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tonytiller

Sales Volume/Operating Expense

tonytiller
14 years ago

My first post-thanks for all your past and future info. I

started selling at farmers markets in the early 90's. I

never reached the volume I needed selling 3 days a week @

5 hrs. a day. I switched to farm stands (2) 7 days a week.

I try to watch the percentage of total sales dollar volume

to the total costs of vegetables/flowers produced or pur-

chased for resale. What does everyone expect this profit

margin to be before taxes and before the owners labor/pro-

fit? I need to get this margin reasonable in order to pay

myself. I can extend the season on both ends, but mother

nature does not always make it profitable and extending the

season does not guarantee a substantial increase in sales

volume. I now work 168 days a year to grow/purchase and sell

produce. I average $150.00 per/day in sales--somedays 0 and

some days over $1,000.00. I need to increase sales to $300.00 per/day to have a modest income. How do I do that?

Profit of $.05 per/cuke on 100,000 cukes is better than on

50,000 cukes.

tonytiller

Comments (4)

  • myfamilysfarm
    14 years ago

    Your figures are low for my market, but good for a farm stand. My farmers market sales vary from less than $100 on Tuesdays and Thursdays (the lowest days) to over $1400 on Saturdays. These figures were from last year.

    I do not grow everything and purchase a portion. When I got started in farmers marketing, a friend in the business told me that I needed to double to triple the dollar amount that I was buying, just to make ends meet. I regularly do that and more now. I started in 2000, and worked with him for about 5 years, learning as much as I could.

    This year, my family is planning on growing more and buying less. We are hoping to only buy what we can't grow.

    As far as increasing your sales, Have you tried some value-added items, like jelly and such??

    Maybe you don't need to increase sales as much if you can decrease expenses. Go thru those with a fine tooth comb. I have found that more and more of my customers are bringing their own bags. True, it's not alot of expenses, but instead of buying 10-20 boxes of bags per year, last year I only bought 4-5. This saved my about $50/year.

    I re-use everything I can, and only buy the barest necessarities.

    I realize my experiences with a farmers market will not compare with a farm stand experience. I tried the farm stand and found that I made SO much MORE at the farmers market. My market is also a 3 day/week market.

  • prmsdlndfrm
    14 years ago

    Your making the most common mistake made by buisness owners. I thank my dad for making me take marketing and biz courses in both highschool and college.
    You need to pay yourself, that is an expense. You are not just a biz owner, but a laborer and a salesmen.
    What would you pay someone for picking your crop, what would you pay someone for manning the stand. YOU do not want minimum wage labor, remember you get what you pay for, in my neck of the woods you dont start getting decent help till you reach the equivelent of $10 per hour, or like I do, I pay piecework, or commision.

    Example: Expenses: plow the ground
    fuel $10
    oils $15
    maintenance $15
    Depreciation $20
    Driver 2 hours $20
    ------
    total plowing expenses $80

    see your the driver thats an expense. You need to record all expenses, then break that down to come up with a price for your crop. Pricing is not, and I know it works for some, but not exactly the best way, pricing is not, whats Joe Blow charging. You should set your prices to whats incured during production, then add a percentage on top of that. And your labor is a very important part of production. I sell mainly wholesale, but I have a firm grasp on production cost and I use that in negotiations. Its boring tedious work, but its work that will keep you in buisness.
    josh

  • tonytiller
    Original Author
    14 years ago

    Thanks familyfarm. For me sales volume was the most import-ant factor whether selling at the farmers market or now at
    my farm stands. It really means that if I need $15,000.00
    profit a year to be modestly successful I will need to have
    more than, lets say $12,000.00 in total sales volume.

    In 2009 I was blessed with $23,699.29 in total sales. How-
    ever after costs and hired labor($3,487.25) I will not have
    $15,000.00 or even $10,000.00 left. I am very grateful for
    what we have and our good sales increase,s over the years.

    I never have difficulty providing the quantity of produce
    needed from my available 5 acres or the amish auctions. I
    find it very challenging to grow produce at a lower cost than the costs to purchase produce of equal quality. I re-
    fuse to sell poor quality produce, mine or someone else's.

    My looks and my ss income is whats getting me by. I still donot have a real tractor and rotovator. I do have a 1998
    8 H.P. DR. rototiller and a 2008 DR. rotohog with a blown
    engine. I have a 24 H.P.(smoking) craftsman as a puller.
    I have the hardest working field hand in this area.

    To lower costs I will not be hiring back any workers in 2010. I will not be buying equipment except for an engine.
    Plastic bags are largely from recycled customer shopping bags. Transportation costs is hard to control. My supplies
    fertilizer and bug spray cannot be reduced from 2009.

    I have never used media advertising, I will this year up to $400.00 per/month. I need to give it one more good try
    to increase my total sales volume for my benefit. I still
    have not saturated the kitchen tables in my area with my fresh produce. I am not in a high society area and I have
    played with pricing to the limit. (cukes-spring 50 cents+/
    summer 3+/$1.00 etc.)

  • myfamilysfarm
    14 years ago

    Your sales were just alittle less than mine last year. Plus I have market fees of almost $600 per year and the gas to go to market 3x26 at 30 miles. I also have a hard time figuring out if it is better financially to grow or buy. One year another vendor and I competed, she grew everything and I bought about 1/2. I think we both came out the same. She had to pay for labor and I had to pay for produce. One year, she got flooded out and I was still in business. I don't buy too much from any 1 grower, that's the reason I shop the Amish auction in my area, even if it's 50 miles away one way.

    We got lucky when we found this tractor, only paid $900 with another $300 in updating and doing repairs that had needed for several years. We got a good disc for $200, from a friend that was going to send it to the scrap yard. We paid scrap price for it.

    We have several strawberries that we are thinking about opening as a u-pick. Also have been considering a tomato u-pick. Still in the thinking stage. The nearest u-pick strawberry patch closed year before last.

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