Year in Georgia?
00:01:26
Speaker
Not in all of Georgia, in my part of Georgia. That's awesome. Tell us what that is. So Farm of the Year, let's see, was selected by our Ag Extension and Farm Bureau and a Chamber of Commerce. And i tell you, it's funny when you get an award. I mean, it is cool. I like it. But I pretty much just thought, hey, this is a good marketing opportunity. You know, this is something to share and give some credibility to customers. So I took my two older boys with me to get it, wearing their little farm shirts, you know,
00:01:59
Speaker
Aww, I love that. Do I need to send your older boys farm shirts? Sure. i mean, we could do that. Okay, they love them. Or some cool hats. All
Phil's Journey from Finance to Farming
00:02:08
Speaker
right, good. So tell the folks here, I'm especially excited to talk about Biggest Farm Mistakes because you had a life in business and money and finance before you became a farmer. And so you have an eyes wide open lens on this and you still made mistakes. you Becoming a farmer, right? This could be a 10-hour podcast if we're going through all my mistakes, Janelle.
00:02:29
Speaker
So give them a little bit of your background so that everybody kind of knows how your farm got started, what you did before, and then we'll fast forward to what your operations look like today. And then we'll dig into the underbelly.
00:02:39
Speaker
Perfect. So I was a finance major with a Spanish minor in college, and I graduated and was a commercial banker for 17 years.
00:02:49
Speaker
So I was the banker for businesses and all sorts of businesses, you know, so I'm like, I Ideally, mean, I'm underwriting loans. I got to get under the hood, understand their business. And also I'm trying to like learn from all the businesses I work with, because it's fun, but B, so I could bring advice to try to get more business. And then probably about 14 or 15 years into that is when I moved to my farm because that was not my plan. It just kind of happened. And once we started selling,
00:03:16
Speaker
Then I think the first year we sold like $33,000 worth of product. I was still working at the bank. And then i was like, hey, I mean, that's not how much I needed to make, but it's something I want to go towards doing this full time. But I enjoy the consulting too.
00:03:32
Speaker
So I was like, I always want to do some consulting with businesses on the side.
Financial Management in Farming
00:03:35
Speaker
But two years ago this month, I like to call it retired from banking. And yeah, it's funny though, as I was growing, I was very busy because I'm working at the bank. We had four kids at the time. We homeschool. I did participate in that. I'm very involved in the community. So I'm rushing around doing my chores, then going and taking a shower, going and closing a loan, and then delivering some eggs right after the loan. And I at that time had more money than time, if you will, because I had a steady income. So I invested in things. I was very focused on time efficiency and on growth. And I was focused on growing revenue and production at basically whatever cost, if you will.
00:04:17
Speaker
I mean, I didn't have that much money. I took on some debt too, which we can chat about that later on the pros and cons of that. But I realized, hey, I need to run it by the numbers, which I have since printed myself a ah hundred bracelets because I give them away and that say run it by the numbers. And what I meant by that is, hey, I was like, I'm in this growth startup phase.
00:04:37
Speaker
I got to get sales. And I was doing stuff to get sales that was just dumb. I mean, i would deliver two dozen eggs for free myself because I just wanted to get the wheels turning. And there's a certain degree to which you must just establish yourself. As quickly as possible, you need to get a good grasp of making sure that you are making making money, not just making sales. And I was like, i understand this. I'm underwriting $10 million dollars loans, but I'm not doing it myself. And it was like the cobbler's son had no shoes.
00:05:10
Speaker
Yeah, I appreciate that, though. I will say it is actually very important to do the scrappy grassroots marketing. Like it doesn't make sense on some
Investment vs. Immediate Profit
00:05:19
Speaker
level to deliver yourself a couple of dozen eggs, but it actually really does. Early on, you are going to lose money at first on any sales channel that you are starting on. We work with a lot of farmers now who are actually shifting to delivery. They're working with a delivery partner. We have a handful of them. And they're like, I don't have delivery, so now I need to get delivery. And then they start marketing and they get you know the first number of folks to raise their hands. and It's not gonna be an overnight success unless you actually start doing it. And then a year or two into it, it's gonna be an overnight success, right?
00:05:49
Speaker
In other words, you are going to lose money at first. It's actually an investment to start up a new delivery route or if you're trying to enter a new city. You have to work at it to build up the threshold where you actually can begin to make money. Now, I think it's smart what you're saying, which is you need to at least run it by the numbers. Can you get there? Like, does it take 50 customers on a delivery route? Does it take 50 customers at a pickup location? How much do you need to make at a farmer's market?
00:06:18
Speaker
Are you gonna make that on the first day you go to the farmer market? No, but over time you will. So know that you're gonna be investing and paying out money, AKA marketing or building up your brand or your sales, but there needs to be the tipping point and it's good to know what that is. 100%, that you be investing be Investing, yeah, it's not losing. It's, well, investing, i would say, be spending money towards something which is going to gain you money. And so you've got to know the numbers. One thing that's key, first, you've got to be tracking this stuff, 100%. And I don't care if you just sell $1,000 worth of stuff, track it. You need a bank account for your farm and one credit card if you're going credit card.
Pricing Strategies for Profitability
00:07:01
Speaker
All your expenses and income flows through just like one channel and you can track it. And you need to understand what margins are.
00:07:11
Speaker
And forgive me because many of our clients might, but I'm just going to explain and i explain like it I explained to my employees. Your gross margin is how much you make on your product. So I'll give you a quick example. On a chicken,
00:07:23
Speaker
I need to factor in my cost per chicken. So I buy a chick for $1.80. I feed it a certain amount. Now, I don't know the feed per chick. I go for a batch of chicks. I get 1,000 chicks every three weeks. That's $1,800 for chicks. I know they're gonna go through a certain amount of feed. I have a certain amount of propane in the brooder. I have wood chains in the brooder. And then I allocate labor costs. We'll come back to that in a second. Of how much it costs me to raise the chicks. And then i have to pay about $3 per chicken. to harvest each bird. That includes packaging and ice and stuff because I built a little poultry process and plant. Let's say I spend $10 per bird and I'm going to sell it for 25, just to use round numbers. Gross profit per chicken is $15. So that's what I sell something for minus what it costs me to produce it. And I got to get all those costs in there, including my time, because for the longest time, I didn't factor in my time. Well, my time has a cost. And as you grow and you have employees, they're going have a cost. If you're not profitable unless you do everything, then that's not good.
00:08:29
Speaker
but You're paying to be a farmer. That's right. And you've got to look at yourself as a business owner, for sure, who is blessed enough that they get to farm. So if your gross margin is good, so if you're making money per chicken, but you're still kind of losing money because you're paying for your farm, you can grow your way to being profitable. But if you're not making enough money for chicken, if you grow, you're just expanding your losses. So you have to have a margin on your product.
00:08:57
Speaker
which the primary things you can control are your price. So when you're pricing, pricing is hard. We talk in the grassroots marketing all the time about, you know, people will price lower because they want to avoid rejection. We do need to be happy with what you're charging and be getting the premium you deserve for a premium product.
00:09:16
Speaker
Agreed. And expect rejection. That's okay. That's totally fine. Like if you have some folks that are, like Phil is saying, cost plus profit equals your final price.
00:09:27
Speaker
right? And so you need to know what that is. You need to know your cost, be very, you know, know your profit, obviously, and that rolls right into your price. And to your point, if your costs are greater than your profit or your price is lower than your cost, you have net zero or negative profit. The more you sell, the more that's amplified. So I'm just repeating what Phil is saying. So it's important to be comfortable with those numbers, to know those numbers and to make the adjustments. And And you're a business. And I love that too, because we talked to a lot of farmers when we first talked to them, like you're farming full time, but you're also running a business full time. And you have to grok that.
Balancing Passion with Business
00:10:05
Speaker
And to be fair, a lot of small business owners from hairdresser to dental to a chef, a lot of people get into these because they love it. They're passionate about that talent or skill or business.
00:10:17
Speaker
But at the end of the day, they're not just running a small gym or running a restaurant or running a hair salon. That's a business. So they also need to be essentially a full-time business person. And if you grok that, you're going to go places because that's the step. Number one is sort of admitting to yourself that you're running a business and making money and price your product for what you know to cover your cost and for what you deserve. And not every customer will opt into buying that, but most will because the value and the nutrition and the taste and everything is so much greater. Yeah, and even if most won't, even if 10% will,
00:10:54
Speaker
Great. There's a lot of people around me. There's a ton. I think my town has like 60,000 people. And if I got 10% of them, boy, I'd need a bigger farm.
00:11:06
Speaker
I mean, you go for it. Some guy called yesterday and was asking about half cow pricing and I was telling him. And I mean, I got a waiting list for half cows and he was like, oh, that's kind of expensive. Like he wanted me to say something. i didn't say anything except for I started looking at my watch and just thinking like, you know, do you want to be on the list or not? Because I got stuff to do. i I feel like repeating that for farmers, because I think a lot of farmers are like, to your point, you said they price it low because they're scared of rejection. Like you need to not fear your customers. You're in a business. So you literally need to not fear your customers. I feel like I had this conversation recently with to another farmer. Like if they're going to be really picky or really cost sensitive or want all kinds of exceptions, A, they're not your customer. Like let them go. And B, if they're really picky, they're going to start wasting your time, which you also don't have. So
00:11:53
Speaker
be willing to let them walk away or be willing to turn away customers. And yeah, that's okay. There's more out there. Be happy about it. I know some guys who have pretty doggone big regenerative farms.
00:12:07
Speaker
Okay. I would classify them as rich in the ways that I also seek to be rich. I like to farm. I like to have land. I like to have an enterprise my family can be involved in. But I mean, they do not have private planes and they don't drive Lamborghinis. So you can make a good living and you can live a rich life.
00:12:27
Speaker
I mean, this is something you do because you're passionate about it. And so all that to say, sometimes we almost feel guilty about profit or charging too much. Like you're doing a legit mission. I firmly believe that profit and growth are moral imperatives. If you are farming in such a way that you're making the world a better place, which I firmly believe I am, I'm making the environment healthier. I am feeding families. I get so many notes from people that like, mean, their health is so much better because they're eating my food.
00:12:57
Speaker
So if I don't get enough profit to stay in business and grow, I am doing a disservice to the world. So you got to go make that money. i'm I'm not doing it. So I have a fancy house. I'm doing because I love it. And I want to do it more to impact more people.
00:13:15
Speaker
I love that. That's like a drop mic moment. Does everybody double click on that? Which is, it is, it's your responsibility to run a good business. So you do need to price it appropriately. You do need to make profit and you don't have to apologize for it. It's hard work. frankly. And so there's nothing to apologize for. Charge what you should, charge what you should or explain. Yeah. Charge what you should and
Structured Processes and Management
00:13:38
Speaker
go run your business. And thank you for all the impact, the positive impact that you're having and for making wise business decisions to keep it going and expanding so you can feed more people. That's right. Which again, as the title of the podcast, I've made plenty of bad decisions. Yeah.
00:13:53
Speaker
I was going to say one of the first things that I actually had written down to talk to you about was not paying yourself. So a lot of firms early on, because you said it will come back to that paying labor. So let's let's just talk about that. And maybe you haven't made mistakes there, but I will say many firms, especially if they're like, I want this to become full time endeavor. There's a point in time where they're like, I've got to pay myself.
00:14:17
Speaker
Actually, honestly, I had the same thing, Phil, when I started Burnt a Door now 11 years ago. There was, I was probably two and a years in and it's like, okay, I need to start paying for myself. Like this is, this is a passion. I'm doing it. And now I actually need some sort of a salary or an income from this. So it's, you do face that moment and it's a very real business decision. Yes. So you definitely, even at the very beginning, if you're not paying yourself yet, you need to factor in like as if you were. So you need to assign some sort of dollar per hour value, perhaps. There certainly is kind of like money for production sort of models. Joel Salatin has a great book, Fields of Farmers, which has some good thoughts on that. It's high recommendation. Which, by the way, I love a Joel Salatin quote going back to our you've got to be making a gross margin, which is you'd rather be doing nothing for nothing than something for nothing. That's important to remember. But you need to factor in your time. So whatever you're going to value that at, $20 an hour, $25 an hour, $50 an hour, I don't care, whatever it is, you need to apply that to your costs as you're tracking. Like if you're doing beef or pigs or veggies, keep track of your hours and keep up with what those costs would be, even if you're not taking that out of the business, because you need to think about what would I need to pay somebody to take over this part?
00:15:35
Speaker
And you need to factor in that it's highly unlikely because they are not the business owner or farmer. They are not going to be as effective and efficient as you. When I started hiring help and I got some good help, but it kind of blew me away. It was like, it takes you that long? So factor in your time And so that you can be paying yourself and just so you know what it would cost. But also, as I started adding team, I did not at first do a good enough job of managing expectations. So if you have employees, you really need to set crystal clear expectations and then manage and hold accountable to those or else you're going to throwing your money away.
00:16:15
Speaker
I was going to say, so let's voice over this as a money mistake, right? Which is first the great piece of advice, which is no matter what, whether you're paying yourself or somebody else, pretend that you are because you need to understand how to account for that cost, which is brilliant. And then what Phil is saying is if you're the farmer doing it and you own the business, you're going to do twice as much as anybody else and be twice as effective. And so don't forget that, right? When you're hiring new people, they aren't most likely going to be as effective or efficient as you. However, you still need to, because you care more and you will go deeper and wider than anybody because it's your business. You do need to get the value out of them because it's your responsibility as a business owner with such great impact to have a thriving business. business So with employees, how do you maximize and have the right structure and framework
00:17:07
Speaker
to get them to be efficient and effective as much as they can be in their given role. But without setting expectations, without setting goals and metrics, they will likely not be as effective because they don't know what success feels like or looks like. They're just showing up and doing the job. I completely relate to that, Phil, in our various departments. Like people come in, they want to reach their potential. They want to be successful.
00:17:32
Speaker
But if you as a business owner don't say, well, this number, This is what daily good looks like. And here's what daily excellent looks like. they They need to know what is good look like. What does bad look like? What does good look like? And what does awesome look like? And if they know those things, you're going to find people reaching for awesome.
00:17:49
Speaker
Yes. Well, okay. I love that. And that is, I've talked about how I feel our business is a mission. And now once you get to start adding team, you get to add what to me truly is the most fulfilling part of that mission. And that is developing people and adding meaningful vocational opportunities. And what is a meaningful vocational opportunity? That is one where you allow people, as you said, Janelle, to use, somewhat paraphrasing or expanding, using their God-given strengths and talents to go reach for excellence and to use their strengths in a great way to do something that means something. So that will bring me to another money mistake I made. And that is my first employee, Brian, great kid, awesome kid. He entered into a completely disorganized, freewheeling, we'll call it a system, but a lack of system. Before you hire anybody, and even just to be more effective as yourself, you must have systems and processes. And I don't want sound boring in corporate, but like, look, at my farm, Every day, we have certain chores that we're doing at different times a year, and we do them in order. We go take care of the chicks and the brooder, then we go take care of our sows and piglets if we're farrowing, we go and take care of our feeder pigs, we move calves, we move chicken tractors, we collect eggs, and then we move our mama cow herd. So that needs to be done in that order intentionally and There is a lot of steps in that that I took for granted because I was running around for years doing it all myself. You'll learn a thing or two and you've got to document stuff and have some checklists, A, to help you be more effective, but b to help this poor employee. who, yeah, you might show them things a time or two, but you need a systematic approach to get consistent results. And if you don't have that for you, don't dare even think about hiring somebody because you're not putting them in a position to succeed.
00:19:51
Speaker
Agreed. Now give you give a quick take because we need to keep double clicking down because these are all such rich pieces of advice, but we need the practical end of it, which is, am I as a farmer wasting money if I don't have systems process playbook checklist in place for my employees and myself.
Efficiency in Farm Management
00:20:10
Speaker
How does that translate to a money mistake?
00:20:13
Speaker
On our farm, we've got to do our chores and some of them are weekly. So if we don't order feed at the right time, we're going to run out of feed. If we don't move pigs at the right time, we're going to less pig production and soil health and ah and all that sort of thing. But you don't want to waste time. So time is wasted in several ways. One, if you're doing things inefficiently. I've got this gal that does our gardens. She's out there. She's awesome. But she's out there watering stuff by hand.
00:20:39
Speaker
Well, golly, from tractor supply, you get a $25 sprinkler thing to put on a T-post and you save an hour a day. So you can't be wasting time doing things efficiently.
00:20:49
Speaker
And if you've been running your farm for a while, then you know, I mean, there's just so many things, you know, the efficiencies a newbie can't. then you might be doing the wrong things. So there's more things to do every day than we can do. So we have to have a hierarchy of, okay, we're going to do the chores. And then as we move on to our next activity after chores, that's got to be, I've got to have a clearly defined list and waterfall of the most impactful thing. And guess what? If you're out there listening, there will always be more farm work than you can do. And so above that,
00:21:21
Speaker
better come doing some sales and marketing activities. That has yet to be at the list every day. That's like milking your cow. My cow, it's going to be real bad if you don't milk the cow. Well, you don't do sales and marketing activities, it's going to be real bad.
00:21:35
Speaker
It's amazing to hear this consistent message. Like if you listen to the last four podcasts I've done with farms in the last probably four or five weeks, Phil, every farmer has said, like literally I think of marketing daily the same way I think of, the you just said milking a cap, but they literally are like, what is the one thing I can do today that helps me increase sales, capture sales, do marketing, which is the whole point of marketing is sales, ongoing recurring sales, ideally with loyal customers, right? so I love that you just said that as well. That's always on the short list. So that farmers have some practical takeaways from this because it systems process documentation can sound overwhelming.
00:22:15
Speaker
Phil made a good point, which is checklist. So same here at Barn to Door. And boy, it would be so fun just to talk about business for hours. We could just pick a department like marketing and go forever. But we have playbooks, right? So people know what to do. Like literally you can ask the head of any department and they have written down, so there's the documentation piece, what is required of each individual in their department.
00:22:39
Speaker
And it might be the same, like in some departments it's the same for everybody, other departments it's different because they have slightly different roles, but they know what to do daily, weekly, monthly, and in some cases, if they're higher in management, it's more monthly and quarterly. But they know, like they know what good looks like. What is my expectations for today?
00:22:56
Speaker
Here's the playbook. It might be, this has to be done this week. You have a daily, a weekly, and a monthly checklist. And then it's documented. It's written down somewhere because you don't want have to reinvent the wheel. So...
00:23:08
Speaker
daily, weekly, monthly, write it down so that anybody can slot in without knowing what they're walking into, but it's written down. And I think that's huge. And then the other thing that Phil said was efficiency. Like we are super dialed My board will ask them and say, hey, do you have any feedback for us? How could we be you know more efficient with this and this? and they're like, um we send people to you for advice because you guys are so darn efficient. And then shocking the next quarter, we're like, oh, but we figured out this and this. You can always look around and add a sprinkler head is what I'm trying to say. Like there's always something and it changes. So don't feel like you have to be immediately efficient overnight because that is even actually something that will always evolve. You get efficient with a handful of things and then you find the next layer and the next layer or you shift a business project or process. And so there's more opportunity for efficiency. It's funny because... When we talk to farmers so often, we're like, hey, we're going to help you make more money. Like take out the middleman. Let's make it super easy for people to buy. That's marketing and sales. Like that's juicy. But I get excited about helping them ditch the office work, which is one of our mantras at Barn to Door because there's so much opportunity that farmers are doing with, you know, sticky notes, Excel spreadsheets, taking orders by phone, text, email. I'm like, can I please save you hours a week? Please let me do that from Barn to Door to you. That's what I want to help with.
00:24:25
Speaker
So I am so passionate about I'll be a farmer save time, even though I know sales and marketing are juicier. I love it. I got to say two things on the playbooks. I love playbooks and I have them, but it was just such a mental burden. I made it such a big deal. I procrastinated forever. Brew a pot of coffee, talk to chat GPT or something like that, and just get a first draft down, please. And what I need to have and what you farmer friend needs to have on your playbook, you need to have the tasks. So I want my daily, my weekly, my monthly or whatever. What are the tasks?
00:24:57
Speaker
What is the DOD? What is the definition of done? For example, when we move our 800 layer hands, The definition of done is that they're in their new paddock, their water's set up, they have grit. The old fence is taken down and rolled up neatly. So like, what is done? How do I know that I'm complete? And when I have problems, how do I solve them? Like, what are the most likely problems? How do I figure them out?
00:25:24
Speaker
Like, where do I go to for help? So that is what I want in my playbook. And then we're talking about adding things. But a lot of times to gain efficiencies, you need to cut things. And I'm going give you a good example. Man, I bought some pigs from a friend and my pigs were real well trained on the electric fence. His were not, which must be why he wanted to get rid of them. So I had this one sow. She got out all the time, knocked the fence down. All the sows would get out.
00:25:53
Speaker
And we had to spend time getting pigs back in, which stinks. And so we wasted so much time on that. And Janelle, this is a visceral raw example. I shot that pig, Janelle, and we roasted her up. You got to shoot a pig in your operation. What is killing your time? Get rid of it. Get rid of that doggone pig. Farming is difficult. And so we can get in the routine of just bearing with it, making the best of it, dealing with it. Well, maybe you just shoot the pig. And now 95% of my pig problems got eaten.
00:26:24
Speaker
Yes, sometimes you do. It's true. Oh, that's rich. I appreciate that. Yeah, there's different ways to improve from an efficiency perspective. And sometimes it a really is just looking around and saying what's taking time and can it be fixed or not is really what you're saying. In many cases, it can, right? Like when we show farmers with, let's say you have 400 customers and you're taking every order by phone text email. That is so many hours of time wasted when you could just send them a link to your online store and they can self-serve order and then you can spit it out on delivery day. That's what we love. That's what we live for at Barnes & Doerr. But to your point, sometimes, even here at Barnes & Doerr, sometimes you hire somebody into the wrong role and no matter how much training and how many different leaders or different managers and try everything, and it's just maybe not a good fit. and
00:27:08
Speaker
And so we might even try them in a completely different role. It's like you have all the talent, all the heart, all the everything, but I think you might actually be in the wrong role. Because in some cases, it's taking like 95% of the time to train one person when you have eight other people who would really benefit from your attention. So even from that perspective, you're looking at the leaders and the managers. So it really is true time is money. And whether it's people or process or pig that can't be trained or, you know, an efficiency on orders, but it's neat because time savings, that's a win. That's a win in business and really, really saves you money. And it frees up your brain to go do other things that are more valuable. Okay, do you want to choose the next money mistake?
00:27:46
Speaker
Yes, I would. I want to share a very important
Understanding Sunk Costs
00:27:50
Speaker
concept. In my four years in college, this is the third most important thing I learned. The first was the name Lindsay Zahner, which is now Lindsay Benelli, my wife. That's the best by far. And then Spanish, and then something called the sunk cost principle.
00:28:04
Speaker
All right, so the sunk cost principle, this is a human mental... issue where when you have put resources, be they time or money into something, you inflate the value of that thing.
00:28:17
Speaker
I'll give you an example. I have manure, which I spread. My neighbor, boy, he had a deal for me. i bought his old manure spreader truck and his dump truck for a combined $5,000.
00:28:30
Speaker
What a deal, Janelle. These things were older than me. Okay, I put like a thousand bucks into one, then another 750 into another. So now I got like, you know, six grand, 6,500 in these things.
00:28:42
Speaker
So the more you spent, your brain is like, oh I got to get them working. The way for me to win is to keep investing in this till it works. Guess what?
00:28:55
Speaker
Those things are, I don't need to own a spreader truck. I can borrow a spreader. I use it twice a year. I don't need a dump truck. So I gave them away. It wasn't even worth putting money in to fix. So you got to look at what have I invested in that is no longer serving me. You have to think about the future. So when you're making financial decisions, you cannot be driven by what you have put in in the past.
00:29:21
Speaker
You have to chart the course for the future. And those were bad for me financially looking forward. So it doesn't matter if I spent 100,000 on them. They're bad. And I needed to get rid of them. It's like, think about if you've been dating somebody for five years, but they're a dud, then hurry up and dump them now. Don't waste another day. So sunk cost, we all fall victim to this. I could have said with that pig oh man, we bought this pig for a couple hundred bucks and blah, blah, blah, blah blah and kept wasting time every day.
00:29:54
Speaker
No, drop it. Make the bright future that you are looking for. So don't fall victim to the sunk cost fallacy, please. Amen. Oh, that's a powerful one. It is hard because you feel like you've invested so much money in something, but it if it just keeps staying broken and more money lost, it's going to be more money lost or you find a solution that's better. Like to your point, I could just borrow it.
00:30:17
Speaker
That's right. I could borrow it. I could rent it. And I would say that too. I mean, on capital expenditures, so like depreciating equipment, like I own a tractor and I am glad I own the tractor and I i get use out of that tractor. But I didn't have a tractor for several years.
00:30:32
Speaker
And I got round bales of hay and I put you around my hand and I got a thing that was like a metal pole and I pulled the hay bales around with that. You can do a lot without owning stuff. And even if you're, as we get into farming, i like I own a farm and I lease a farm and my growth, you know, I want to be farming a thousand acres within the next five years and probably every bit of those, but the 43 acres I live on will be leased because I mean, farmland costs like 15 grand an acre where I live, but I can rent it for $50 per acre per year. I don't have to own it. I can rent it.
00:31:07
Speaker
And some people might let you farm for free. So you don't have to own stuff. Man, my neighbor comes over and he spreads manure for me. And guess what? He gets a weekly delivery box for me and a Thanksgiving turkey.
00:31:19
Speaker
I love that. But land, I was going to ask you about land, but I think you've expanded that even further, which is ask yourself twice if you need to own it or not. Yeah. And I want to own land. Like if you asked, what would I like? I don't want anything else in life, but healthy kids and more land because I think land's fun.
00:31:35
Speaker
The way I would get the money to buy land is by, Lord willing, growing my farm through leasing land first. So- It's just so much cheaper. Don't burden yourself with debt and big payments because everything's more expensive and takes more time than you think. So prepare yourself.
00:31:51
Speaker
As everybody who bought a house or a farm before, because you do have to s sink costume. I mean, they cost money, right? More than you think. Yeah. Any other big financial shifts that you have encountered as you've been growing your farm that you think would benefit the the farmers that are listening to this?
Product Profitability and Cash Flow
00:32:08
Speaker
100% and that one would be like things generally I have found do get, you need a certain amount of scale. Okay, you need a certain amount of scale. If I didn't have, you know, we'll harvest like 8,500 chickens this year and like And that justifies me owning a chicken processing plant.
00:32:29
Speaker
And that gets my processing costs down to $3, $3.50, something like that. But if I just did a thousand chickens, it wouldn't make sense. And I'd be paying 13 or 14 bucks at George's other poultry processing place. So I'm saving 10 bucks a bird because I'm going big on scale, which again, i have to do daily sales and marketing to do that. But you just, if you're milking one dairy cow, there's just no way to win. You know, you gotta start out with that. Start out with whatever you got, but build it up and grow. You know, we're farmers. We work within nature and nature things grow and then they die, right? I mean, trees keep on growing. The the perennial grass keeps on growing. So you need to grow too. And growing is hard, but so shrinking.
00:33:13
Speaker
So I'd rather have the problems of growth than shrinking. I appreciate that. Would you say, cause you, we've talked a lot about poultry and I know you've leaned very deeply into that category for lack of a better way to say it. Can you tell them right here? Like, are you just doing chicken? What else are you doing? And what would you recommend? Right? Because not all products are created equal, right? Are there some that are more profitable than others? Cause I suspect you can keep looking at various product lines, whether it's poultry or pork or beef or whatever, and you're going to tell us what it is for you. and those are different profiles in terms of profit margin, but also
00:33:47
Speaker
you know, you have to grow a cow for a while before you can sell it. That sort of a thing. It is very important. so you as a business, there's lots of things we're doing, but as a business needs to do two things to be successful, it needs to make profit. So make more than it spends and it needs to generate cash. And those are not the same things. So I do beef, pork, chicken, turkey, eggs, veggies, beauty products, pet treats. So let's look at a cow generates the most money for me. especially cow that I raise from a calf. So I've got a certain amount in hay and minerals, and then I've got processing costs. And let's say I sell the meat from a cow for $5,000, and it costs me $1,000 to process it. That's $4,000 minus my hay and my time. So it's a big hit. Let's say I net $3,000 on it. But golly, I mean, it takes me two, two and a half years to raise up a cow. A pig takes me eight and a half months before I can turn it into cash. A chicken takes me seven and a half weeks. So a chicken, let's say I make $15 per chicken. That's way less than a cow, but I can turn it so much quicker. And then an egg, those hens, you know, they lay them every single day. You need all of the above ideally. But if I were starting out, I would start the opposite of what I did with cows. I would start with the layers and or milk, milk is a win because I would do things people get every day. So you're producing every day and people eat it all the time. So we do sourdough bread too. So the bread, the milk, the eggs, people get them every week. I don't sell milk right now, but the bread, the milk, eggs,
00:35:27
Speaker
Quick turn. Now, a second thing I would get after that is I would get pigs because as you scale up your eggs, if your sales are not yet meeting your supply, you could always give old product to pigs. And man, when I'm having my milk and eggs for breakfast, I would also love to have some chorizo or some bacon. It just goes together. So I would climb up the ladder of turn. Now, we all come from some context. So, you know, I started out with cows and other people listening, they might already have a cattle farm, right? So they can't just start from scratch. But I would add the daily turners because, man, my farm store, like so we sell through several channels. Like we do delivery and we do some farmer's markets and we have a farm store that's on our system.
00:36:14
Speaker
And man, I got tons of eggs. So I needed more people to come into the farm store and eggs are what that gets it. And on those marketing activities, man, I had more eggs than I had customers because I went from, you know, like 70 laying heads to 800. So I did it buy two, get one free special. And man, they just, they come. I post about that on Instagram and I sell $300 worth of product the next day. But I've been working for years to build up that Instagram audience. Yeah, you talked about scale earlier. So I appreciate that. You were talking about like he's talking about, you know, eggs, dairy, bread, things that people eat every day is going to be your consistent cash flow, even though the order size is much smaller. And then literally quote unquote cash cows, I love that, are you know a two year plus cycle.
00:37:02
Speaker
And then you've got your meat birds as an option. You have pigs as an option, et cetera. You can just map that on a calendar, right? Because you can go through so many batches of meat birds sort of as a layer, quote unquote, not a relayered chicken, I mean a layer in your revenue base where you're just building one on top of each other to make sure you have that ongoing cashflow. That's awesome. I love that. You did talk about scale too. Scale is important. I know you you spoke about mapping it out. I know the audience can't see, but I do map out my income and expenses because again, i need to both make a profit and generate cash.
Leveraging Debt and Grants
00:37:38
Speaker
I need to know every other week I have payroll. I have a tractor payment.
00:37:42
Speaker
So this has some operational things, but also like when does cash come in and go out? Because just like I can't let my chicks run out of feed, I can't let the farm run out of cash. That's pretty important. Love it. Thank you for all of that. And then you said you were going to talk quickly about debt and loan. I just want to tuck that in before I ask you for your final bits of wisdom.
00:38:01
Speaker
So I would definitely, I mean, look, if you're making good gross margins and you could keep growing sales, you will be able to grow faster if you leverage other people's money to get things. So need to be smart with what those investments are.
00:38:15
Speaker
And I would look at two different things. First of all, I would look at grants. And there are a lot of grants out there. We're a huge fan of the and NRCS, EQIP grants, and I've got water systems, fencing systems. I'm building a big compost facility right now with grants. So look to grants for both capital expenditures and marketing costs. Because they're out there. They're there. Go look for them. But then if you're going to borrow money, make sure it's for something that you feel comfortable you can pay back, but that is going to make you money. And you don't need a big fancy tractor right away. And golly, man, my farm truck is a 2005 Silverado. It will need to be replaced by a different truck at some point. But everyone who sees, I mean, it's beat up. My son who's 12, he loves cars. He's like, Dad, we got get a new one. There's all these dents. And I'm like, I don't care.
00:39:09
Speaker
This thing works. I mean, I can haul pigs and cows and hay with it. And i don't need a fancy truck. People come to my farms. Everyone who comes to my farm has a way better truck than me. They're driving $80,000, $90,000 truck. i don't need that. So... Be wise with your investments. I'm certainly not against debt, but you better be smart with it and look to grants first. Look for them. They're there. Check them out.
00:39:33
Speaker
Great pieces of advice. And I'm going to give you a chance for some final bits of wisdom up here too, because I know that we're coming up on the hour, but thank you for running through all that. It's interesting because I'm going to give my two cents because we are talking about people and some of the efficiency. In our case, systems like business systems, that's what we build for farmers here, right? To make it easy for them to run their business. But one of the things that when you're managing people, in addition to like, here's the daily, weekly, monthly expectations, there's, this is, you will relate to this, Phil. There's always going to be too much to do. So there's two ways that we handle that here, which is here's the expectations on the daily, weekly, monthly. Number two, here's the priorities, because there's always gonna be things fighting to be on your priority list. And especially with your most competent people, they'll just want to do more and more and more, but you also don't want to burn them out. So it's important to be aligned that they know priority one, two, three, and then you've got like grayed out four and five, because you know, they're there and you're acknowledging that they're on the radar, but they did not hit the top three spots. And so that helps people kind of put their shoulders down a little bit, because you will never get to the bottom of that list. But as long as you know what the expectations are and the priorities are, you've got a great extra lens on what you're choosing to do and how to spend
Effective Workload Management
00:40:47
Speaker
your time. And then i have to mention this because you'll get a kick out of it. For the example, on our engineering side and even in marketing, we always have a list of what we call cherry picking.
00:40:56
Speaker
This is just our bonus list of small little tasks that need to get done that nobody has time for. But if you do come up for air or you need a change of scenery for a bit, go do a cherry picking task. And we get a kick out of doing, you know, farm branded things like cherry picking lists, but it's become a really central feature to a lot of the folks working here at Barn to Door, which is, again, if you've got, you know, an extra bit of time, which nobody ever does. So sometimes it's just means you scenery where we'll say, okay, everybody gets to do cherry cooking for half this day or something like that. You get to work on things that are sometimes hygienic or a treat to do, but it is neat to have that list as well because they don't fit perfectly into the daily, weekly, monthly, but it's good to do. It's something there. It's on the list.
00:41:38
Speaker
I love it. One thought that I had, which is a big one based on that is if you're going to be efficient and effective yourself, and if you'd like your employees to be as well, you have to not overwhelm them and you telling them how to prioritize in saying like, okay, There's five things or 100 things we have to do. Let's work together, figure out the top three. Forget about the others. Write them down so you're not stressing over forgiving them, but write them down. But then don't think about anything else because so much of our stress is thinking about things versus doing them. When we feel overwhelmed, it's not generally from too much work. It's too much of a mental burden of thinking about all the work. Yeah, and that's so good. Well, okay. So we covered a lot of bases today. You were giving some great advice on just track all money in money out, know your costs, know your profit, your price has to be higher than both of those. so pricing for profit.
00:42:36
Speaker
Don't apologize. this You have a responsibility in in keeping your business alive and healthy and well because you're making ah an impact. Be willing to walk away from customers too. That's good. And then some great wisdom in the various product categories and when they turn the daily profit. Does it take six or eight weeks to grow the birds? Does it take, you know, eight months to grow the pig? Like when is that cash going to hit? So write it down. It doesn't have to be overwhelming. You can start at a very high level and some great input on loans and debt and grants. So there's a quick little fun summary. Phil, any last bits of wisdom before we bounce
Embracing Challenges as Opportunities
00:43:13
Speaker
out?
00:43:13
Speaker
Every problem, which like I'm guaranteed, I'm very optimistic. I'm not optimistic because I think that everything will go great. I'm optimistic because I know everything's going to go to crap every day and I get to fix And everything is a problem to be solved. And if you've got the brains enough to listen to this great podcast, you've got the brains to solve it. You've got a network of people, which has become my favorite thing about Barnard Ork.
00:43:41
Speaker
is the network of knowledge. Listen to the podcast, watch the videos, read the articles. Every problem you have, there's a solution and go work on it. and Like every day, brew yourself a pot of coffee and go do the work and you will make the farm that you want it to be. You can do it. Build that business. You got this. I love that you just made you own a business synonymous with your problem solver now. That's good. I love it.
00:44:07
Speaker
Folks, you should know this about Phil. So we do have a connect program, which is essentially a program for anybody who uses Barn to Door, any farmer all across the country who wants to access other amazing farmers like Phil, who literally hosts office hours so that you can have regular access to him. He also happens to be one of the farmers that teaches our grassroots marketing class. So in terms of money mistakes, the brilliance of grassroots marketing is there's so much marketing you can do ideally on the daily. That doesn't cost anything, cost some of your time, but it doesn't usually cost money. It's some very smart, basic marketing that will get you a very long way. So he teaches those classes. And then he also has a business on the side that's a fractional CFO. So we're really talking to a guru here when it comes to finances, which is fun. What is the name of that?
00:44:55
Speaker
Round table advisors. Round table advisors. That's where you can find Phil. So that's fractional CFO services.
Support Systems for Farmers
00:45:03
Speaker
But again, also a huge help to burn to door teaching grassroots marketing, hosting office hours for other farmers.
00:45:10
Speaker
So many rich resources. We're very much all same team here. We just want independent farmers to be wildly successful, um not just in their farming decisions, but truly in their business decisions that help make farming possible and repeatable and scalable and profitable. All those beautiful words. So thank you, Phil.
00:45:29
Speaker
Such a joy to work alongside you and with you and support your farm in any way we can. FYI, if you want to follow Phil directly, you can on Instagram. It's at HopewellFarmGA, as in Georgia. So at HopewellFarms GA, that's a plural, isn't it? Hopewell Farms GA, got it? All right. At Barn to Door, we're humbled to support thousands of independent farmers across the country. We're delighted to offer services and tools to help farmers make more money, get to see office work and look like a pro. We literally talk all day, every day to farmers and farmers working with Barn to Door can go to office hours or schedule one-on-one meetings with team members for consulting on their business. We exist to support farmers like you, like Phil. If you're an independent farmer getting started or interested in selling direct, We have a lot of farmers who want to move towards selling more direct because there's a lot more control in their business.
00:46:17
Speaker
Please come talk to us. We want to help. Burntodore.com backslash learn more. Thank you for tuning in today. We look forward to joining you next time on the Independent Farmer Podcast.
00:46:36
Speaker
Thank you for joining us on the Independent Farmer Podcast. At Barn to Door, we are passionate about empowering independent farmers to build a thriving business. To all the farmers out there, thank you for all you do to grow amazing food, care for the soil, and serve your local communities. You are the backbone of our country.
00:46:53
Speaker
For free farm resources or to listen to prior podcasts, go to barntodore.com backslash resources. We hope you join us again and subscribe to the Independent Farmer Podcast wherever you stream your podcasts. Until next time.