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SPEAKER 1: Profitability, wow. When we started this operation we didn't expect to be in the black for at least four or five years.
SPEAKER 2: It's taken us about 20 years to become independent on the farm so that we could both be supported by the farm.
SPEAKER 3: I think we did not make a profit at this farm for five or six years, because of the original investment.
SPEAKER 1: We're continually investing in the infrastructure. And that outlay, it's going to take some time for our cash flow to cover that plus some.
SPEAKER 4: Commit yourself to trying it for at least three years. To try to get into farming, small farming, and say after a year it's not for me, I would say hang on and do a couple more years at least. Because no year is the same from year to year. Things are always different.
SPEAKER 1: We hope and expect that down the road-- and it's really hard to predict exactly how long down the road-- that all of this will eventually be paid for and we could start seeing a little bit of positive cash flow.
SPEAKER 5: I don't have any debt load other than to myself, which has given me a little bit of leeway. I haven't had to become profitable quite as rapidly as if the bank had a hand in my pocket.
SPEAKER 3: And I've always been one not to use credit. I've always been one to just do what I can and then grow it from there. And I think that's a problem that some borrowers have. They get a little too ambitious and buy too much too soon, get in debt, and have a hard time getting out. But I have to be very careful of my expenses, because they can really eat up a business.
SPEAKER 5: I don't have to start out real big and you know, have everything generate a huge income right off the bat. I can kind of experiment and see if it's worth pursuing it to a larger extent.
SPEAKER 4: We don't put all of our eggs in one basket. We do grow a wide variety, because some crop will fail each and every year. And you have to be prepared for failure. You have to be flexible.
SPEAKER 3: The farm is actually as much as I can possibly take care of right now, the land that I currently have under cultivation. And so I keep trying to farm smarter not harder. And try to really watch the bottom line.
SPEAKER 6: We've been able to consolidate. We've been able to just keep paying it down, and yet still borrowing more somehow. It's crazy how that happens. But you know, we're gaining equity in our animals. And our equipment is worth something and we're paying that down. So hopefully-- we're only two years into it so I really can't speak to whether it's going to really work.
SPEAKER 7: Yeah, being profitable, it means many things. I think the first thing that most people would think is are you making money.
SPEAKER 3: That's the weak link. I'm not. I'm not paying myself enough.
SPEAKER 8: A definition of profitability to me is the fact that you can actually make a living from this business and you can pay all your expenses and there's profit at the end of it.
SPEAKER 2: You have to make enough money to pay your expenses every year, both your living expenses, just your household, and your business and have a little bit extra to play, I guess, and have money for investing.
SPEAKER 9: Center for Integrated Ag Systems at Wisconsin did a study of market growers and tried to figure out kind of what the average amount they made per acre was, and it was about $5,000 net per acre. And so that kind of gave me a starting point that this is my goal to get there.
SPEAKER 2: Well, the last five years I've said we have to make $10,000 gross of every acre. That's just what we've said. We've got to get at least that much. That has to go up, because everything else is. So we've got to be making more than that to make it.
SPEAKER 7: It's all relative in my way to see it. You've got to have a year plan and you have to have a long term plan. Sometimes my year is not profitable in terms of like how much money I made that year. But if I end in that year I can have a lot of experience and a lot of tools that will like secure for me a better next season, I feel like that is paying a lot of my [? world ?] that I did that year.
SPEAKER 3: I don't have a big paycheck. If having a lot of money is important to you, then I think you need to maybe farm on the side and find something that will create more money.
SPEAKER 1: Ultimately, the goal is to be sustainable as a farm without outside income. I'm not sure at this point whether that's a realistic goal or not. But certainly I'd say you need to have those first five years covered with some income coming in from somewhere else.
SPEAKER 4: Are we being profitable from a money standpoint? Yes, a little bit. If we were to factor in labor involved, then no.
SPEAKER 10: Farmers do a real poor job of analyzing their labor inputs.
SPEAKER 2: Just doing all the work yourself, you don't even count that as cost. But that's real cost.
SPEAKER 4: It's just hard to hire someone. It's not economically feasible at our size. You have to take into consideration social security, unemployment insurance, workers compensation, state and federal taxes.
SPEAKER 7: It's one of the biggest expenses, labor. Every week we have a big portion of the goal sales just go to salaries.
SPEAKER 2: We had originally said we're going to do everything as a family. We're just going to be a totally family run business, which we still are. But you know, that's been tough on us. It's really hard, because we're worn out.
I should have a picker. I should have people. But we don't have people. The people is us.
SPEAKER 1: One of the limitations on how far we can develop our farm is labor. We decided, again, as part of our informal business plan early on, that we would not go into the red paying for help. It didn't seem like a wise move. And so we haven't been in a position yet, and we may never be in a position to actually hire labor.
SPEAKER 6: One of the things that was right in our business plan was that we wanted to remain a two person operation and we broke that cardinal rule just this summer by hiring our first employee.
SPEAKER 5: I got into this venture because I like doing it. And I don't want to be paying somebody to do the whole job. I'd just like to hire somebody so that I'm not tied 24/7.
SPEAKER 2: Really, we've come to almost a tipping point a couple of times this year. It's like it's been very difficult. Because you can only work so many 14 hour days in a row and then never get a break.
SPEAKER 6: We were really coming up against the wall with me out doing all these deliveries and trying to make yogurt and milking the cows and making hay. It just really became too much. And so we had to look for a place where we could bring somebody in that could do a really good job for us, have a really focused on assignment, and that was the place, was the deliveries.
SPEAKER 1: Starting up a business, doing something, getting a pencil and writing down what one's anticipated costs are and using that to decide whether it's worth it to get into it to start with, but also to price the product. We did this for our pigs, to come up with a price per pound for our live weight. And if we hadn't done it, we would probably be charging far too little.
SPEAKER 3: I went to the dollar store and purchased vases for $1. And then I'd pick wildflowers and I would sell the vases with the flowers on my little table for $3. So it wasn't much of a profit, but I had a great following very quickly. And so over the next few years I raised it to $3 bouquets and $5 bouquets, eventually $7 bouquets. And so it was quite a slow start. And if I made $300, I was absolutely ecstatic.
SPEAKER 2: When half of your customers say, well that's cheap, then you gotta go up.
SPEAKER 7: Sometimes it depends on the market. You know, like I go for Tuesday for the markets. And sometimes they have difference in the prices from one market to another. Or go to a [INAUDIBLE] neighborhood where people are not always used to maybe pay that much for food, so you have to lower the prices so you feel more in the standard in that market.
And you don't want to under sell yourself too. Price is also determined by how much of one produce you have. Like if I have a lot of something that I want to just move faster, I maybe lower my prices. If I have like not enough of something and I want it to sell slowly, I make the price a little higher.
SPEAKER 9: I think what I have to do at the end of this year is just keeping as the best records that I can of how much I charge for things, how much sales, and how much acreage or how many bed feet are planted. And then I'll go back at the end of the year and say OK, what profit did I make per bed foot of this vegetable? Do I need to raise the price of this vegetable because I could make more money out of it, and I'm charging too little? Or do I need to plant less of it because I'm not actually selling very much of it and it wasn't worth my time and effort to grow that much of it?
SPEAKER 1: It's very important to keep records to help you make business decisions.
SPEAKER 10: The record keeping is a must. Money is a funny thing. I call it a gremlin. If you don't control it, it's going to control you. And your invoicing, you have to constantly invoice.
If you think you can get in the house and invoice every two weeks, you're missing something. You're losing some income. And eventually that lack of paperwork will catch up with you. So it's a struggle for me.
SPEAKER 11: The amount of records that you keep on a daily basis makes the end paperwork chore really a lot less hairy.
SPEAKER 12: Every week with my sales I record all of the checks that come in. I add up the cash sales and that type of thing. So I know basically what I'm making on a week by week basis throughout the year. And this year, because of those records and following them, adding them all up over the years month by month, I knew that I did 3/4 of my business by the 1st of July.
SPEAKER 2: I do a daily journal. And I've done a journal on our farm for 25 years. So I could go back and figure out every row, almost every tree how much fruit we've got off of it.
SPEAKER 11: We keep a constant log of everything we do in a calendar.
SPEAKER 1: I kept copious records of all of my harvesting the first season, how long it took me to pick it, how many pounds I picked, how much of that was salable goods, how much I charged for it, and what the total value of that particular day's picking was. And at the end of the season, I totaled all this up by crop.
And it was very interesting. I learned that lettuce was a huge moneymaker. I wouldn't have known that if I hadn't kept these records. Compared to everything else, it was our best money maker. So as a result, I made a business decision to plant a lot more lettuce the following season.
SPEAKER 6: Well, we've expanded hugely over the past two years from four cows to 12. That's three threefold, I guess. Lots of my friends like to make jokes about that.
Our plans for the future are to focus on our product line, try to develop some complementary products to the yogurt. Because we do go to so many different places delivering, and that's a really major investment that we have in our delivery system, just the truck and the driver and her being on the road four days a week taking our product to those stores. So if there's a way that we can develop a product that can also go to the same places that we're selling right now, I think that that is where we're looking right now.
SPEAKER 5: Part of the plan is I'm slowly going to be continuing to expand until every operation is profitable. Or if it looks like it's not going to be profitable after a few years, then I'll phase it out. I'm starting out with beef in a small way. I got eight head of beef. And depending on how that sorts out, I'll decide whether I work it up to a cow herd of maybe 15 to 25 animals. But it'll take me a couple of years to make that decision.
SPEAKER 1: One very important source that I would put top of the list is our customers. They let us know what's working, what isn't working, what they want more of, what they want less of. So we need to listen to our customer base.
SPEAKER 2: We have expansion plans and the ground is prepared already for planting another seven acres of fruit. And we're basing that on every year for the last four we've doubled our you-pick.
SPEAKER 1: Four to five years down the road we're hoping to be in the black at least for certain ventures. As we continue to develop ventures, however, those ventures will not be in the black for a ways longer.
SPEAKER 5: I think farming, to be successful, has to be sustainable in several aspects. First and foremost, in the long haul, you've got to be sustainable financially, unless you got a real rich uncle, the farm at some point, hopefully, is going to pay for itself. Am I there yet? Not totally. Partly because I'm still in a growth phase.
SPEAKER 8: I would define success in the fact that we've started a new industry. It looks like there's really potential for this industry. It's attracting more people to the north country. The agro-tourism business I think is the wave of the future. In terms of that, the winery has been very successful.
SPEAKER 2: When I can sit down there and watch 40, 50, 70 cars come up the driveway and when they leave they're all leaving happy and they're saying we'll be back, we'll be back in two weeks and we're bringing our neighbors.
SPEAKER 3: I feel like I'm very successful because I'm happy and I love what I do.
SPEAKER 12: My idea of success is to be one, a successful gardener. And two is to teach my customer base and keep them happy. I mean, the more of them that come back happy, to me, that's a measure of success.
SPEAKER 4: Am I succeeding at farming? Yes, I believe we are succeeding. Because we are able to grow a good quality vegetable, many types and sell them and we have many return customers that do enjoy what we offer.
SPEAKER 6: Having been in it for two years, we're covering our costs and taking as little out as we need to live on and throwing everything right back into the farm in every way that we can. So whether that's buying animals when we need to, to have enough product to satisfy our market, or buying new equipment, we just upgraded our pasteurizer finally. So that is an important step for us. But yeah, right now it's still at the point where it's questionable whether we're profitable or not.
Many new farmers resist thinking of their farm as a business, and therefore neglect to consider profitability. Learn about the business side of farming from experienced farmers, including product pricing, record-keeping and measures of success.
In the Voices of Experience series from the Beginning Farmers Resource Center, you'll find the kind of dirt-under-the-fingernails advice that can only come from someone who's been there.
The NY Beginning Farmer Project is led by a team of Cornell Cooperative Extension Educators in partnership with the Cornell Small Farms Program. The project, launched in 2006 in response to increasing interest in farm start-ups, aims to enhance the likelihood of success of new ag enterprises by making the best resources and training available to new and diversifying farmers.
