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A Double-Dog-Dare: “What do you measure?”

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That was the first question Dr. Eric Sims asked me when we sat down to lunch.  “What do you measure?”

Eric is a wine business consultants in the Napa Valley, and one of the finest financial minds I’ve ever met. As a professor, he taught a piece of my MBA program. I later asked him to advise on activities at Six Sigma Ranch and Winery.

“Well,” was my answer, “we measure sales. And we count the guests in the tasting room. What else is there?” The professor continued relentlessly: “And how often do you talk about those numbers with the team?”

I soon discovered where the man was going with his questioning: Whatever gets measured (and talked about,) that’s what grows.

The Tractor Supply Company, a well-known supplier of farming equipment, tracks monthly sales daily on a graph in the break room. If they hit the monthly goal, everyone gets a bonus. If they don’t, the bonus goes away. You can bet there are no unattended customers on the sales floor near the end of the month.

We now have one or two key metrics for each job at Six Sigma Ranch. We talk about sales and club memberships at our weekly meeting. We track things like “average membership duration” and “annual yield per acre.” These aren’t complicated, but they help everyone keep a clear focus.

If you aren’t yet sold on metrics, I dare you to try something: Pick a metric. Try sales, customer visits or even your own weight. Review it every morning for a month. Then tell us what happened!

Christian

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Choosing Products (that Create Profit)

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A friend asked this week about picking products that balance customer needs with his own farming interests. We don’t have all the answers, but we’re happy to take a stab at it!

Here are 6 things to consider:

Grow something you like! I would make a terrible lettuce farmer. I think it’s boring. For that reason, I have no business growing lettuce! Picking a product you enjoy helps you to produce it well, sell it with enthusiasm, and enjoy the leftovers.

Grow something people eat. This is obvious, but often missed. Don’t start emu eggs or badger-hair brushes unless you have a strong conviction about them. Instead, pick something people are already buying and create a brand and quality that outperforms existing options. Hint: Check out your local grocery store to see what gets shelf space. If there is a giant cooler full of eggs, they’re likely a hot item. If there is no section for pomegranates, they’re likely less popular.

Consider cash flow. Some products sell seasonally (think turkeys), while others grow seasonally. Obviously, a turkey farmer has to plan for the influx of cash during Thanksgiving to last the rest of the year, while an egg farmer has to acknowledge that chickens produce less in the winter. Financial discipline, or a mix of seasonal products, will keep seasonality from causing problems.

Consider your climate. Merino wool sheep hate hot weather (for obvious reasons) while California grows terrible coffee. So, if you’re settled on a location, pick crops or livestock that fit there. Or, if you’re settled on a product, move to where it will thrive.

Consider perishability. Before planning a business around a product, remember that some products have a great shelf life (think honey) while others don’t (think lettuce). While neither is necessarily better, it’s worth keeping in mind, to make sure your product fits your schedule and temperament.

Consider consumption rates. At Six Sigma Ranch, we sell beef by the quarter (100 lbs.) because people eat a lot of beef. For that reason, we can do a lot of business with a few hundred customers. If we were selling only olive oil, we would need to acquire and maintain more customers to hit the same sales numbers.

Christian

Ps. We love writing on topics from blog guests, so keep them coming!

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Best of 2014

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Thank you all for an AWESOME first year at YouHaveThreeCows.com!

Here are the top 3 most popular topics from 2014, in case you missed one:

1. “If you start a business and take out a loan, you’re a moron.” –  Mark Cuban

2. Trading in the $4,425,925 Pick-Up Truck

3.  Marriage, Work and My Personality Issues

Finally, do you have any topics you would like to see in 2015? Anything related to the business of agriculture (or, apparently, marriage and personality issues =) is fair game.  Shoot us an email or a comment below, and we will cover them in this new year.

Rachel and Christian

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