Additionally, we did not have the capital to acquire professional management to guide our company in these directions. Despite painstaking monthly analysis of our gross margin and exploring every cost-cutting measure we could think of, including heroic subsidization of our business with free labor from our members, we were consistently losing equity. We could not see any improvement in sight within the economic structure in which we were trapped. At that point, we used our now considerable experience to produce a thorough business plan. Using this plan, we looked for outside help including private investors, financial institutions, government agencies, foundations and other rancher alliances. However, we could not find the help we needed. Ultimately, we lacked the capital to escape our quandary. Our members, who had already made significant financial investments in the co-op, faced the prospect of mortgaging their family ranches to back what we knew writing was a worthy but risky enterprise, to compete in a cut-throat and volatile commercial arena. In 2000, after five years of intense struggle, we made the painful decision to terminate our sales and stem our loss of equity, so that we would be able to pay all of our co-ops bills and not cause financial injury to others.
The markets that worked best economically were the large distributor markets. Catch-22 or barriers, barriers we encountered were numerous. Many we were able to overcome through hard work and determination. Others had become insurmountable by the time we perceived them clearly, and we found ourselves caught in a vicious cycle. Our volume was too low to obtain processing of our product at an economically viable, competitive rate (our costs were triple those of other high volume suppliers). Yet even managing the volume of orders we had was exhausting our members and employees. We lacked adequate supply to access the markets we needed to reach the volume we needed to obtain affordable processing and transportation.
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We maintained intricate documentation on every animal processed, and recorded carcass data for all beef man processed. (The advantages of cla and Omega-3 fatty acids were an area we had only begun to explore toward the end of our production.). Market successes, one of our great market successes was the effectiveness with which our members could personally market our beef. We attended promotions and trade shows in which our passionate, western-clad ranchers were popular attractions and generated great consumer enthusiasm. People loved to meet and visit with the actual producers. The only problem was this was time-consuming and expensive. At first we assembled our own promotional material, but later hired professional graphic designers who produced award-winning labels and promotional materials.
We were fortunate to receive attention from local and national media, and won Best of Show awards in our state food exhibition. It is our strong opinion that we had one of the most healthy, delicious and environmentally sustainable food products ever offered to the American consumer. At our peak, we were marketing our beef in 23 states through three large natural food distributors. From the beginning, we also direct marketed some beef in our local area. However, our local markets were so low in volume and high cost in service that they were never profitable.
Our original mission was to produce and market meat products from livestock raised in a way to maximize conservation of natural resources and minimize use of fossil fuels and farm chemicals. We decided to raise cattle that spent their entire lives on the pasture, never in the feedlot, avoiding the grain and feedlot production model and producing a unique lean, grass-fed beef product raised without hormones or sub-therapeutic antibiotics. To do this, we organized ourselves into a formal marketing cooperative in 1995 to develop our product, market and distribution strategies. We received some grant assistance. But all our operating capital was generated from investment in co-op stock by the ten ranch families.
The organizational structure was member-based, with someone from each ranch serving either individually or as husband-wife teams on our board of directors which met monthly. All ranches also had to serve on either our marketing or production committees which also met monthly, and our officers had an additional monthly meeting as our executive committee. We had one non-member employee who provided part-time marketing and operations management services; and one member who served as business manager, taking orders, doing billing, handling communications; and another member who worked part-time at our storage unit assembling large orders for out-of-state shipment. All other jobs were performed by co-op members on a volunteer basis. Early on we did nutritional testing on our grass-fed beef, discovering that it had an extraordinary nutritional profile, even better than we had thought, with a very low fat content and high nutrient content. We went through the onerous process of obtaining usda approval for Nutrition Facts labels for all our products, as well as unique special label claims including natural, free range, grassfed, (to our knowledge, the first beef product in the nation to obtain this designation raised.
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Below is the story of why and how. While the cluster continues to explore ways to work together, former business manager Annie wilson offers the following as their lessons learned in the hopes that others will benefit from what theyve learned. The purpose of this article evernote is not to discourage other producers from niche marketing, but to share our experiences in our five years of marketing grass-fed beef. The variables in any business effort are so endless that we cannot conclusively pronounce what will or wont work for others. Times change and undoubtedly some of the production and marketing realities we faced are different now. A new and different formula may work today. We only know what happened to us, and will try to communicate our perspective here. First we will give a general overview of our history, followed by what we saw restaurant as the critical elements of success, some of which we unfortunately lacked. Business history, tallgrass beef is a product produced by ten ranch families in a marketing cooperative called Tallgrass Prairie producers co-op.
While i expect my farms revenue (sales) to improve with each passing year, i do not expect the profit margin (aka my income) to increase significantly (or exist until Im confident my farming operation is on good, solid financial footing. I didnt come from a farming family, so i wont inherit any land, and theres theres no rich uncle to invest or cosign for a traditional commercial loan. Our bootstrapped business model involves taking it one step at a time. I save up enough money to tackle the next project on the list (right now, its vietnam installing a head gate) and work until the money runs out. Minimizing debt, while not part of my original plan, will set the farm up for a bright and shining (and independent!) future. Our slow growth is a small price to pay for long-term security. Filed under, blog, bootstrap, credit, featured Posts, latest, news, willow Springs Farm, tagged with beef, beginning farmers, business plan, business school, capital, grass-fed beef, kansas, loans. Editors Note: Tallgrass Prairie producers co-op operated from 1995 to 2000, raising and marketing grass-fed beef from ten Kansas ranches. It ceased active operation in 2000.
and graze them until theyre finished. Following slaughter (a year to year-and-a-half later customers pay the remaining balance (according to the animals finishing weight sales tax, and slaughter expenses. Its a long-term investment for our customers, but it allows them to be more involved in the entire process of finishing cattle. Its been really cool to see how our community welcomed this unique strategy as an opportunity to support local farmers. Im confident that this strategy will help Willow Springs get started off on the right foot, without going into debt. My goal is to continue to reinvest in the farms assets—land, livestock, outbuildings—over the next five to seven years. I (finally) own land, and have constructed a barn, fenced the property, and installed a solid catch pen.
My initial three options for funding my cattle—a crowdfund campaign, usda/fsa financing, and outside investors— did not pan out. The crowdfund campaign did supply the money necessary for catch pen materials and additional fencing, so that was super helpful. But the usda/fsa financing options did not work for me, and my network of tech startup investors were more interested in putting their money in the latest app than in cattle. At present, my farm is 100 percent self-funded, meaning I work my tail off as a full-time marketing and pr consultant and a part-time adjunct professor so i can put every extra dime in my cow fund. I was getting extremely frustrated with the slow growth, as there are only so many hours in the day and only one. While working at max capacity, itd take me weeks to squirrel away enough money to fence another quarter-mile, roof the back half of the barn, or repair the washed-out driveway. It seemed as though the farming part of Willow Springs would never come! So, i decided to explore one last option for start-up capital—presale inventory (aka beef). Willow Springs is now pre-selling dissertation whole, grass-fed steers.
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By hannah Becker, willow Springs Farm, like many startups, my farms business plan has been tweaked a time or two. Initially, i review wanted to start a commercial cow-calf operation, but I was unable to secure the financing necessary to get it off the ground. So instead I decided to explore a grass-fed beef operation and direct marketing opportunities, which offered lower startup costs plus higher profit margins. The downside was, the production cycle for grass-fed beef is longer than for a commercial cow-calf business, so it would be a long while before i made any money. Also, my education and industry certifications were all focused on traditional cattle operations, so learning the ins and outs of more natural beef production was all. I read everything grass-fed I could find, and reached out to several other grass-fed farmers in the area. After a couple months of research, i compiled the info and revisited the original commercial cow-calf business plan I drafted in business school. By adjusting the production strategy and numbers to fit grass-fed beef, i finally had a roadmap customized for Willow Springs Farm. But despite lowering my startup costs, i still needed capital to launch my business.