By ANN HINCH
Assistant Editor

WEST LAFAYETTE, Ind. — If starting a farm-based business is difficult, keeping one afloat is downright tricky.

Within their first two years, nearly a third of all small businesses fail, explained Megan Bruch, marketing specialist with Tennessee’s Center for Profitable Agriculture (CPA). For four years, she has worked with Tennessee farmers and producers to help them analyze potential markets for agritourism and other farm-based businesses.

Statistically, more than half of all small businesses which put out a shingle at about the same time she started her job have folded in that four years.

There are three main things that account for these failures, Bruch explained: Lack of sufficient operating capital or cash flow, lack of management skills and experience and poor marketing – or, not knowing one’s potential customer base well enough.

Start with a plan

Knowing about customers is vital, since it’s their money a business owner will be needing to operate. This was one of Bruch’s first points for her “customers” – farmers and other agribusiness hopefuls attending and video-conferencing from several Indiana county extension offices into her agritourism marketing workshop at Purdue University on June 11.

“If you don’t get this right, the rest is really going to be off,” she said.

A business’ target audience is defined as that part of the population with a need or a want which that business can fulfill. Those people must also be willing and able to purchase the product – a Ferrari is fine to dream about, but the manufacturer only profits from those who can afford to indulge.

Agribusinesses operate on the same principles as any other small
business. For one, an owner needs to know the demographics of their intended audience: age, gender, geographical location, income, education level and what they value.

Is a lower price more important than convenience? How important is a brand name to them?

Bruch pointed out that marketing begins with a written plan.
Such a plan includes a general introduction about the business, a section on research and analysis, marketing and financial goals, strategies, a budget, a checklist for doing all this and a follow-up evaluation to measure the plan’s success.

“We want to know ourselves – the good, the bad and even the ugly,” she explained. “This is vitally important to starting a marketing plan.”

Research and analysis is asking, “Why would a customer buy from you and not from somebody else?” Bruch said.

“What is unique about your operation? Is it something about the experience? Something specific about your customer service? Is there something really neat about your location?”

This includes pricing. Proper pricing is the holy grail of being one’s own boss, since it is what allows an entrepreneur to pay the bills and turn a profit. Bruch calls it “a science and an art, all rolled into one.”

For example, if you market your product as high-quality – and it is – your price should reflect that, or it will confuse the customer. Charging $2 for your corn maze when similar facilities are charging $10 may make potential customers wonder if your operation is as good as those others.

A new business owner should also find out about the competition and what appeals to customers. For example, having a clean and neat facility is important to get return customers, but what other amenities can one offer? A playground for children? Benches for parents? Refreshments?

The longer people stay, the more they will spend, Bruch said, adding, “We don’t want them to get away with any money in their pockets, if we can help it.”

Promotions

Advertising may seem the only way to inform and remind potential customers. Bruch pointed out television ads aired in Chicago and Indianapolis may reach a lot of people, but are often not in the budget for small agribusinesses. She advised less expensive strategies for informing and reminding people of one’s business, beginning with what one can realistically spend on paid advertising.

Word of mouth is valuable for agritourism, especially among teachers and home-school groups. Many site owners have found that offering educational tours during the week gives them an additional income stream, but also, those children and teachers will tell others about good experiences, and those relatives, friends and colleagues  may patronize the business on weekends.

Coupons are also good, Bruch said, because collecting them as they are used gives a business owner a fair idea of which ones work and which don’t. She also suggested owners be involved in community causes and learn to write basic press releases and pitch story ideas to gain positive, free publicity.

One agritourism operator attending the workshop via videolink told Bruch he obtains customers’ e-mail addresses to send them newsletter updates, in which he includes a certificate for a free tomato.

It’s a small thing, but he pointed out people who already know they like the business will often return to claim their freebie and spend more.

Since it costs five to seven times more to snag a new customer than to keep an old one, Bruch endorsed this, along with keeping records of customers and asking for feedback to improve one’s business.

Of course, even “free” marketing techniques really aren’t. “Even if there’s not a financial cost (in promotion), it does cost in your time, and that’s a very valuable asset that you have. There are no free lunches,” she said.

Finally, the website question: To have or not to have? Bruch advises having at least a basic site with a couple of photos, a description, contact information and a map. These days, “If (people) find out about you and go to look for you on the web and can’t find you, may have second thoughts about you and not look any further,” she said.

“Our web guy says, if you aren’t on the web, you aren’t.”

In Indiana, the Office of Tourism Development prints annual travel and festival guides and maintains websites aimed at tourists. Development Direc-tor Brian Blackford explained festivals can have a free annual listing and agritourism owners can take advantage of special rates to be included in one or both guides. To learn more about what Indiana’s tourism professionals can do for agribusiness, contact 317-232-8881 or visit either www.visitindiana.com or www.in.gov/tourism

Purdue will produce a DVD of Bruch’s presentation; to order, contact a county extension office. She also edited Agritourism in Focus: A Guide For Tennessee Farmers, which is now available online at http://cpa.utk.edu then by clicking on “Educational Materials,” or by calling 931-486-2777.