Scaling Down...Not UP
Growing on small acreage is absolutely a viable way to make a living on a farm, and in some cases, it might even be more profitable than growing on a larger scale.
Often, as cut flower farmers, we discuss scaling up, doing more, and growing our businesses bigger and bigger. But what if we could grow our profits, without growing our acreage or the amount of flowers we grow? What if we could cut back on the effort we put in, while still earning more?
In many cases, I find that we grow flowers just because everyone else is doing it, or because certain flowers add a little “sparkle” to our bouquets. But what if our customers don’t care that much about that “sparkle”? What if those flowers aren’t really adding much to our bottom lines, even though they take plenty of effort to grow?
A couple of years ago I did a major overhaul on my farm by asking myself all of the above questions. I had decided that I didn’t want to grow the farm to more acreage (we were growing intensively on just about an acre), but I was interested in making more money (who isn’t?). So, I began the process of analyzing every single aspect of my business.
The first thing to analyze was our business model and sales outlets. I was selling through about 6 different sales outlets: a flower CSA, two farmers markets, weddings & special orders, direct to florist sales, on-farm workshops, and selling dahlia tubers. I constantly felt stressed and pulled in a million different directions. I was somehow managing it all, but I honestly wasn’t doing an excellent job at any of it. I thought to myself, “If I could do an amazing job at just a few things, instead of an OK job at everything, I could really push the limits.”
I looked at which outlets were bringing in the most amount of revenue and profit, and thought long and hard about which sales outlets were easiest for us to serve, and what type of customer I wanted to work with. I decided to only sell through three sales outlets: a flower CSA, a farmers’ market, and dahlia tubers.
This was a really tough decision because I was practically waving goodbye to tens of thousands of dollars of income from the other sales outlets I was dropping. But it ended up being the best decision! All the time I normally would have spent trying to manage florist sales, weddings, special order communications, and workshops was funneled into doing a better job at selling through our CSA and farmers market. I did a better job at marketing, connecting with our customers, and learning what those customers valued most. Although our overall revenue decreased the following year due to this decision, our profits increased… which is all that really matters! We profited more by focusing on doing less!
We did less, but we did it better.
Secondly, I analyzed all the types of cut flowers we grew (at that time probably around 75) and cut the list in half…and then cut it in half again. I kept only the most profitable ones and the flowers my customers cared about most. This meant getting rid of lots of filler flowers and foliage, selling mostly straight bunches, and asking my customers lots of questions about what they really wanted so I could focus on that.
Ever since then, we continue to refine the list of crops we grow more and more. Currently we grow less than 15 types of flowers and have gotten so efficient at growing them that we are earning a higher profit margin on our flowers than ever before.
I contribute the success of this massive experiment to the power of identifying and focusing on what was truly making a difference on our farm.
Since focusing my efforts on high-value sales outlets and crops that truly move the needle, and eliminating everything else, the business has improved in nearly every way possible. I, personally, found a new sense of clarity, purpose, success and profitability, while my employees found an easier groove at work (they also are no longer being pulled in a hundred different directions), and my customers can tell that they have my full attention (which has increased customer satisfaction and loyalty).
This strategy might not work for everyone with their unique mix of sales outlets, but streamlining and simplifying our farm has changed my life. I am not nearly as stressed as I used to be, my employees enjoy working more (probably because I am not a cranky mess all the time), my marketing efforts have improved, and my work life balance is wonderful.
Although it IS important to be diversified in some aspects, it’s also equally important to have clarity and focus on the things that are directly producing results (like greatly contributing to your bottom line), and truly move the needle.
Besides focusing on what’s producing results on your farm, there are many other factors that can make profiting from small acreage easier. Here are 10 keys that I have done my best to follow that I believe have helped me max out the profitability of my one acre flower farm, these ten pillars can help you maximize your profits on small acreage:
1. View constraints as a gift. Starting small and staying small does not have to be a bad thing! In fact, if access to land is a limiting factor for you, use that constraint to your advantage. These seemingly limiting constraints can sometimes force us to get creative and find ways to do things more efficiently and effectively (like narrowing our crops to only our most profitable, thus freeing up time for other creative outlets!).
2. Keep overhead as low as possible. Don’t make huge investments into equipment, infrastructure, or systems that you aren’t 100% sure if they’ll fit perfectly into your farm within the next 3, 5, or 10 years. Stick to budgeting your expenses for just the basics in order to squeeze out as much profit as possible at first, until you have found your niche and feel confident with your cash flow.
3. Understand your market. Do market research to figure out what you think will work in your area, and deeply understand who your ideal customer is. What kind of flowers, products, and services would they truly value or need? Are there things you are growing that they wouldn’t even notice if you stopped growing them? There will always be some trial and error involved, but doing research is key to getting a small farm profitable quickly.
4. Focus on high value. This is A BIG ONE, and probably the most important point here. For small farms, focus on selling through high-value markets and growing high-value crops. It’s important as a small farm to understand you are selling a hand-crafted type of product, which demands high prices (obviously your skills & product must meet the price point). Sell retail as much as possible to avoid the low margins wholesale offers. Grow crops that bring in a high profit margin, and ditch the rest.
5. Track and measure. Know your numbers! As Peter Drucker says, what gets measured gets managed! Do you know how much revenue and profit each flower type is bringing you? Do you know how productive your flowers yields are? If not, you won’t be able to easily know if you’re making money on them or not. Track and measure yields, revenue, expenses and profits so you can make solid, data-driven and informed decisions to drive your business to success.
6. Focus on tasks that pay. Our to-do lists are never ending, but prioritizing is key here. Don’t waste time doing things that don’t directly contribute to your bottom line. There are always a million things to do on a farm, and never enough time. Prioritize tasks such as selling and marketing since they directly contribute to putting money in the bank.
7. Use LEAN practices to increase efficiency. By increasing efficiency, you are cutting costs and therefore directly increasing your profit margins. For example, instead of hand-weeding, utilize more efficient weed management methods such as stale-seed bedding and wire-weeding to move faster and cut down on costs (time spent pulling weeds).
8. Leverage technology to your advantage. Everyone’s got a smart phone in their pocket most of the day - USE IT! On our farm we utilize apps and other technology on our phones to increase efficiency, increase sales, and make marketing easy. Use your phone to take marketing pictures as you harvest, make harvest yield notes, record pest/disease management while in the field, schedule tasks and to-do lists, and utilize financial apps to track your financees. Keep things as easy and simple as possible. My favorite apps are Asana for task management, Quickbooks for bookkeeping, and Evernote for organized note-taking. Clockify and Toggl are also good apps for time-keeping.
9. Opt for optionality. Invest in tools, products, and systems that can stack multiple uses. For example, investing in a tractor implement that ONLY cultivates one type of spacing can be a major investment tie-up. Alternatively, a cheap wire-weeder plus one person can do the job of cultivating many plant spacings, both inside hoop houses and outside. This gives you a lot more options with lower overhead. Another example is utilizing technology that you can use for multiple tasks. We use the “Asana” app on our farm to make to-do lists, schedule tasks, make harvest lists, record harvest yields, and communicate. This is better than using a separate app for all those different tasks.
10. Find a mentor and learn from them. Being resourceful and learning from others that are where you want to be is the best way to fast-track your success. Luckily for you, you are in the ASCFG, which is the best organization to learn from! There is enough trial-and-error learning within your business to keep you busy and tripping over yourself for a lifetime. Invest in learning from others so you can avoid as many mistakes as possible, which will get you to a profitable farm and a better quality of life much faster than trying to figure it all out on your own. ASCFG has an endless number of invaluable resources to learn from!
Every farm is as unique as the person who runs it (you’ll hear me say that over and over again!). However, I believe all of our farms share commonalities when it comes to managing our businesses, no matter the size or type. Good financial management, data-driven decision making, and learning key business skills such as marketing and sales are important proficiencies across the board, no matter what kind of farm you have. The experiment I ran on my farm by deciding to scale down instead of scale up is simply an example of how I put all of the above skills into practice in some way. As entrepreneurs, it’s our job to continually assess and refine our business systems, improve our skills, and not be afraid to change things up when they are no longer working for us. And, as I proved to myself… sometimes it can really pay off!