Cha-Ching! Homestead MBA – an indepth evaluation of an online homestead business – part 2

This post is a  joint-post with Robin and Chris Dalziel, of Joybilee Farm.

Recently I visited a new blog,  through one of my yahoo! groups.  It was a farm blog with a website, raising farm grown mohair, wool, and French angora bunnies.  It sounded like our farm, in the write up, so I was curious about what she wrote on her blog and how she was making a living on her farm.  Sometimes its helpful when you are starting out to get an indepth evaluation of your strategies to help you avoid costly mistakes and improve your bottom line.  Its what I wish I could have had at the beginning.  Robin and I together, wrote a 2 part, public evaluation of this new homestead business, and I invite you to listen in and learn both from the evaluation and from some of our own mistakes that we share on the journey.

Our combined expertise:

We come to this with 7 years of full time homesteading and making a living from our homestead, with the credentials of an MBA degree in business, an accounting designation (CGA) and a financial planning designation (CFP, now retired), on Robin’s side and on Chris’ side an Honours BA in English Lit and writing plus post graduate counselling and psych courses, and 12 plus years experience teaching and writing.

Here is part two of a two part homestead business evaluation on a new homestead blog (con’t from part 1):

10.  You have a presence on social media.

This is a good start.  Are you utilizing your Facebook  presence to get the most leverage from your time spent there?  Expect to spend 2 hours a week on each social media platform that you engage in.  Ideally you want to blog once a week, send out a helpful message to your audience on Facebook at least once a day, and Tweet a helpful message to your audience or share a link on Twitter at least 3 times a day.  That’s hard to do on Twitter, since it frequently experiences volume outages.  The purpose of social media is to engage in a conversation.  You do this through sharing your ideas through blogging, as well as sharing links that support your ideas through other social media platforms.  Before you add on another social media platform to your marketing mix, be sure that you can invest the two hours a week necessary to make it a success and contribute benefit of your audience.  You will find that although there is some cross-over between the different social media platforms, much of the audience is unique to each platform.  When you add a platform, you add audience for what you have to say.

11. Your social media platforms are not linked through your webpage.

In order to “like” your Facebook page, I have to go to Facebook and type your farm name into the Facebook search engine and find you and then click “like”.  How many of your readers are going to go through this effort?  Looking at your Facebook likes (7 at this writing) will give you an answer to this question.  Instead, use social media linked buttons on the top of your webpage to make it easier for people to link to your social media hang-outs and follow you.  I did find a Facebook link at the bottom of your page, but it wasn’t obvious that the link was to Facebook.  Adding Facebook’s own code for your facebook page to your website’s home page will give you a better return on this link.  You can pick up the code on your Facebook page and then add the code in the HTML part of your website — in a “text box” widget on your side bar or at the bottom of your home page.

And then post links and tweets that reward people for giving you permission to ask for their attention.  Link to things your audience values.  Give them a shout out to thank them for their attention.  Give them value for their time.  For instance, one of your farm products is handspun yarn.  Offer links to free knitting patterns that will be enhanced by using your yarns — stunning wrist warmers, funky hats, for instance.  You don’t have to create the patterns, but do evaluate them for feasibility before you post the link.  Or let your audience decide how to use your yarn by posting a link to a knitting e-zine, or pattern repository.  Balance posting personal status updates to your business account with helpful links and status updates that are aimed at making your customer’s lives better.

12.  Are you hanging out online where your audience hangs out?

If you are frequenting the sites that will help you build your own business but not frequenting places that your audience hangs out, and sharing there, you might need to tweek your strategy.  In order to become an authority in your niche and be the place people go to when they need what you have to offer, you need to hang out where your audience is, and contribute helpful information to the discussion.  Work on this every day and your authority will build over time.  Post comments on other people’s blogs that fit into your niche, offering helpful ideas in the discussion, and build your brand with your helpfulness.  Make your motto “Be as helpful as possible.” and it will transform you online brand.

13.  Your pricing strategy is not sustainable

Your products are time consuming to produce and you aren’t changing enough to compensate you even minimum wage for your time.  While it might make you sales initially, it is a strategy that is not sustainable.  When you trade your time for money, you need to understand that time is the most valuable commodity that you have.  You can always make more money but you can’t make more time.  If you price your time below the cost of minimum wage, you won’t be able to feed your family or pay your bills.  If you are selling a “commodity” then the commodity prices rule — you can’t sell generic yarn and expect to get a premium price that will actually cover all the costs of shearing, processing, and maintaining the animal over the year it takes to grow the fleece.  But if you have a distinctive difference — you create a yarn that can’t be purchased anywhere else, then you can ask a premium for your time.  Create a quality product that is essentially you, and then build an audience for that product and you can ask a premium for your work.  Continue to price your time below minimum wage and you will soon give up in resentment and frustration. And don’t forget to price both a retail and wholesale tier into your price.  You need to cover the costs of your overhead, and materials as well as your time to sell.  Many farm businesses make this mistake — we did when we started.  When a store loves your product and wants to carry it on consignment or buy it wholesale, you need to figure in these costs or you will be losing money.

We made this mistake last winter with our goat’s milk soap.  We had a wholesale customer contact us and purchase $400 worth of soap at a wholesale price.  We warned them that shipping was quite high to mail from Canada to the US at that weight and that the customer is responsible for the costs of shipping.  They were in a hurry to get the soap because they had a sale coming.  Over the winter our soap oils doubled in price, but we hadn’t increased our retail prices.  We hadn’t taken the time to figure the real “cost of goods sold”.  It was a large order and we filled it, really happy for the sale in the middle of the early Spring slump.   But after the parcel was mailed, the customer complained about the high cost of shipping, insisting that we hadn’t properly informed them of the costs and demanding that we cover the cost of shipping.  Our markup on our wholesale was too little — and in fact on the Gardener’s soap we had priced it below the actual cost of materials.  In negotiations with the customer, we reached a 50/50 split compromise over the shipping cost.  The customer was happy, but it meant that Joybilee Farm not only lost money on the sale, but we didn’t recover the cost of materials on some of our product.  It was a bitter lesson, coming during the winter slump.  The loss took food off of our table, it was that serious.   When you are in business you need a really good idea of the actual costs to you in both time and materials of every item that you sell.  You also need to figure in your overhead, your website hosting, internet connection, computer and office  equipment replacement costs, cameras and every other item that you need to blog and run your business.  And you need to ensure that your price setting is reasonable for the investment that you’ve made.

Your business needs to be sustainable.  If your business plan isn’t sustainable you will be looking for another way to support your family and your livestock.

14.  There is a donation button on the website homepage

This is one way to monetize a site.  Does it actually support your branding strategy and tell your potential audience what your dreams and goals are?

“A donation would contribute to the success of a family, the well-being of beautiful animals, the local economy and would also help to ensure improved land for future generations…this would be greatly appreciated.”

Is the donation request part of an integrated business plan or was it just thrown up there on a whim?  On a business website your main monetization strategy should be marketing your own products .   There were only 11 products listed in your shop– all one of a kind.  My guess is that all your products are not listed — it takes a lot of time to make a shopping cart. Make it a priority to get all your products on line.  You mention an etsy store but there was no link on your website to your etsy store.  You need to link to the other places online where your work is sold, through your website.  The links count in your search engine optimization and the more that you can get the better.

15.  You website lacks an “About Us” page and a “Contact us” page: 

In order to connect with you, your audience wants to know who you are, where you live, and they want to hear your story.  At the very least they want to know what you first name is.  And they want to know, when you ask them to support your local economy, what “local” means.  You don’t have to get super personal — don’t post pictures of your kids or tell people when you won’t be home — but you can give a few details that will make the connection with your audience.  These connections will help you build your “tribe” and create authority in your niche.

16:  You are losing opportunities because you don’t have a place for people to give you permission to contact them again

There are no social sharing buttons on your sight to allow people to subscribe to your RSS feeds when you post a blog update.  This means that when a visitor comes to your site, they visit once.   If that visitor isn’t your Mom or your neighbour you lose the opportunity to talk to them again.  By allowing people to subscribe to your feed you receive permission to contact them again.  Permission is a very valuable asset that you don’t want to squander.

17.  You don’t have a newsletter and you aren’t collecting an email contact list.

You are missing an important opportunity.  Getting a newsletter sign-up and an email contact list is invaluable when you have an online presence for your business.  When people give you permission to contact them by email, it says they trust you, what you are saying is important to them or helps them, and they want to hear from you again.  Every day that you don’t have an email sign up you lose an opportunity.  Consider signing up for Aweber or MailChimp to put out a regular email newsletter, and collect permissions.  I made this mistake when I started out — it was 6 years after I created our first website before I started to collect email addresses from people that found our website helpful.  When I first started out I was advised to collect email sign-ups right away, and I was told that if I didn’t I would regret it.  It was good advise that I failed to follow.  And I do regret that missed opportunity.  It was always on my gonna list.  Mailchimp is a free email subscription service that has a newsletter creation platform, as well as a secure way to collect and store email addresses, to protect privacy.   You can sign up for my email newsletter using the box at the right, near the top of the page and while you are there check out what mail chimp has to offer you as an online business.

18.  Do you have a business plan for your homestead business that states your income and expense goals and gives you a plan for how you are going to get there? 

If you don’t have one yet, take some time in December, while the farm work is quieter, to write up a business plan.  Set some income goals and figure out how you will meet those goals.  How many pounds of roving do you have to card, or how many skeins of yarn do you need to spin and market, or how many pumpkins will you sell to meet those goals.  Writing a business plan will help  you determine if your business is sustainable or if you need to tweak it to make it work.  Lack of a business plan is one of the biggest reasons that homestead businesses fail.  Start by writing your business plan and then evaluate it regularly — at least quarterly — and make adjustments based on the income streams that you are developing.

Homestead businesses can be viable, sustainable in the long term.  With some planning and regular check ups, with the willingness to tweak it to make it work, you can live your dreams of doing what you love, where you want to live.  But begin by taking a hard, honest look at what you are doing and see where you can make improvements.  At Joybilee Farm we do this regularly.  I’m not saying we’ve arrived.  There’s lots of work we still need to do to have the farm and website that we want and to be sustainable in the long term.  Building a business is like having a child and watching it grow.  You need to make adjustments as your business matures and maybe throw out the ill fitting clothes and get something that fits better.  That’s what a business plan is for — to see what fits and what’s been outgrown.

Those of you listening in on the online business evaluation, and that made it all the way to the end, thanks for reading.  I hope you gained some tips to make your own homestead business a success.  I’ll be doing more of these in the future.  If you want to participate in a public evaluation of your homestead business, leave a comment or send me an email.

If you want a private consultation, we do that, too, and we are happy to help you make your business sustainable.

To see part 1:  Cha-Ching!  Homestead MBA — an indepth evaluation of an online homestead business.