4 Simple Steps to Discover Hidden Profits On Your Farm
Discovering hidden profits on your farm
What if I told you that you could instantly make more money flower farming this season - WITHOUT planting any additional flower beds (assuming you already grow a number of them)?
It would sound too good to be true, wouldn’t it?
Fortunately, it’s for real. I use this simple 4-stem process every season to increase revenue and profits on my own farm. It’s been my #1 tool in growing my business (besides my husband, Matt!).
When I started my farm, I grew just about every flower possible. The list was probably over a hundred varieties long, and I had mis-matched patches of flowers in every growing bed. A little scabiosa, a little calendula, and wayyyy too much flowering tobacco growing all in one bed (spoiler: I don’t grow them any longer). I loved seeing all the diversity and felt like I had to grow “a little of everything” to succeed at both farmer-floristry and as a sustainable farm. I felt this way only because I had been told to by other growers.
My first year growing flowers, I grew plenty of flowers that I hardly ever harvested. They were either too sticky, too annoying to cut, or simply because no one wanted to buy them. I also did not make any money. After that, I cut way back on my list of blooms, and focused more on flowers that seemed to sell well and that weren’t a giant pain to produce.
The same thing happened my second year of flower farming - even though I had narrowed down what I grew, the list was still long and there was still a ton of flower waste. So, I further cut back on my list of flowers and focused more on the “tried and true” types (for the most part), and did minimal experimenting.
Then, around my third flower farming growing season I created this simple 4 step process for increasing revenue on my farm and things really turned around. For the first year ever, I made money (AND a big profit!)!!
Then, using the same 4 step process, I doubled my revenue in my 4th season. And I doubled THAT number again in my 5th season. All thanks to this simple process that not many beginning growers take seriously on their fam.
Focusing my efforts has not only led my business to be more profitable, it also has lead to a life of more ease and freedom. I am not stretched as thin and I actually enjoy finding ways to improve growing just a handful of crops, rather than tending to a list of hundreds.
Here’s my simple 4 step process to discover hidden profits on your flower farm:
Step 1: Keep detailed sales records and growing records (you can read about my record keeping process here, and get a free copy of my records sheets when you get on our email list).
Step 2: Input data for each crop from sales and growing records into your enterprise budgeting analysis spreadsheet (click here for a guide).
Step 3: Analyze the results of the enterprise analysis to identify waste.
Step 4: Eliminate any waste from the growing/selling process for each crop in order to cut production costs. If a crop turns out to be less profitable than I prefer, I root out waste in order to cut costs or may slightly raise my prices (as long as they are within fair market prices) in order to make the crop more profitable,. If a crop can not be made profitable enough with these techniques, the crop is eliminated from the line up. I only grow the most profitable crops on our farm.
By eliminating waste from your growing practices, you make your production much more efficient, and therefore more profitable. You free up time to put more effort into growing higher quality crops and delivering more value to your customers. You also save money on labor and non-essential production costs. This practice of ruthlessly rooting out waste on our farm has cut our costs dramatically, resulting in increases in our overall profit margins each season. In fact, we have doubled our revenue and profits each season for the past three years using this process (in addition to strategic growth). I am also much more focused and therefore have more energy to improve my growing skills rather than feeling spread thin.
The fantastic thing about this process is that you can systematically improve your bottom line without stressing about growing to more and more acreage (sometimes you DO have to grow more, though). This system teaches you how to make more money on your flower farm without the stress and added expense of land growth.
Let’s look at this simplified example:
We all know the formula: REVENUE - COSTS = PROFIT
Lets say hypothetically you sell 100 bunches of zinnias for $10/each from one 50’ growing bed: that totals $1,000.00 in revenue.
Now let’s say that your costs tied up in growing that crop total $900.00 (for seed, soil, soil trays, greenhouse space, propane heat, water, transplanting labor, weed management labor, irrigation, pinching labor, any sprays and labor for spraying you might use, harvest labor and harvest materials costs, etc.).
REVENUE ($1000.00) - COSTS ($900.00) = PROFIT($100.00).
You’ve made a profit of $100. An OK start, but not quite enough to keep a business afloat. So how can you make more money? Your options are:
Grow another bed of zinnias to increase your profit to $200 ($100 from each bed).
Grow one bed of zinnias more EFFICIENTLY to cut your costs, resulting in an increase in your profits.
For option #1, you must also increase your costs because you will be using more land, more labor, and more materials. But you’ll still grow two zinnia beds equaling $2,000 in revenue, with roughly $1800 in costs, equaling $200 in profit. You’ve doubled your profit! - BUT with much more effort and inputs.
REVENUE ($2,000) - COSTS ($1800) = PROFIT ($200).
For option #2, you’ve decided to cut your costs by developing a more efficient weed management system, sped up your harvesting process so you can harvest more bunches per hour, transplanted healthier plants reducing the need for a spray to prevent powdery mildew, and also sold the bunches in a bulk buckets instead of to farmers market customers, eliminating sleeves from your packaging. All of these management decisions have increased your efficiency and therefore decreased your costs by $100. Now, your formula looks like:
REVENUE ($1000.00) - COSTS ($800) = PROFIT ($200).
You’ve just achieved the same result & doubled your profit without growing A SINGLE ADDITIONAL FLOWER!!!
Like I said before, this is a SIMPLIFIED example but the theory remains the same. You can increase your profit by simply analyzing your numbers and finding ways to grow more efficiently.
Try to replicate this on your farm to increase your profits.
Types of waste that you may identify include:
Time spent moving a crop (trays) back and forth from a prop house to the field (move all trays in one trip rather than 2 or 3). Time is money, people!
Replacing hand weeding with lean weed management practices
Reducing distance a crop travels (from prop house, to field, to processing area, to cooler, to customer, etc.)
Eliminating disease or pests that decrease yields (resulting in decreased profits)
There are so many more!
By simply choosing to find ways to make crops more profitable and by replacing unprofitable crops with profitable ones, you will automatically increase your revenue and profits. I’ve managed to double my revenue every season for the past three seasons using this systematic process, along with strategically growing our production space.
Each farm is different and has its own profit centers and profit leaks : your most profitable flowers will likely not be the same as someone else in a different microclimate or location or type of market. Do your own research to find out which crops are money-makers on your farm and which-ones are money pits. The first year I performed this audit I was VERY surprised at what the actual cold, hard numbers revealed. Flowers I thought for sure were making me money (because others told me they were “so profitable!”) were actually not at all for me, while flowers that are widely criticized as always “unprofitable” made the most money for me.
Be sure to keep proper records, perform an enterprise budget analysis each winter, identify and root out waste. Give this process a try on your farm and let me know what you find out by commenting below.
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