This week I was a guest on the popular Peak Prosperity podcast. It was a great pleasure speaking with Adam Taggart, who co-founded Peak Prosperity with Chris Martenson. You can listen to the episode here on the Peak Prosperity website, here on iTunes or here on YouTube.
We discussed many aspects of starting and running a successful small-scale farming business.
If you’d rather read than listen, you can read the entire transcript of the episode, below.
Adam: Hello, and welcome to the Resilient Life podcast. Resilient Life is part of peakprosperity.com. It’s where we focus on practical and actionable knowledge for building a better future. I’m your host, Adam Taggart. Many of those looking to live with greater resilience dream of owning productive farmland that’s managed sustainably. Now, in the past we’ve profiled funds like Farmland LP that enable folks to become directly invested in farmland like this, but many aren’t interested in simply being passive investors. They want to become farmers to work the land themselves, to grow food to feed their families and their local community. From firsthand knowledge, having in the past being a part owner of a CSA, it’s rewarding work and a worthy pursuit, but it’s hard. Farming demands more time and toil than most jobs out there, and mother nature’s unpredictability always finds a way to up end your best laid plans. So how does one succeed at running a successful small farming operation?
Today, we’re joined by Tim Young, founder of Small Farm Nation, which offers farmers proven, practical guidance for growing their farm businesses. His first and most important advice: successful small farming is 20 percent about growing and 80 percent about marketing to customers. From his firsthand experience, Tim has observed that is the business side that farms live and die by. And from my own work with small producers in California’s Sonoma County where I live, I 100 percent agree with this. But most farmers, especially new ones, are undereducated and under experienced in key business skills.<–more–>
Tim’s mission is to correct this knowledge deficiency which is why he created the Small Farm Nation Academy, a curriculum and knowledge center that teaches farmers key skills like marketing, accounting, customer management pricing, handling insurance, sales strategy and more. Tim knows what he’s talking about. He built and operates and award-winning artisan cheese business, but before doing that he spent 25 years closing large marketing deals in the tech industry. Then he founded an Inc. 500 company. He has learned firsthand which business fundamentals are necessary for small farms to thrive. Tim, thanks so much for joining us today. I think a lot of folks are going to be interested in what you have to tell us.
Tim: Thanks, Adam, it’s my pleasure. Thanks a lot for having me.
Adam: Oh, gosh, it’s a real pleasure. And I know that you interviewed Chris for a podcast for the Small Farm Nation, and I know that he really enjoyed that experience, so we’re very happy to return the favor today.
Tim: Yeah. That was one of our most popular episodes last year. I encourage everyone to check that out. I think a lot of us really admire what you guys are doing in terms of helping people to become more resilient and take preparedness a little bit more seriously.
Adam: Well, thanks. I think it’s a little bit of a mutual admiration society here because we’re big fans of what you’re doing too. Tim, why don’t we start here by giving our readers a little bit more background into how you transitioned from the world of high tech into becoming an expert on small scale farming.
Tim: Yeah. Farming’s not in my background at all. I didn’t grow up on a farm. I have never really, for the most part, I’ve never petted a cow or seen a chicken too much close up. I lived in North Georgia growing up and had seen some of that from afar. But as soon as I got out of school I moved up to Massachusetts, and got into the world of business to business marketing for many years on the financial services mutual fund side working with very large mutual fund companies. And for a dozen years or so after that on the technology side working with tech giants who would outsource a variety of marketing services to either a firm I used to work for when I worked for a Fortune 500 company or later when I founded my own business they were all clients of mine as well.
I did that for a long time and was pretty much like what I consider most people to be like today, disconnected from where our food comes from and from how things are produced. I was eating at restaurants, I was shopping at grocery stores, I was hiring someone to change the oil in my car, I was hiring someone to paint the room, things I could do, but I had advocated all of my skill set to other so-called experts. And my wife and I had this awakening 2005, 2006, kind of in that timeframe, and the awakening was thanks to a lot of the work that Michael Pollan, and the Omnivores Dilemma had done and other people that just increased our awareness of geez, you don’t know where your food is coming from, and you’re totally disconnected with the source of your food. And that really alarmed us, and when we discovered that we probably should have done something sensible like go to a farmer’s market and support other farms, but instead – at the time we were living on a golf course north of Atlanta, really nice, 5,000 square foot home, typical type of big thing. We did something that was a little bit crazy. We decided to buy 100 acres of land, move about two and a half hours away out to the country, and that lead us to the world of farming all because we wanted to become more connected with where our food came from and more connected with preparedness skills that we recognized that we had lost sight of.
Adam: Wow. So that transition is certainly very similar to what Chris did and to a certain extent what I did myself as well. How long did it take you to come up to speed on the farming side of things?
Tim: At first, believe it or not, Adam, I didn’t even – the plan wasn’t to be a farmer. I spent my first few months trying to figure out – well, we wanted to be in the country, so what are we going to do out here? And I contemplated all kinds of business model’s business that’s what we entrepreneurs do, we just conjure up all kinds of ways that we can make money in this new world that we have. But the thing that I was passionate about that really troubled me was that the land that we bought was just really run down. It had been farmed maybe 20 years before, but when we got it, it was overgrown with all kinds of weeds and brambles and big boulders and rocks in what used to be the pastures. And it just – it sounds a little bit corny, but it just called to us to re-heal that land and restore health to that soil.
And so I started reading a lot. And my wife is – well, she started reading about gardening and the modern things, and I started reading the old books, the hundred-year-old books by Sir Robert Howard and authors like that who talked about how to restore health to the soil. And I learned that nature never farms without livestock. You need multiple species out there working in a symbiotic dance, if you will, to breath health into the land. And that compelled me to say, well, I’m going to get some cows. And we stared with a heard of about 25 Murray Grey cattle, and I said I’ll start a grass-fed beef operation. And we started – our first chicken was – we got 400 chickens and built a small bird house and decided that we would have laying hens out there following very much after Joel Salatin’s model. He was a great inspiration to us and many other people. And so we said we’ll do something similar to that. Before you knew if we have 100 Catan sheep, maybe 150 Ossabaw island pigs in the woods, and we’re doing all kinds of layers of farming out there. And that’s when I discovered, wow, it’s not just restoring health to the land, but you got to get customers for this. And I realized then how important the marketing background I had was because you can do all the farming you want to, but without customers to buy your products what’s the point?
Adam: Right. Right. And we’ll get into this in a moment as well. But I live in an area where there’s a lot of small scale producers, and I think most of them come into the practice or into the project of deciding to create a small farm from the farming side. And they sort of have a if I build it they will come, or if I grow it they will come mentality. And they learn quite quickly that the whole operation part of it is just half the equation. The second half is how do you actually get the product to market? And as I said in the intro, that’s really, from my experience, from where I’ve seen small farms live and die. So you gave us kind of a background of how you became this accidental agricultural entrepreneur. What made you decide to switch from doing your own work on your own property to creating a resource for a platform for small farmers really everywhere? And who specifically did you create the Small Farm Nation platform for? Is it the person who has a small farm and wants to be better about it, or is it somebody like yourself who had no background and is thinking about getting into it for the first time?
Tim: Well, I have a real strong passion for both local food and seeing local food communities develop and also for any type of small scale agriculture. That can be growing food, but it also can be making soap or fiber or crafts or whatever, any of those kind of things. And when we were operating our farm we used to do farm tours and have a whole bunch of people come out, and one of the things that I noticed back then, Adam, when I had the farm tours and when I had the farm podcast was how many people wanted to live vicariously through us. They were looking to do something like this. They were also looking for the courage to how do I start a farm? Or how do I run my farm, and can you make money farming? That’s the question that we got more than any other question out there.
So I noticed that there were a lot of people that just lacked the business skills to make a farmer or, quite frankly, any small business successful. And one of the things that I learned, Adam, is that the skills that are required to make a small business, a business marketing firm successful, aren’t really any different than the skills required to make a small, diversified livestock farm or an artisan cheese business successful. They really are one in the same. So the Small Farm Nation Academy who I’m targeting is any type of direct marketing farmer. I’ll use direct marketing because I don’t think what I’m offering is as much help to the commodity farmers. It’s for people that are trying to go to market directly and not be caught in the commodity business. So that included farmers, it includes soap makers, cheese makers, equestrians, breweries, wineries, distilleries, anyone who’s using the land to create an amicable product I’m tailoring the content to show them the steps they need to create a brand to define their market, to attract customers, to choose the right go to market strategy and all the things necessary to be successful with their business.
Adam: Great. Well, let’s start then with that person who’s been looking for the courage, and in my perspective when I ran a CSA where we had a 350-acre property that we’d give farm tours on too, my experience was that people like you just described were really looking for permission to do this. They were looking for the reasons why – the validation for why they could themselves take the step to actually get into one of these small production roles, whether it’s growing something or creating something like cheese or soap or whatever.
I could see when these people would come out for the farm tours that they emotionally were bought in. They so wanted to be involved with something like this, and they were really just looking for the reason to be able to say, yes, I want to commit to something like this. And to me it seems like that’s very much what you’re doing through Small Farm Nation which is connecting the dots for them to say this actually is doable for somebody, particularly if somebody’s got a business foundation to leverage. You’re giving them moments more than anything else, just the permission to able to say, hey, this is a risk worth taking.
Tim: Isn’t it really telling how, Adam, that you’ve had an experience, I’ve had that, and I’ve talked to so many others who have had that. There are so many people, as you say, who are looking for permission, or they’re looking for you to just assure them, reassure them, that yes, you could make a life out of this. Because they’re all looking for a way out of the rat race, soul-sucking jobs, whatever it may be, but they don’t have enough meaning in their lives, and I think that they find what we’re talking about here to be a meaningful life.
Adam: Absolutely. Our farm was located about 45 minutes north of San Francisco, so we’d get a lot of people coming out from the city, and you could see it in their eyes when they’d step out of the car that all the sudden, first off, they’re just back in nature which is something that when they’re spending most of their day in the city is something that they don’t realize how starved they are for it until they actually get out and stand on some dirt for a little bit. But it’s that reconnection to nature, it’s that reconnection to the food cycle that you were talking about earlier. There really is something primal about it, and of course, for folks that read Peak Prosperity, and I’m sure a lot of the folks that listen to your podcast or read your blog, they have an intellectual appreciation as well for just the importance of having some resilience in your life.
And so, again, they’re just looking for that door to be able to step through that says you can actually participate in this even if you have a desk job. You don’t necessarily have to quit your job tomorrow to do some of this stuff. You could partner with a small farmer or have a side business or whatnot. So I think in many ways people are just looking to be assured that it’s not unattainable for them and it’s not a crazy step. So it’s kind of fun to be – I almost feel like a drug dealer for nature where I give people a little taste and tell them hey, it gets even better the more you have.
Well, hey, let’s, if you don’t mind, let’s take somebody who’s listening to this podcast who has been thinking about potentially taking a step like this, or at least dreaming about it, and maybe they’re encouraged by listening to us here knowing that you put together a step by step programmatic curriculum for them to engage with. What would be your advice to this person just starting out? What critical areas do they need to focus on most at the start, and what’s going to be most important to their long-term success?
Tim: So some of this, in my experience and in my belief, is very similar to any entrepreneur starting a business. And there is something strange about farming that people start a farm, and they don’t always view that they’re starting a business. They think that they’re just going to do farming, and that’s a huge mistake, So the most important factor is that they make strategic choices, and they plan for their farm business to succeed. And they way that I try to get that across is one of the very first courses that I have in the Small Farm Nation Academy is I walk members through what I believe are the eight critical questions they’ve got to fully answer to succeed. And this is part of the one-page business plan that I offer them and help them create. And the first question is for them to define their mission – what they want to accomplish, what their farm business is and why, why it’s important. Because that leads into the next question.
Who is it important to? And once they answer that it will help them understand well, they can define who their customer groups are, who they want to target, whether it’s local, regional or national market, whether it’s a niche or a wide market. So they start making these strategic choices – this is my mission, this is the niche market I’m going after, this is who’s going to care, this why they’re going to care. Once they get that then they have to identify the competition. And not just the direct competitors like other farmers, for example, but alternatives like grocery stores and even home gardening and home cooking. Or there’s new entrants and new threats like Blue Apron wasn’t around a few years ago, now it is, and there’s other ones on the horizon. So they have to answer those questions.
And the next two questions require the farmer to define where their revenue is going to come from, what products they’re going to have, what their go to market strategy is going to be, what their cost structure is and their critical success factors, and all those questions lead up to the eight and the most critical question that any entrepreneur has an answer, but particularly a farm-prenuer has to answer which is this: how is my farm business unique, and what is my one defensible competitive advantage? And how often do you hear farmers talk about things like that, Adam? My defensive competitive advantage or what is my uniqueness. We don’t typically talk that way. We talk about raising some cows or raising some chickens or I’m making some cheese or whatever. Well, that’s fine. That’s a hobby if that’s what you’re doing.
But if you want to be successful as a business you do have to answer these questions. And my advice to the new person would be go through those eight questions. Create a one-page business plan. I’m not a fan of long business plans. I’m not a fan of the SWAT analysis and all the things that we often make ourselves go through. There’s nothing wrong with them, it’s just that we tend to get paralyzed when we see those kind of recommendations and we don’t do anything. So I think you can create a really good one-page business plan that will get you going, but you do have to think strategically about your farm business.
Adam: Yeah. I think that’s a really good structured approach for a lot of our listeners. Folks are going to recognize a lot of the terminology that you mentioned, but I think for some of our listeners maybe some of what you mentioned does sound a little bit like a foreign language. So one question here, Tim, is I really like the simplicity of limiting it to the one-page business plan, but is this something that truly anybody can do, and does Small Farm Nation have templates that walk folks through all this stuff? Or do you really feel that someone needs to have some previous business grounding to be able to jump into this?
Tim: Well, can anyone do it? Sure. I mean, look, anyone can play a guitar too. Can some people play it better than others? Sure. So in terms of how I try to present this information, when they are a member of the academy they’ll see a video of me walking them through the background of why this is important. And then I go through an example of the eight questions on the one page, and then I show them here’s what you’re going to have to provide. And then I give them an example. I say, here’s how I might answer these. And then I give them a downloadable, fillable pdf file where they can answer it one their own. But the reason I do a membership site, Adam, which is what Small Farm Nation Academy is – the reason I didn’t offer all this as a course is if I offered it as a course people pay usually a pretty large fee, and then they take it, and they might need help six months later, and of course, help is available to them.
And what I found is that the people I’m trying to help have questions on an ongoing basis. And so in the community, in the forum, which is part of Small Farm Nation Academy, they can complete this, they can come in there and say, well, I have a question about this or is this really a defensible advantage? Or here’s how I’m defining my customer group, does this make sense to you, or whatever it may be. And I get those kind of questions as well as the other questions which is what do you think of my logo? I’m having trouble coming up with a tagline or any other type of questions that I’m trying to help people to deal with.
All of those are important decisions that lead into thinking about their farm as a business which is the most important thing that I’m trying to get them to grasp. Stop thinking of it as a hobby. Think of it as a business they way any entrepreneur does, and then at some point the light goes off, and they start becoming very comfortable thinking this way. But I notice that at first, Adam, many people who come into this either don’t have the business skills, or they do what you said earlier – they may have the business skills, but they do it like it’s a side thing that they have to their other job or whatever. And that’s kind of the same result. It still doesn’t get treated as a viable business, and therefore it far too often fails.
Adam: Right. Okay. That’s really good clarification there too. So it sounds like yes, if you’re already good at playing the guitar you’ll be able to use a lot of the templates and the guidance as is, but if you’re not, if you’re more of a neophyte, A) you’ve constructed in a way that’s hopefully bite-sized and easy with lots of video guidance and stuff like that, but there’s also mentoring/consulting available for those that need more early on and all that stuff.
Tim: And I think, actually, what I’m finding in the Academy is that’s the important part. I mean, at this point, I even offer free consultations in the Academy, so they can go into my video chatroom once a week. It’s almost like professor’s hours, if you will, or office hours that I’ll keep once a week. And they can, first come, first serve, reserve the time in 15-minute increments, and we’ll go in and talk about whatever you have. And that’s important for them because they struggle with some of these decisions, and we all struggle with certain types of decisions. And so I’m glad to be there as a resource for them to help them on their farm journey.
Adam: Well, that’s great. And given my experience as an entrepreneur, so much of it is trial and error, and that’s how your learning curve works. You try something out and see how it works, and refine from there. So having the ability to do that, leverage somebody’s domain expertise like yours before you take that initial leap, but once you have, have somebody to go back to and help think through okay, what’s the next iteration of this look like? It just suits the entrepreneur journey very well. So it’s good to hear that you’ve set it up that way. All right. Let’s go into this then. So you’ve helped, apparently, a certain number of folks that have gone through Small Farm Nation already get started – what are some of the pitfalls that threaten success? What are the things that get in the way? When you look at the folks who make it versus those who don’t, on the plus side and the negative side, what are the things that stand out as particularly telling as to how well they’re going to fair?
Tim: Well, people in farming or e-business fail almost always because they don’t get enough customers. Now, you could say there’s a problem with their profit margin, but generally it’s because they have trouble getting customers. And it’s certainly that way with farming. You were dead on earlier when you said people approach it as if I build it they will come mentality. And honestly, I think 10 or 15 years ago there was more truth to that because local food was newer then, but there’s a lot of stories of people like me who have left the rat race to go and start a farm. So that’s not enough anymore. You have to be effective at attracting customers. So the critical mistake, the first one, to sound like a broken record now, is to fail to recognize that they are, in fact, entrepreneurs running a business, and they treat it as a hobby rather than a business. That leads to bad habits and predictable results like throwing a lot of money at the farm if people have that.
You know, Adam, you probably heard this, but there’s an old saying that if you want to make a million dollars in farming it’s easy, just start with two million dollars. And that’s largely been true for many, especially those track and commodity farming. But it doesn’t have to be that way. The reason it is that way is because people don’t treat it, and make the strategic choices, to treat it as a business. Success in any business has to be planned for, but the hard part of direct market farming is, you said earlier, to me and my experience isn’t the growing, it’s the marketing and making clear strategic choices that will lead you to a path of success.
Adam: So let’s assume that somebody has put together that one-page business plan, they’ve come up with their competitive differentiator, they’ve come up with their positioning, they’ve now branded their company, got a logo, whatnot – what then when we talk about the actual marketing kind of brass tacks? What are some of the techniques that you find, or channels or strategies, that you find pay the biggest dividends for farmers when it comes to the marketing?
Tim: Well, the biggest thing is if they’re doing direct marketing they have to establish a brand, and they have to get customers to become loyal supporters of them and their brand. And I tell you, and in fact my last podcast was about this, was about how to develop a personal brand for your farm because farming is different from other businesses. Other businesses may think of brand – you think of Gillette and big companies and that’s the brand, but it’s not a person. Well, the defining characteristic that makes a farm a farm is the farmer. So the real successful farms that we know about – we all know Joel South [PH] and his name – he’s a wonderful farmer, but we know that person because he’s outspoken. So the first critical success factor is after you decide all the other issues, what your products going to be, how you’re going to go to market, who your customer is going to be, what your competitive uniqueness is going to be, develop your personal brand.
One of the things I talk about a fair amount to people who haven’t started farming is, I say, the best time to start marketing your farm is way before you start your farm. In my own case, we started marketing our farm way over a year before we had any animals. And I profile many people in my podcast that have done the same thing. And they way we did that was through having a blog or a podcast to tell the story of how we’re disconnecting from urban life. We’re taking up rural life. And I know some people that have told the story how they were – I profiled one family last year that moved from New York City investment banking to rural Tennessee making goats milk. And they told the whole story on their blog as they were looking for farm land in different states and the trials and tribulations. But that built them a following and a base way before they actually needed customers. Not to mention it gave them all kinds of SEO juice with Google because they have been writing for a year about their farm, so when they finally launched their business they had a mature website up, and they had a captive audience of customers to support them from day one.
So that’s the first thing. There’s a lot you can do that doesn’t cost you money that you can start doing intelligent marketing to build a following and a tribe to support you before you even have to lay out a dollar for the farm land or the animals.
Adam: Yeah. That makes a ton of sense to me. Earlier you had said that when you were doing farm chores you found that people really wanted to experience farming vicariously through you. And I think in many ways people that, for many reasons, aren’t going to get into farming themselves. They chose who to buy from as a way to vicariously be connected through that person or that farmer. So you’re right, the power of story is very important here. And for those folks that replicate what you did where they basically started marketing for the farm in advance of actually growing anything, I assume that also gives them the ability to sign up customers before you actually have your first harvest. Is that true?
Tim: It gives you the ability to do that whether it’s a CSA or metropolitan pine club or whatever. But, Adam, it gives you one other really great marketing advantage – you get to do free market research. Let’s say it’s a year or a year and a half before you’re going to start producing product. You get to get feedback from people. Maybe they don’t want another pasture/poultry operation in that area, but maybe they would love to have chicken cuts, like breast or whatever. Or maybe they would like to have certain type of cheese or a certain type of enterprise. And through them reading about what you’re saying and the choices you’re contemplating, you get this free research for what’s missing in the market and what people are looking for.
Adam: I think that’s actually really interesting. One thing you mentioned too about the SEO benefit about writing about all this stuff before you actually have operations going on – when I was involved with the CSA, once we really got to the part where we were reinvigorating the marketing program – they never had done much online marketing – we found that very good return on Google key word based marketing because people are doing a local search. They’re typing in their zip code or their city and then followed by grass fed meats or pasture raised eggs or organically grown produce or whatever, and so scoring highly on the search results actually does matter.
Tim: Well, it does. And, of course, things change very rapidly, so the local search is more important than ever. I’ve got lessons in this academy. They’re simple lessons that you can learn to do on your own. You don’t need to sign up for what I’ve got to do this, but to how to get your business listed on Yelp, how to be found of Google local searches, how to comply with Google map, name, address and phone number, consistency across all platforms, those kinds of things. But the reason, again, for the Academy is while you could take any of those individual things, and people can do that on their own, who’s going to think about it?
And so part of what I’m trying to pull together as a resource here is one repository, if you will, where we will think – we will help you figure out what’s changing, what all this technology and what you need to know today. And not to mention, when you talk about the mobile implications for searches, mobile implications for web design. This is stuff that not a lot of farmers think about, but you know, 60 some percent of the people are getting the website through mobile now, so these are a lot of the issues I’m trying to help inform my constituency about.
Adam: And I’m curious – all that’s very important – what’s the balance right now in terms of the focus you would recommend on digital versus more traditional or at least more real-world marketing channels – everything from farmers markets to hosting farm tours and all the other things that happen in the real world to promote a business?
Tim: Everything is digital. If you have a farm market and you’re going to try to go there without doing some kind of digital on social media or instant messaging or with a messenger bar or email marketing or something to drive traffic there, then you’re completely at the whim of A) people showing up to the farmers market and B) choosing you over someone else just on the basis on your display. So I think that you have got to have a decent grasp on all elements of digital marketing. But it doesn’t mean that people have to get intimidated and go like, oh, I just can’t do this just. I mean, I’ll be the first to say that there’s way too much out there. There’s so many social platforms, so I don’t tell people they have to be great at Pinterest and great at Twitter and great at Twitter and great at YouTube and great at LinkedIn and everything else, but they do need to pick at platform or two, and that’s where they’re going to reach their customers.
And then, even if you pick at platform, Adam, as you know, like Facebook, the algorithms are changing all the time. The best practices are changing all the time, so where can a farmer go to keep up with what are the best practices with email marketing and open rates and subject lines and everything else? And it’s a real challenge for any business, but it’s particularly a challenge for people in farming because most of us that move out here to farm to be tethered to our computers running all this technology.
Adam: And that begs a question which is, as we said at the very beginning of this broadcast, farming is a lot of work. So what do you think is – and there’s probably several different models that work, and I guess I shouldn’t try to say one’s better than the other – but there’s somebody like yourself who I think can manage doing both, but not everybody’s going to be as proficient on both sides of the fence. And certainly, once the operations get above a certain scale they require probably full-time focus from the person that’s overseeing the operations.
So is this – I’m guessing at the beginning, at least, you want somebody to do their best to wear both hats, but does it make sense over time to specialize where one person’s really focused on the business side of things and one’s focused on operations or should the main farmer always be living in both worlds? Do you have a perspective on that?
Tim: You know, farming has always been – farmers have always been very much having to wear a lot of hats. They have to be mechanics, they have to be carpenters, they have to be vets if they have animals, and almost all farms do, they have to be growers. They have to have all these things. And now, you still have to have all those hats as a farmer that you always have, but you have to layer on top of that many elements of technology. First of all, the technology of farming has changed. There’s all kinds of new methods today to farm, so you’ve got to know those things. But then on the business side, all the marketing stuff we just talked about, well, in the old days when people did commodity farming they were stuck between somebody who was going to do a coop that was going to buy from them – and they were stuck between that person and whoever provided them with feed on the other side, or seed, and that was it.
When you do direct marketing there’s all these different channels and all these different decisions you have to make, so you either have to be a pretty special person and have a special background and skills to be able to be comfortable with all of these decisions on both sides, or you divide it into multiple roles. Now, some people do that with a husband and wife, for example, or do partners that will – one will focus on operations, one will focus on business and marketing. Others, I know some that have multiple siblings on a farm, and they’ll divide it that way, but you have to get both sides done very well. So if you, as a farmer, feel like you don’t have access to the business sides, what I’m saying, Adam, is that it’s not acceptable that you say well, I can’t do it, I’m just a farmer. And I literally see people saying that – I’m going to focus on the growing side, I can’t do this other stuff. If you want to be successful as a business that side has to be done.
So you either have to find a partner, you can get a CPA to help you with the accounting side, you can outsource your marketing to someone, but most people in farming don’t have the resources to do that. So they’re going to have to have someone in the family or they’re going to have to bring those skills with them from their other careers or, to a large extent, that’s what people like me are trying to do with the Small Farm Nation Academy is well, great, can we help you with those skills? But even then, even with the help that I’m trying to provide, it takes time, Adam, to master not just these skills, but for someone to feel comfortable that they’re able to go in and pitch restaurants, and I know how to do the sales call, or I know how to write the copy for my website, all those kinds of things that they need to learn.
Adam: Yeah. So if I understand what you said, it largely sounded a little bit like hey, this is just the modernization of farmer where, just like you had to learn how to repair a tractor, these are just base skills that every farmer needs to be familiar with and above a certain scale. Maybe you get a partner that can really specialize in this stuff, but it’s not something that you can just chose not to take on and just focus on the operating stuff as well if you want to be successful in the long term,
Tim: Yeah. And I actually had to learn the opposite stuff, so I got the farming and I said, well, how do I pull the calf? I had to learn how to pull calves, I had to learn how to milk cows. I found myself taking the belly pan off of a bulldozer one time and I said, what the heck am I doing under here? And it’s be, well, farming doesn’t necessarily have the free cashflow that’s required for me to bring in a mechanic every time I need to do something, so I had to learn that side. But I always felt comfortable with the business on the marketing side.
Adam: Yeah. Everything you’re saying definitely is consistent with my observations with the experiences that I’ve had, and I came in supporting small producers largely from the same door you did. I think all the advice you’re giving, to be honest too, is really pretty universal, meaning it’s not just related to small scale farms. It’s related to small scale entrepreneurship. But I remember sitting down with a CSA that had gotten into trouble largely because it had let its costs get out of control, and it hadn’t realized that the costs were getting out of control at the time, and so I offered the owner – it was a friend – I said, look, I’m happy to come by and help you out a little bit if I can. I’ve got a business background. Maybe if we sit down and I look at your books I can give you some suggestions about what to do. And he said, that would be excellent if I had any books.
Tim: If I can find the books, right?
Adam: Not even find them, if I actually had any. And so that was business priority number one is I helped him basically build the P&L statement for his business. And so it’s just an anecdote that goes to show that a lot of farmers just don’t prioritize the business part, and it you don’t, obviously, you’re – obviously if you don’t have books, your flying blind. You can’t afford to be ignorant and involved in the business side of things or else it’s just not going to work out. And I’m glad you made that point about the farmers often don’t have enough free cashflow to be able to bring in every specialist you want. That’s very true, and it’s certainly very true at the beginning. I’ve seen a lot of these businesses die pretty early on just because they run out of working capital right away, and to avoid doing that you’ve got to A) keep costs just under control as possible, and that requires both some accounting skills as well as just a lot of discipline.
And it also – the other flip side of that is getting revenues to grow as quickly as possible, and that’s really the whole marketing side of things. So I think the resource that you’re providing is something that is widely needed in this field for the existing base of folks running farms, but what really makes me excited about it, and one of the main reasons why we’re having this podcast, is I think it’s a great risk reducer for people that are getting into this to be able to leverage a resource like what you’ve put together.
Tim: And that’s what gets me excited because it’s going back to what drives me. I’m very passionate about local food, and we’re not going to have a local food community if our farmers aren’t successful. And I love the farming life style. I know that a lot of people are drawn to elements and aspects of this life style, maybe not a full-fledged commitment to the farming path that I took, but they want some element of it. So helping farmers reduce that risk and become more successful is very exciting for me, and there’s an opportunity here for all the farmers because, like I said, most farms aren’t focusing on these fundamental business aspects.
And if I can get them focused on it then I think there’s a great opportunity for them to be successful in the market, for them to have more resiliency which I know you and I both care a lot about, for them to live more independently and more freely, and it’s a beautiful life style. It’s way better than the life style of fighting traffic and just sitting in cubicles.
Adam: Well, I couldn’t agree more. To make this concrete for folks, and I’m trying to be respectful for your time here, so we’ll wind down in the next five, ten minutes or so, but getting back to the business plan where you talked about really crystalizing your vision for the business and how you’re going to position yourself out there in the market, you talked about having your competitive differentiator. So if you don’t mind, I’m going to put you on the spot here, for your cheese business – you had an artisan cheese business – had or have an artisan cheese business?
Tim: I had an artisan cheese business that we sold.
Adam: Okay. So when you started that, what was your competitive differentiator?
Tim: Great question. So when I started making artisan cheese, one of the first questions you got to answer is what kind of cheese am I going to make? And I made a bunch of cheeses to try and figure out what I wanted to make – everything from Camembert to a variety of blue cheeses to gruyere to cheddars and gouda’s and everything else. In the end, what I decided to make and specialize in was a gruyere cheese that was an eight to eleven months, a cloth bound cheddar cheese that was aged about ten to eleven months, and a blue cheese that was aged about six months, and they were all raw mild cheeses. The competitive advantage and the differentiator is to be able to focus on those cheeses – just say somebody new wants to come and market and make those kind of cheeses, you have to milk your cows today – if you’re using cow’s milk – and be comfortable with the fact that you’re not going to get paid for that mild for almost a year. So that’s a years’ worth of buying feed if you’re buying feed, milking cows, paying the labor, paying for any of your cheese equipment and supplies, paying for your refrigerators if you’re running cheese caves or however you’re doing the environmental controls for your tables, cheese, all the capital that you’ve got to put in for you cheese vat, for your tables, for you molds, everything else. You won’t get paid back anything for a year.
And the defensible advantage is if somebody else wants to come in and make a gruyere style cheese that’s local, first of all, I’ve got a year and a half start on you, and secondly, most people aren’t going to do that because they don’t have the financial resources to absorb that delayed cashflow. So that was number one. Number two, once we started making those cheeses I started entering in competitions, so the gruyere cheese had won awards in the United States and South Africa and England in the American Cheese Society and in the other competitions. The blue cheese won awards in the United States Cheese Championship.
So once you start getting that kind of attention for some of your products, that gives you another layer of defensibility, and that gets you attention with distributors, with retailers like Whole Foods and Kroger which is where we ended up selling those cheeses. And to take it full circle, Adam, in the end when we sold that business it’s one of the ways that you’re able to have an exit strategy and sell that business because it was another couple that really wanted a cheese business. And we had the recipes, we had the contracted distributors, we had the awards, and it was easy for me to hand that business off to somebody else who wanted to take that and make it much larger than we wanted to take it at the time.
Adam: Okay. Great. Kudos to you. But also, Adam it’s a very concrete example of what you meant about really picking your niche, why you pick it, and once you’ve lined all those things up how success can follow through from that.
Tim: Because with cheese making, for example, what most people do – I had many cheese marketers tell me if I see another new chevre on the market I don’t to see it. Because that’s what happens. When you start with – you mild some goats, you make chevre, you can flip your cashflow in a few days type of thing. Or just as commonly, people start with chickens – I’m going to do meat chickens with some chicken tractors and six weeks later, eight weeks later, I’m flipping cashflow. Well, that’s true. You can flip cashflow quick with those, but your barriers for entry are very low for those business, so therefore, somebody else can come in and replicate your success overnight.
Adam: Right. Right. Well, your business as you described it is a notable example of a business with a good moat where somebody needed to invest a year before they could actually begin challenging you. You had mentioned, as we were preparing for the podcast, that you had some lessons learned, not even just in the marketing side but on the insurance side that you found was very helpful to impart to new farmers. Is there anything about that you wanted to say?
Tim: Well, farming is unique from other businesses from a liability point of view. If you run any business you might have some kind of law suit or whatever, but when you have a farm your business and your personal life are located at one and the same place. So you do the farm tours as we talked about earlier. Somebody’s coming on to your property, so if it’s really important that you do the obviously basics. You set up separation of liability with an LLC at a minimum, but also you get the right insurance in place so that you have layers of protection to isolate your personal assets from the business.
Now, to anybody listening to this who’s got a business acumen, of course, it this makes sense. But I’m telling you in the farming world I’ve seen a lot of sole proprietorships, which may make sense in the commodity farming world, but in direct marketing there’s a huge risk that there’s no separation of assets between either personal assets and their business.
In the cheese business that I had, for example, Adam, the cheese facility was on the same property, so therefore, I as an individual owned that, but we leased that to the LLC that was my farm. And so here’s a clear relationship between the farm business, and it’s paying for that facility that it uses to operate a cheese business. Things like that is what I’m talking about in terms of setting up your business the right way.
Adam: Yeah. Well, I’m glad that you’ve highlighted that. My observations have been that, for a variety of reasons, many of which are very understandable, but people that are starting out at the beginning with a small farm there’s a lot of trying to fly under the radar about a lot of things before you can perhaps afford to be able to do things fully at code or get the right permits in your county or whatever. And sometimes these small farms are doing it for those reasons, or sometimes they’re doing it, as you said earlier, because they just don’t know any better.
But the point is, their vulnerability is a lot higher early on to the downside of making a mistake or getting caught or having somebody break their leg on your property during a farm tour or whatnot, is a lot higher if you don’t have those safeguards and structures in place before hand. So even advice on some of the insurance elements or at least liability mitigation elements that you just talked about – can people learn some of those through the Small Farm Nation Academy as well?
Tim: Oh yeah. Yeah. In fact, one of the things that I do once a month is I have a different mastermind interview with an expert in some area as it relates to a farm business, and the one I did this past month was on food law. So it’s all the liability that relates to food farming. It’s an hour-long interview that’s available to the members of the Academy. And another reason why farms may not get the right protection and do it on the low is because some it’s just obscure. There not sure what to do, particularly in the area of things like raw milk or processing chickens on the farm. Can I do that? Regulations say I can. Some say regulations say I can’t. I can’t get a straight answer from my authorities.
You know, Georgia is a state, for example, where it’s very clear what the sale of raw milk is. You can’t sell it for human consumption, but any farmer such as myself can sell it legally as pet food. So all you do – the time I was doing this a few years ago – you get a – I think it was like $75 or $100 – you pay for a license to the department of Ag, and you get your permit to sell pet food. Then all I have to do is put a label on the milk that says pet food not for human consumption, and I can sell it to anyone. I don’t have to ask them if their pet drinks it. and we all know what happens, right. But because of that and because of me following the letter of the law, my insurance provider threatened to drop me, and they weren’t going to cover me anymore for my cheese business or my product liability because I sold raw mild even though I was completely in accordance with the law. So I dropped the raw milk, and I said okay, I’ll just sell the cheese.
It’s those kinds of issues that farmers run into all the time everywhere. You would think it would be clear, cut and dry answers, but it’s not. And that’s one of the reasons why I’m grad we have a community that’s developing inside the Academy, so we can figure these issues out.
Adam: Well, that’s great. Well, in closing here, Tim, I just want to express my strong endorsement for the mission you’re behind, what your doing. And again, I’ve seen this first hand – I’m on the board of an organization in my county that supports all the small produces and the need for this type of business acumen, the need for really understanding the changing world, especially what’s happening on the digital side is great, and I think is highly little understood – there’s probably a better way to say that – but it’s an area – I guess the awareness is low is probably a better way to say it, amongst a lot of these farmers. And they desire to learn it is there, but it’s really just getting that guidance, and it sounds like, in the little bit that I’ve seen of the Small Farm Nation Academy, and you’ve been kind enough to give me a pass into the past development work to see what’s going on.
It seems like it’s a really constructive and rich and structured – which I think is really important – learning environment for these folks. So for people that are either current farmers or are thinking seriously about getting into this who want to learn more about your curriculum and your work and what’s going on at the Academy, where should they go?
Tim: Well, thank you very much for saying all that, Adam. They should go to smallfarmnation.com/academy, and you said early that most of what I’m talking about is applicable to any small business, and you’re right. We even have people in the Academy that are landscapers and pest control whatever, and it’s the same principles for anyone. So everyone is welcome.
Adam: All right. Well, Tim, I wish you the best on growing the Academy, and continuing to enable farmers around the country, and perhaps we’ll glide at some point. Love to have you back here again in the future at some point in time if you’re up for that, and again, just thank you for your time today.
Tim: Thank you to both you and Chris. You guys are doing great and very important work, and I really appreciate it. So keep it up.