Jan 24, 2016

Adventures of a business start-up. Final Entry # 3

Thank you for being here with me today, and listening to my story. My name is Kerry Beiter; I’m an organic farmer and small business owner. I own & operate Beiter & Son’s Farm, a certified organic goat farm in Wales, NY. I also own and operate a soap & skincare business I branded as Alpine Made. What I essentially do is pay our farm for the organic milk we produce and then use this as a raw material to create our luxurious soaps and skincare products.

Before I continue with the details on how I make money, I’d like to back track to a few years ago. In the beginning in 2008, I bought my first few goats and had to finish building a 300 square foot barn just to house them. I had no idea that farming for a living was in my near future, I only imagined raising a couple of goats as pets and milking them to make cheese and feed milk to my family. I soon loved the goat farming lifestyle so much that I began thinking of making cheese to sell and growing my herd to accommodate the milk requirements. I had been accustomed to raising my few goats organically, without the use of synthetic dewormers and medicines to keep them healthy. Which soon led me to the realization that becoming certified organic would give me a marketing edge in selling my cheese. At that time the US Dept of Ag was offering grant money to farms transitioning over to organic certification. I jumped on this opportunity and applied and low and behold received a grant to improve our farm by adding permanent pasture, adding watering systems, & solar panels to operate water pumps and electric fencing. I applied for certification in 2009 and became organic in 2010. Certification was indeed worth the effort. I soon found out we were one of 37 certified organic goat dairy farms in the country.

I thought that producing organic goat milk to make cheese and yogurt was going to enter me into a niche market that no one in NYS had attempted before. So over the course of a year, through research, I realized that to build a state approved creamery operation was out of my reach. I had watched the progress of a nearby goat dairy farm doing exactly what I had intended, with two men partnering dedicating their entire days to their farm & creamery’s success. With two very small children at home and a husband who worked full-time outside of the farm, I knew it would be very difficult for me to make cheese and sell it. I still underwent organic certification anyway. However the certification part was easy, even with yearly paperwork and inspections. The hard part was in figuring out how to raise the enormous capital needed to build a creamery, costing easily over $75K initially.

At that point, I literally had no idea how to make a living at farming, but was unwilling to give up after how far I had already come. I turned to the numerous business-mentoring organizations seeking help. I became a client with the Small Business Development Center at Buffalo State College. I also sought a mentorship opportunity with SCORE, a national organization of retired executives that volunteer their time to mentor start up businesses. I joined the 8-week Straight Talk Series in 2011 and attended all the workshops before settling into my mentor/mentee relationships with SCORE & SBDC. My Mentors helped me with my business plan, which changed direction so many times in these early years. It was a very intensive process but very important at that point. I can’t recall how many modifications I
made to my business plan, but it was a lot. I became frustrated for sure, but I never gave up! I knew I wanted to farm, and I knew I’d have to figure out how to support the farm. I needed to sell either a raw resource I produced, like milk, or create a value added product to sell at markets, promoting it non-stop until the product spoke for itself. It had to be a product line people loved and wanted to consume regularly.

Another major change to my business plan was that I did not want to place my family in debt for life, through the construction of an expensive creamery operation. At the time I was a stay at home Mom, having quit a full time position with the USDA, and supported by my husband. We had school loans and a mortgage to pay, and no bank would lend to us at that point. We eventually got a personal line of credit that I used to grow the farm. I used it to build farm infrastructure, including buying a much needed tractor. We started building solid credit, although it was personal credit, it was important. I also took a part time job at a local horse farm. I learned how to run a farm. And I was providing extra income to offset our farm expenses. Soon I developed an idea to use my organic goat milk to produce a value added product other than cheese. I had experimented with soap making in the past, I had two Biology college degrees, why not use some of my chemistry knowledge to make traditional soap with our milk?

As an aside, I knew my organic goat milk was unique in that other companies producing goat milk soaps and skincare did not have access to this raw resource. I soon got the attention of a well-known name in the industry; who’s CEO contacted me to produce a line of organic goat milk soaps under their brand name. At the time it seemed like a great idea until the wholesale price they offered me was half of my cost to produce the organic soap itself. I would’ve quickly gone under even with the consistent cash flow coming in from their substantial orders. They wanted over 24K soaps produced per year. I politely declined and pushed through. I had the confidence and perseverance to get through the lean years, knowing I had entered a niche market, could produce a product no one else had, and that was in demand! After all, this famous company had already demonstrated this through their online sales of goat milk soap and cheese. I knew I could create a profitable business over time.

So, I began soap production to meet quantities that would support multiple retail markets. I had applied to a handful of farmer’s markets that accepted me because of my organic status. No one had organic soap and organic certification was not something many farms had, even just a few years ago. Today you will find more and more local farms certified organic or at least transitioning into organic status. So, I had my organic milk I used as a marketing strategy, but I also had something else. I created a goat milk soap recipe that contained 38% milk, using no water in the recipe whatsoever. This is how I made MY product stand out above the rest. By claiming my soap contained 4 times the amount of milk by industry standards I showed how my soap could work therapeutically on the skin. I also talked about the benefits of goat’s milk for the skin. But the very high concentration of milk in each bar I produced was what sold and resold my product. That became my number one marketing tool. After handing out thousands of samples at my markets initially, getting people to try the soap, I was able to build my customer base. People used my soap, saw that it worked to sooth their skin and heal it, and eventually became repeat, regular customers. People noticed the benefits of my soap over other handcrafted soap. They noticed their skin feeling and looking better, and then wanted more.

My attention then turned to sales strategies, again modifying my business plan. I asked myself what number of Farmer’s Markets could I physically cover on a weekly basis, and what other sales strategies were available to me. Do I try to sell my soap wholesale? Or should I spend my time developing a state of the art website that was user friendly and well advertised on a national scale. I ended up doing both. I hired a website designer and manager who also took all of my product pictures. My website looked fabulous and very professional, and was well worth the investment. Initially, I tried creating my own website using a popular website building site. This worked for a while, but I wanted a polished appearance for where I was heading with my sales. I turned to my business mentors with SBDC and SCORE for advice. My approach ended up being a mix of all the above; local retail markets, online web sales that grew over time, as well as wholesale. My goal was to get the word out about my soap, even on a national scale. My web sales constituted almost a quarter of all monthly sales, while my wholesale accounts made up approximately 15%. I wanted to increase wholesale to around 30% of my total sales; which is our goal for 2016. Since 2012, I had doubled my gross sales each year and as sales increased over time, I was able to secure more personal financing to build a heated workshop where I could produce all of my products and store raw materials and inventory. I installed a full kitchen with stainless steel sinks and equipment. It was expensive but very important to expand, especially once I began hiring.

Soon my customers were asking for more soap and a line of organic milk infused, natural skincare. When will you develop a cream and a lotion I had been asked many times. 2014 came and went and with the advice of my mentors I hired my first full time employee in February of 2015. In 2015 my employee Amy and I doubled gross sales again. This was crucial! An important piece of advice given to me that I’ll never forget is that when hiring your first employee, their contributions absolutely need to generate enough revenue to pay for themselves. So, once the initial training period is over for your employee, you as a business owner should not have to borrow money to meet payroll. Also, another question I had before I hired was, “when would I know was the absolute right time to hire?” I found this tricky, I knew I couldn’t physically work any harder than I was to increase my sales, but could I afford to hire? The answer became simple, if I didn’t hire someone then Alpine Made wouldn’t grow! There was a point where I knew I couldn’t generate any more revenue myself. To grow your business, you need two basic things, to produce more goods and sell them, and to increase your yields (increase pricing to adequately cover costs and contribute to profits). I had increased my retail pricing for the first time in four years, at the end of 2015. I now had to increase production and sell more product.

Back to my story. Once I understood my business plan goals (selling soap infused with my organic milk), I started thinking how nice it’d be to partner with someone. To ensure a quicker start and quicker gains through the efforts of two people who’d share the labor and costs 50/50 between us. My goal was to delay the need to hire an employee; a luxury I felt at the time would’ve strained the fiscal health of my business. Thus, I had hoped that my partner and I would forgo a salary and place all profit back into growing infrastructure. However, it became impossible to find that partner. I was able to forgo a salary because I had a spouse working full time and supporting my family and I. It was a luxury for sure. The reality is, most people who start their own businesses need to keep their day jobs until they get to a point of affording to either hire or pay themselves to work more. Mentors have told me the longer starts ups can delay paying themselves the longer they can take profit and place it back into their business to grow it. I never have paid myself nor plan to to pay myself for another few years so that I can continue to hire more full time staff, which will translate to increased sales leading to year-end profit. If Alpine Made suddenly shows strong year-end profit, I will then opt for an owner’s draw, and will immediately place it towards paying down principle on my business loans.

So, back to searching for a partner. I never found a person to partner with. I did in fact find a fulltime employee who shared my vision, shared many of the same principles I started my company with. Amy was also looking for change in her life having quit her teaching job to work in the farming sector. She never looked back. She interned at a farm near us for a year producing vegetables, meats and eggs and selling them locally at markets and to restaurants. Amy, after pursuing years of college education, working in a school for 7 years, realized her creativity and passion for work lay elsewhere. Amy’s passion is in having total creative power, and I realized this so I put her to work on R&D of new products at Alpine Made. I had no time to create new products. I was tasked with the care of my farm, producing substantial inventory for 35 soaps while marketing it all by myself. I was at full capacity. Amy came on and was on fire, and loving her Research & Development of new skincare in our soap lab. After only a few months she created a fascinating and therapeutic line of milk infused skincare products for Alpine Made. Amy also can see becoming an equity owner at some point in the future. This opportunity, which I’m open to providing my employees who share my vision and passion, will keep our business family strong. It’s a way to not just provide someone with just a paycheck, especially someone who’s willing to strategically grow Alpine Made. It’s a great opportunity to give people to build something creative and new, and be a fully invested party in that process.

Thanks to many strong decisions and mistakes made along the way, Alpine Made is a company worth noting. We (currently just two women) have now doubled Alpine Made’s product line to around 60 products. We’ve doubled our sales in 2015. We are in 16 different stores mostly within WNY but a few in the NYC area as well. We have more then 500 nationwide online customers that continue to place orders regularly. We received our very first business loan in 2015 from the USDA to build a bigger barn and a new state of the art milk house. And we won’t stop there. In 2016, we’re open to any new opportunities. The sky is the limit. Last week we began the process of applying to Whole Foods under a specialized process through their New Vendor Department. We spent most of 2015 getting our product labels store ready so that when a larger store called on us, we would be able to accommodate orders immediately. We even plan to construct more work-space at our workshop, hire and train new employees all while keeping the current business flow going at our markets and events. I have no doubt this growth will happen, it’s best to have an action plan in place for when the larger opportunities present themselves. But, don’t keep asking when it will happen, take a deep breath, and don’t question the time line. It will happen when it’s ready to happen is my motto. I also truly believe that if you LOVE what you do, success will follow! And never ever chase the money, it will eventually come with a job well done.
-Kerry