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Business Model Canvas: Inner Loop Farm

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Sam Tischler

on 25 January 2015

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Transcript of Business Model Canvas: Inner Loop Farm

Sam Tischler
Inner Loop Farm
1
9
2014
2
Low Income Residents
Localvores
Restaurants
Goods: Affordable high quality produce
Experience: Agricultural education & skills
City of Rochester
Fixed Costs:
Variable Costs:
Land- This cost will be dependent upon the size plot that is chosen. Vacant lots can run from $400 to $1000 per parcel. Taxes on vacant lots can run between 1K to 3K per year. Once a lot has been chosen then, depending upon the ownership arrangement, costs will be relatively fixed.
Infrastructure- This cost will also depend on the plot that is chosen. If their is a vacant home on the property then the potential to convert it into a storage/processing/refrigeration space is high. Homes on vacant lots also indicate that utilities already exist there. Relative costs of infrastructure include:
Raised bed- roughly $35 to $50/bed including soil
Greenhouse- 14' x 96' run about $2000
Small Storage Shed- $1k to $3K
Used Tractor - $3k to $5K
Irrigation equipment - $1K to $2K
Inputs- This cost will be relatively fixed. The cost of seed, fertilizer, building materials, vending accoutrements, and others inputs could arguable run $5K plus per season
Labor- The first season will likely be exclusively run by me, but my cost of living external to the farm averages out to be $25K/year
A rough estimate of fixed costs for the first year, not including my salary, would run in the $10K to $15K range if all infrastructure was purchased the first year and the farm was built and operated exclusively by me.
Other fixed costs might include a website designer, an accountant, and potentially a lawyer.
Marketing- The cost of marketing will ultimately be determined by the amount of time available as well as the availability of funds. However, this might be an aspect of the farm that could be 'farmed' out to an interested customer in exchange for product.
Utilities- Utility costs will most likely fluctuate with the season as well as the intensity of production in times when the availability of sunlight is limited e.g. winter. I would estimate that monthly utility bills, including gasoline, would run an average of $400/month
Consumables- The cost of consumable materials e.g. daily use items will also fluctuate with the seasons. Items might include packaging, safety equipment, sunscreen, business cards, containers, etc. I would estimate that monthly consumable costs would run an average of $500 to $1000/month.
Vending Fees- Vending fees will mostly likely be a one time fee at the beginning of season but each market will have different costs. This will also depend on the number of markets participated in by the farm. A seasonal estimate might be in the $1K to $2K range.
Based upon the averages above, a rough estimate of seasonal variable costs would come in around $8K to $10K/season
Personal Assistance
Communities

Direct human interaction will be the primary means of consumer interface
Direct to consumer marketing and sales will facilitate this relationship
One on one interaction will personalize customer experience (WOMM)
A huge emphasis would need to placed on building customer relationships/loyalty
Issues to consider:
Urban placement of farm will be key differentiating mechanism
Appearance of both farm and employees will help to convey legitimacy of business -dress code, signage, cleanliness of property

On Farm Sales
Asset Sale
Alternative revenue streams
City of Rochester
NOFA-NY
Staach, Inc.
Financial investment
Reputability
Customer networks
Farm Service Agency
Beginning Farmers and Ranchers Loan
Pathstone
Rochester based not-for-profit that offers microfinancing to small farmers and business owners
Off Farm Sales
Other Considerations
Population in Rochester has steadily declined from 330,000 in 1950 to a projected 198,300 in 2014
20% Surplus in housing city wide
Estimated 300,000 people out 1.11 million in six county region are food insecure
Opportunity exists to revitalize economically depressed neighborhoods and reduce urban food insecurity
Contact: Mitch Gruber (FoodlinkNY)
Growing number of Rochester residents are seeking out locally produced goods.
Over 300 community gardens throughout city in 2013
Over 35 farmer's markets throughout city in 2014
More than 20 farms offering CSA programs to city residents in 2014
Presently no commercial urban farm in Rochester
Opportunity exists to provide residents with authentic urban agricultural experience/product
Potential avenues to explore:
CSA
Farmer’s markets-(Brighton, Southwedge, Pittsford, Fairport)
On farm sales
Contacts include Sue Sutheimer, Chris Hartman
Opportunity exists to capitalize on the growing number of farm to table restaurants in Rochester (Lento, Good Luck, Label 7, Cure, Rabbit Room, Owl House)

Potential for restaurant CSA?

Contacts include Seth Eshelman, Jeff Ching, Mike Calabrese, Matt Fuller
Close to 1000 acres of vacant city lots available in Rochester

“Urban Agriculture and Community Gardening Feasibility Study: A Vision for a More Sustainable” commissioned in 2011. 300 pg document, shelved for the past 3 years

City is very interested in finding alternative ways of utilizing vacant lots; however, present zoning laws severely hinder anything but community gardening

Ownership status (rent, lease, own) and site selection would ultimately dictate extent of activities on farm

Contacts: Liz Hendersen, Peter Sax, Nancy Johns-Price, Sara Scott
Issues to consider:
Market for local produce is relatively saturated with growers
Crop types might be limited due to soil contamination
Harsh winter climate, 120 day growing season
Growing environment might be restricted to raised beds
Commercial urban farming in Rochester is unprecedented so its hard to know how consumers will view the safety of products
Useful websites:
www.epa.gov/brownfields/urbanag/
http://epa.gov/brownfields/urbanag/pdf/bf_urban_ag.pdf
Opportunity for Agrotourism is huge
Inner city schools
Colleges/universities
Clubs, youth groups, scouts
Provides alternative revenue stream for farm
Guided tours, harvest festivals, tasting events
Issues to consider:
Farm Design
Safety Procedures
Liability Insurance
Accessibility
Grant available through USDA -Voluntary Public Access and Habitat Incentive Program (VPA-HIP)
Communities will need to be built in both physical and virtual ways.
Physical relationships with residents in the immediate vicinity will need to be established so that the value of such a business can be conveyed. Individuals/groups to engage include:
Neighborhood Associations
Churches
Youth groups
Law enforcement
Neighbors of farm property
Virtual relationships will also need to be established so that customers feel engaged with the operation of the farm. Virtual communities will be composed of:
Farm Website/Blog
Social media platform -Facebook, Twitter
Farm Newsletter via customer mailing list (email)
Farm stand -Location, pricing, refrigeration, payment methods
Classes- Curriculum (composting, gardening, permaculture, etc), space to host(pole barn, greenhouse), pricing
Tours/Events- Farm upkeep, accessibility
CSA- On farm pick up, value-added products, pricing, workshare opportunities, end of season surveys

*Customer base/farm reputation would need to be well established for this channel to be the most cost effective
Useful website: http://www.growingformarket.com/
Farmer's markets
Variable source of income depending upon location, average level of affluence, and weather.
Might need to tailor crop types and quantities per market
Retail prices will enable highest returns on products grown
Tradeoff between travel distance/time and a potentially established customer base
Farmer's markets have the highest potential for profit out of all of the sales avenues for the farm
Restaurants
Pricing structure/unit, delivery times and packaging would need to be determined
Set purchase volumes would need to be determined for this avenue to be lucrative due to wholesale prices received for goods
Potential to integrate restaurant deliveries on days of farmer's markets
Useful website: http://www.agriculture.ny.gov/
Two sets of vending accoutrements would need to be purchased. One set for on farm sales and one set for off farm sales. Items include tent, packaging, signage, & display

Packaging and product units would need to be determined to provide consistency throughout all sales avenues

A reliable delivery method would also need to be secured. Options include: personal vehicle, personal vehicle with trailer, purchase a vehicle with refrigerator unit

On farm refrigeration as well as food safety and handling protocol should also be considered

*Both channels have a degree of integration in the sense that product will be consistent at both locations. Potential to integrate infrastructure for both avenues exists e.g. mobile refrigerator unit
Subscription Fee
Farm CSA
Length of season would need to be determine, preferably 20 weeks
Operating costs would need to be determined before season to determine share pricing, ideally in the $400-$500 range for season though
Number of CSA members would need to be determined. 25 members would be feasible for a trial season
At $400/share, expected farm income in spring, ideally March, would be $10K for a 25 member CSA (fixed pricing)
Greater variety of crops would need to be grown for this aspect of the business. Potential to unbundle?
Product mix for all sales other than CSA shares would be limited to a few crop varieties so that quality and consistency could be maintained throughout season.

High value crops, such as tomatoes and peppers would be emphasized as well as short days crops like lettuce, peas, and beans.

Heirloom tomatoes in particular command an average of $4 to $6/lb, especially earlier on in the season, which could generate a substantial amount of revenue throughout the length of a season. 300 plants growing an average of 15lbs of tomatoes per plant at $5/lb could generate between $15K and $20K depending upon cull rates and other environmental factors.

Dynamic pricing would play more of a role with direct marketed products as seasonal variations and quantities of product fluctuated.
Usage Fee
Usage fees would be generated through on farm experiences in most cases. Agritourism will play the biggest role in generating usage fees through activities such as farm tours, classes, and events. Dynamic pricing would used to determine fees for such events because each event will likely be different in terms of time requirement, consumer segment, and level of involvement e.g. curriculum development. For instance, I would ideally like to charge per person for farm tours to provide consistency for these types of experiences instead of charging different prices case by case.
Grants
SARE
USDA
NOFA

Downside of relying on grants for income is the time required to write them, the lack of guarantee that you will get them, and the additional paper work required to maintain them.
Lease - 5 to 10 year ideally
Insurance
Zoning- laws would need to be changed so that product could be sold off of property
Funds/Donation- matching program if large property was purchased, perhaps in form of reduced taxes
Publicity - WXXI, WHAM13
Headquartered in Rochester, NY. Could potentially provide:
Training- Mentorship program
Exposure- Listing on Farm and Food Guide
Physical/Virtual Resources- Publications, technical assistance, funding opportunities
Other
Growing Product
Secure land through public or private avenues
-City vacant lots, land trusts, homeowners
Research zoning laws and reqs for growing food in city limits
-EPA, Bureau of code enforcement
Securing funding for farm
-Genesee Valley Co-op,ESL Credit Union,
Farm Service Agency, Staach,Inc.,Crowd
Funding, membership program (CSA)
Build infrastructure (shed, greenhouse, raised beds)
-Tools, materials, labor (ideally friends)
Grow/harvest product
-Tools, regionally sourced inputs (talk to
farmer friends), crop planning, labor (me)

Selling Product
On Farm
-Open business bank account with regional bank or credit union
Determine area of farm that will be suitable for farm stand
Build farm stand (if allowable in city)
-Materials, labor, manned or unmanned?
Stock farm stand - exclusively grown by me or other producers as well?
Maintain property so that farm tours can occur
-Labor, farm design, accessibility
Determine how payments will be received - Cash, credit, EBT

CSA
-Determine how many members are feasible for first year and determine pricing structure
Standard share, half share, pay as you go, low income share
Find customers - NOFA NY, ATTRA, word of mouth
Receive payment - Cash, credit, EBT
Survey customers to see what they would like to see in shares before season starts

Off Farm
Find customers and vending outlets
Determine pricing structure
Retail
Wholesale
Purchase vending accoutrements
Tent, signage, packaging


Distributing Product
Research packaging options
-Wax covered boxes, rpc containers, bins,
bags
Determine whether product units will be weight based or quantity based
-Weight based units require a certified scale
-Quantity based units enable more
consistency
Purchase large enough quantity of packaging to cover year of product
-Potential quantity discount, upfront cost
Stick with chosen packaging and salable quantities to provide consistency for customers

Determine delivery method
-Personal truck (minor conversion req’d)
-Personal truck with purchased trailer
-Buy a vehicle w/ refrigerator unit
Establish delivery times with customers
Be consistent (keep a calendar)
Keep a milage log and all receipts (gas and product sales)
Marketing Product
Develop a mission statement and guiding values for business
-Authenticity, stewardship, alleviate food
insecurity
Identify four P’s
-People - chef’s looking to source product as
locally as possible, low income
families, locavores who are
looking for authentic urban farm
experience/product
-Place - City-owned vacant lot or privately
owned lot located within city limits
-Price - Tiered depending upon type of
customer
-Product - High quality, close proximity,
sustainably grown fruits and
vegetables
Determine marketing budget
-Based on sales potentially
Determine best marketing approaches -Social media, WOMM, Online ads, Tabling events, Website
Implement marketing strategy
Conduct customer surveys at end of season via email
Review trends as well as customer feedback via social media websites
-Facebook
Modify marketing strategy

Intellectual
Develop protocol to protect proprietary knowledge (PK)
Identify most important PK possessed by me and of business
-Brand, logo, unique skills and knowledge,
customer information
Determine appropriate methods of protecting PK
-Trademark, password protected logins for
online customers, keep email list private
Other considerations:
Addressing infringement of PK
Pricing structure for use of PK
Human

ME
-Implement efficient methods to maintain personal health
Consistent work weeks, days of rest
Provide work-share/volunteer opportunities
Health Insurance, workers comp
Evaluate tools and methods used to identify areas for improvement/reduced labor reqs
Hired Help
- Develop protocol to find and retain hired help
Evaluate labor reqs for farm
Write a job description, post it
Interview and hire someone
Evaluate labor reqs for winter at end of season
Find ways of offering opportunities that will build employee moral and skills in an effort to retain them in future years
Physical
Land
Location
Ownership status
Design
Equipment
Tools- Those req'd for field operations (hoes, pruners, seeders, etc) and construction (drills, saws, etc)
Machines- Rototiller, mower, harvester, tractor, truck
Infrastructure
Barn, walk in cooler, greenhouse, fencing, raised beds, irrigation
Full transcript