Is This Why Your Farm or Business Is Failing?

Perhaps the small, rural town where I grew up claimed this as a joke more than a fact, but “fact” was Tunkhannock, PA had more cows than people.  Beautiful, quaint dairy farms scattered throughout the Endless Mountains wove a strong culture of hard work throughout the community.  As much as I appreciated those farms and the people work worked them, I must admit I hated the work itself.  Heck, one of the main reasons I went to college was to escape the prospect of having to work on one!  My brother, on the other hand, loved farm work so much he went on to earn a PhD from Penn State’s School of Agriculture.  But no matter where one ranks manure spreading on the fun scale, we can all agree that farming is part of what makes America America.

Today, however, the small, family-owned dairy farm is going the way of the Blockbuster Video Store.  Farm Aid reports that since 1970, more than 90% of U.S. dairy farms have closed shop.  In Wisconsin and Minnesota, dairy farms are now closing at a rate of two per week.  Why?

Follow the news and you’ll see blame cast at oversupply, poor government policies, a sweeping anti-dairy movement, even the Canadians’ crooked trade policies (really?).  But Jim Valent, a friend of mine whose family operates one of New York State’s most historic dairy farms, says it best.  “The majority of dairy farmers have a flawed business plan,” he explains.  “Their approach is, ‘We’ll make it and someone else will sell it.’”

For decades, American dairy farmers have tended to their farms, milked their cows, and then waited for a tractor trailer to swing by and haul their product of to…  well, who knows where.  Once that truck pulls out of the farmer’s driveway, Farmer Brown turns around and goes back to producing more milk.  The actual business of where the milk goes, into which products it’s added, even the price for which it’s sold at your grocery store is left to third party traders and government agencies.  And from there things get messy.  Suffice to say Farmer Brown and his dairy brethren are not thriving due to the selfless, savvy negotiations and policies that Uncle Sam & Co. have devised.

As I considered Jim Valent’s insight into the floundering dairy industry it struck me that so many other creative, hardworking people distance themselves from the sales process and therefore find themselves in a similar boat.  The artist who gives away 40% of her painting’s value to a dealer.  The coffee farmer who sells his crop for pennies on the dollar to a commodities trader.  Even that poor sap in Russia who invented the Rubik’s cube.  I understand that sales is a complicated, stressful business but leave that part of your livelihood to someone else and you’re riding in the back seat of someone else’s car.

Over the course of my professional life here are some of the ways my own employers have taken the “easy” path to sales and the outcomes of those journeys:

  • A software company that decided to scale back direct sales and replace that with channel partners, i.e. bigger software companies who promised to sell our product as a bolt-on to their own.  The result?  Sales plummeted more than 60%.
  • A training company that in lieu of selling direct turned sales over to a third party booking agency.  The result?  A big fat $0.
  • A tech company that in lieu of selling direct turned sales over to a network of outside distributors.  The result?  You guessed it, zilch.

Certainly there are exceptions.  I’m sure the genius who invented the Thighmaster managed to bank a little coin along with the infomercial company that promoted it.  But c’mon, do you really want to be the Thighmaster guy who has no choice but to sit back and pray that some infomercial company can sell your product for you?

The good news is for many there’s a way out of this low profit death spiral.  Back to Jim Valent: “Even at a time when dairy farms are dropping like flies, some are doing very well.  These farmers are selling direct.  Farm fresh cheese, yogurt, ice cream, and milk straight from their farm to their neighbors’ doors.”

Whether you’re a farmer bypassing the grocery store network or Elon Musk bypassing the car dealer network, the premise is the same.  Stop counting on someone else to sell what you worked so hard to produce.  Do you really think a third party agency will ever share your passion and conviction for the product you created?

Is there a beautiful family farm in your community?  Imagine that one day your local Farmer Brown knocks on your door and says, “I stopped by to see if you’d be interested in subscribing to our new farm-to-table service.  Not only will you save yourself a trip to the grocery store but you’ll save my family farm, which is currently on the brink of getting paved over to make room for an Ollie’s Discount Dollar Store.” 
Which do you prefer, kind reader, farm fresh products from your neighbor’s beautiful farm or the breathtaking view of a next-door Ollie’s?

For this direct sale model to work two things have to happen.  One, you need to say yes to Farmer Brown’s offer.  The other, which I believe is far more unlikely, is that Farmer Brown needs to step beyond his comfort zone – the boundaries of his farm – and come knock on your door.  And for many farmers, craftsmen, artists, researchers,  and engineers this is more terrifying than the prospect of giving away 30% to 50%+ of their earnings to a sales mercenary.

If your sales model depends upon resellers, dealers, retailers, or distributors to push your product, reflect for a moment upon what’s happening to America’s dairy farms.  What risks do you, like these farms, face by distancing yourself from your product’s end users?  If you were to form a strong relationship with your end users and net higher profit margins from every unit you produce, how would that benefit you?  Other than fear of rejection, what’s holding you back from, just like Farmer Brown, crossing that scary border between your farm, workshop, studio, or factory and entering the real world where your customers are?

If you’re good at what you do, passionate about it, and convinced you can bring value to others, pick up the phone.  Knock on a few doors.  (Notice I did not say, “Build a website” or “post stuff on social media.”  Heck, I’m not even saying, “Set up a table at the trade show.”  Those passive efforts may support your direct sales efforts but you gotta get out there and grind down some shoe leather!  Dial the phone.  Canvas the town.  Knock on doors.)  You have more supporters out there than you realize.  We want to know you; we want to support you.  But we’re not going to step forward and speak with our wallets until you step outside the shadows of the broker or government agency on whom you’ve grown dependent.