Biggest Farm Money Mistakes
In this episode, Barn2Door CEO Janelle invites Farm Advisor Phil from Hopewell Farms to discuss the common financial pitfalls that prevent Farmers from achieving a sustainable, full-time living.
For more Farm resources, visit: barn2door.com/resources
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Hello and welcome to the Independent Farmer Podcast, the go to podcast for do it yourself farmers who are taking control of their own business, skipping the middleman and selling direct to local consumer and wholesale buyers. This podcast is hosted by Barn2Door, the number one business tool for independent farmers to manage their business, promote their brand and sell online and in person.
Let's dive into today's Independent Farmer Podcast.
Janelle Maiocco: Welcome to the Independent Farmer Podcast. I'm Janelle, CEO of Barn2Door, and your host for today's episode. As you may be aware, Barn2Door is all about helping independent farmers make more money, ditch the office work and look like a pro by getting a system in place to sell direct market under their own brand and manage orders.
[00:01:00] Farmers can skip the middleman and build a strong local business with recurring sales. And we just debuted helping farmers with local delivery. In today's conversation, we'll get into the biggest farm money mistakes. Today I'm happy to welcome Phil from Hopewell Farms, who is part of our farm advisory network and has worked with us for a number of years and, if I'm not mistaken, did you just get, nominated, voted, or anointed Farmer of the Year in Georgia?
Phil Bonelli: Not in all of Georgia. In my part of Georgia.
Janelle Maiocco: That's awesome. Tell us what that is.
Phil Bonelli: So, farmer of the Year, let's see, was selected by our ag extension and Farm Bureau and a Chamber of Commerce.
And, I tell you, it's funny when you get an award. I mean, it is cool. I like it, but I, pretty much just saw as, hey, this is a good marketing opportunity. You know, this is something to share and give some credibility to a customer. So, I took my two older boys with me to get it. Wearing their little Hopewell Farm shirts, you know.
Janelle Maiocco: I [00:02:00] love that. Do I need to send your older boys farm shirts?
Phil Bonelli: Sure.
Janelle Maiocco: I mean, we could do that.
Phil Bonelli: Okay. They love 'em
Janelle Maiocco: Or some cool hats. All right, good. So tell the folks here, I'm especially excited to talk about the biggest farm mistakes because you had a life in business and money and finance before you became a farmer. And so you have an eyes wide open lens on this. And you still made mistakes becoming a farmer, right?
Phil Bonelli: Oh, this could be a this could be a 10 hour podcast if we're going through all my mistakes, Janelle.
Janelle Maiocco: So give them a little bit of your background so that everybody kind of knows how you're from got started, what you did before, and then we'll fast forward to what your operations look like today. And then we'll dig into the underbelly.
Phil Bonelli: Perfect. So I was a finance major with a Spanish minor and college, and I graduated. And was a commercial banker for 17 years. So I was the banker for businesses and all sorts of businesses, you know, so I'm like, ideally, I mean, I'm underwriting loans. I gotta get under the hood, understand their business. [00:03:00] And also I'm trying to like, learn from all the businesses I work with A) 'cause it's fun, but B), so I can bring advice to try to get more business.
And then, probably about 14 or 15 years into that is when I moved to my farm. ' cause that was not, my plan just kind of happened and once we started selling then I think the first year we sold like $33,000 worth of product. I was still working at the bank and then I was like, Hey, I mean, that's not how much I needed to make, but it's something I wanna go towards doing this full time.
But I enjoy consulting too. So I was like, I always wanna do some consulting with businesses on the side. But, two years ago this month, I like to call it retired from banking. And, yeah. It's funny though, as I was growing up, I was very busy because I'm working at the bank. We had four kids at the time, we homeschool.
I did participate in that. I'm very involved in the community, so I'm rushing around doing my chores, then going and taking a shower, going and closing alone, and then delivering some eggs right after the loan. And
I at that [00:04:00] time had more money than time, if you will. 'cause I had a steady income, so I invested in things. I was very focused on time efficiency and on growth, and I was focused on growing revenue and production at basically whatever cost, if you will. I mean, I didn't have that much money, I took on some debt too, which we could chat about later on, the pros and cons of that. But I realized, hey, I need to run it by the numbers, which I have since printed myself a hundred bracelets. 'cause I give 'em away. And they say, “run it by the numbers.” And what I meant by that is, hey, I was like, I'm in this growth startup phase, I gotta get sales. And I was doing stuff to get sales that was just dumb. I mean, I would deliver two dozen eggs for free myself because I just wanted to get the wheels turning.
And there's a certain degree to which you must just establish yourself, as quickly as possible, you need to get a good grasp of making sure that you are making money, not just making [00:05:00] sales. And I was like, I understand this. I'm underwriting $10 million loans, but I'm not doing it myself. And it was like the cobbler's son had no shoes.
Janelle Maiocco: Yeah, I appreciate that though. I will say, it is actually very important to do the scrappy, grassroots marketing. Like, it doesn't make sense on some level to deliver yourself a couple dozen eggs, but it actually really does early on you are going to lose money at first on any sales channel that you are starting up. We work with a lot of farmers now who are actually shifting to delivery. They're working with a delivery partner. We have a handful of them, and they're like, I don't have delivery, so now I need to get delivery.
And then they start marketing and they get, you know, the first number of folks to raise their hands. It's not gonna be an overnight success unless you actually start doing it. And then a year or two into it, it's gonna be an overnight success, right. In other words, you are going to lose money at first.
It's actually an investment to start up a new delivery route. Or if you are trying to enter a new city, you have [00:06:00] to work at it to build up the threshold where you actually can begin to make money. Now, I think it's smart what you're saying, which is you need to at least run it by the numbers.
Can you get there? Like does it take 50 customers on a delivery route? Does it take 50 customers at a pickup location? How much do you need to make at a farmer's market? Are you gonna make that on the first day you go to the farmer market?
No, but over time you will. So Know that you're gonna be investing in, paying out money, aka marketing or building up your brand or your sales, but there needs to be the tipping point, and it's good to know what that is.
Phil Bonelli: 100% that you will be investing. Yeah. It's not losing, it's investing, I would say be spending money towards something which is going to gain you money.
And so, you've got to know the numbers. One thing that's key is first you gotta be tracking this stuff a hundred percent. And I don't care if you just sell a thousand dollars worth of stuff, track it. You need a bank account for your farm and one credit [00:07:00] card.
If you're gonna have a credit card. All your expenses and income flows through just like one channel. And you can track it and you need to understand what margins are. And forgive me, 'cause many of ours might. But I'm just gonna explain and I explain, like I explained to my employees your gross margin how much you make on your product.
So I'll give you a quick example on a chicken, I need to factor in my cost per chicken. So I buy a chick for 80 cents a dollar, I feed it a certain amount. Now, I don't know the feed per chick. I go for a batch of chicks. I get a thousand chicks every three weeks. That's $1,800 for chicks. I know they're gonna go through a certain amount of feed.
I have a certain amount of propane in the brooder. I have wood, shavings in the brooder, and then I allocate labor costs. We'll come back to that in a second of how much it cost me to raise the chicks. and Then I have to pay about $3 to harvest each bird. That includes packaging and ice and stuff.
'cause I built a little poultry processing plant. Let's say [00:08:00] I spend $10 per bird and I'm gonna sell it for $25. Just use round numbers. My gross profit per chicken is $15. So that's what I sell something for, minus what it costs me to produce it. And I gotta get all those costs in there, including my time because for the longest time, I didn't factor in my time.
Well, my time has a cost. And as you grow and you have employees, they're gonna have a cost. If you're not profitable, unless you do everything. Then that's not good.
Janelle Maiocco: You're paying to be a farmer.
Phil Bonelli: That's right. And you've got to look at yourself as a business owner. For sure, who is blessed enough that they get to farm.
So if your gross margin is good, so if you're making money per chicken, but you're still kind of losing money 'cause you're paying for your farm you can grow your way to being profitable, but if you're not making enough money for chicken, if you grow, you are just expanding your losses, so you have to have a margin on your product. Which, the primary things [00:09:00] you can control are your price. So when you're pricing, pricing is hard. We talk in the grassroots marketing all the time about, you know, people will price lower 'cause they wanna avoid rejection. Well, you need to be happy with what you're charging and be getting the premium you deserve for a premium product.
Janelle Maiocco: Agreed. And expect rejection. That's okay.
Phil Bonelli: That's totally fine.
Janelle Maiocco: Like if you have some folks that are, like Phil is saying, cost plus profit equals your final price, right? And so, you need to know what that is. You need to know your cost. Be very, you know, know your profit obviously, and that rolls right into your price and to your point, if your costs are greater than your profit or your price is lower than your cost, you have net zero or negative profit.
The more you sell, the more that's amplified. So I'm just repeating what Phil is saying. It is important to be comfortable with those numbers, to know those numbers and to make the adjustments. And you're a business and I love that too. 'cause we talk to a lot of farmers when we first talk to them like, you're farming [00:10:00] full-time, but you're also running a business full-time and you have to grok that. And to be fair, a lot of small business owners, from a hairdresser to dental, to a chef. A lot of people get into these because they love it. They're passionate about that, talent or skill or business. But at the end of the day, they're not just running a small gym or running a restaurant or running a hair salon.
That's a business. So they also need to be essentially full-time business person. and if you grok that, you're gonna go places. 'cause that's step number one is sort of admitting to yourself that you're running a business, and making money and price your product for what you know to cover your cost and for what you deserve.
And not every customer will opt into buying that, but most will. because the value and the nutrition and the taste and everything is so much greater.
Phil Bonelli: Yeah. And even if most won't, even if 10% will be, great! There's a lot of people around me. There's a ton. I think my town has [00:11:00] like 60,000 people, and if I got 10% of 'em?
Boy, I'd need a bigger farm. I mean, you go for it. Some guy called yesterday and was asking about half cow pricing and I was telling him, and I mean I got a waiting list for half cows and he was like, oh, that's kind of expensive. Like, he wanted me to say something. I didn't say anything except for I started looking at my watch and just thinking like, you know, do you wanna be on the list or not?
'cause I got stuff to do.
Janelle Maiocco: I, I feel like repeating that for farmers. 'cause I think a lot of farmers are like, 'to your point, you said they price it low 'cause they're scared of rejection. Like, you need to not fear your customers. You're in a business. So you literally need to not fear your customers. I feel like I had this conversation recently with another farmer.
If they're gonna be really picky or really cost sensitive or want all kinds of exceptions, A) they're not your customer, like, let 'em go, and B) if they're really picky, they're gonna start wasting your time, which you also don't have. So, be willing to let them walk away or be willing to turn away customers.
and yeah, that's [00:12:00] okay. There's more out there.
Phil Bonelli: Be happy about it. I know some guys who have pretty doggone big regenerative farms. Okay. And I would classify them as rich in the ways that I also seek to be rich. I like to farm. I like to have land. I like to have an enterprise.
My family can be involved in. But I mean, they do not have private planes. and they don't drive Lamborghinis so you can make a good living and you could live a rich life, I mean, this is something you do because you're passionate about it. And so all that to say, sometimes we almost feel guilty about profit or charging too much.
Like you're doing a legit mission I firmly believe that profit and growth are moral imperatives. If you are farming in such a way that you are making the world a better place, which I firmly believe I am, I'm making the environment healthier, I'm feeding families. I get so many notes from people that like, I mean, their health is so much better 'cause they're eating my food.
So if I don't get enough [00:13:00] profit to stay in business and grow, I am doing a disservice to the world. So you gotta go make that money. I'm not, I'm not doing it so I have a fancy house. I'm doing it 'cause I love it and I wanna do it more to impact more people.
Janelle Maiocco: I love that. That's like a drop mic moment.
Just everybody double click on that, which is, it is, it's your responsibility to run a good business. So you do need to price it appropriately. You do need to make a profit and you don't have to apologize for it. It's hard work, frankly. And so there's nothing to apologize for. C harge what you should.
Charge, what you should or explain, yeah, charge what you should and go run your business. And thank you for all the impact, the positive impact that you're having. And for making wise business decisions to keep it going and expanding so you can feed more people.
Phil Bonelli: That's right. Which again, as the title of the podcast, I've made plenty of bad decisions too.
Janelle Maiocco: I was gonna say one of the first things that I actually had written down to talk to you about was not paying yourself. So a lot of farms [00:14:00] early on, 'cause you said it will come back to that paying labor.
So let's just talk about that. and maybe you haven't made mistakes there, but I will say many farms, especially if they're like, I want this to become a full-time endeavor. There's a point in time where they're like, I've gotta pay myself. Actually, honestly, I had the same thing, Phil, when I started Barn2Door Now, 11 years ago, there was, um, I was probably two and a half years in and it's like, okay, I need to start paying for myself. Like, this is, this is a passion. I'm doing it, and now I actually need some sort of a salary or an income from this. So it's, you do face that moment and it's a very real business decision.
Phil Bonelli: Yes. So you definitely, even at the very beginning, if you're not paying yourself yet, you need to factor in, like as if you were, so you need to assign some sort of dollar per hour. Value perhaps. There certainly is kind of like money for production, sort of, models. Joel Salatin has a great book, Fields of Farmers, which has some good thoughts on that.
So, [00:15:00] high recommendation, which by the way, I love a Joel Salatin quote going back to our, you've gotta be making a gross margin, which is, you'd rather be doing nothing for nothing than something for nothing. That's important to remember, but you need to factor in your time. So whatever. You're gonna value that at $20 an hour, $25 an hour, $50 an hour, I don't, I don't care.
Whatever it is, you need to apply that to your costs as you're tracking. Like if you're doing beef or pigs or veggies, keep track of your hours and keep up with what those costs would be, even if you're not taking that outta the business. Because you need to think about what I would need to pay somebody?
To take over this part. and you need to factor in that it's highly unlikely because they are not the business owner or farmer. They are not going to be as effective and efficient as you. When I started hiring help and I got some good help, but it kind of blew me away. I was like it takes you that long? So factor in your time and so that you can be paying yourself. And just so you know what it would cost. But also as I started [00:16:00] adding a team, I did not at first do a good enough job of managing expectations. So if you have employees, you really need to set crystal clear expectations and then manage and hold accountable to those, or else you're gonna be throwing your money away.
Janelle Maiocco: I was gonna say, so let's voice over this as a money mistake, right? Which is. First, the great piece of advice, which is no matter what, whether you're paying yourself or somebody else, pretend that you are because you need to understand how to account for that cost, which is brilliant.
And then what Phil is saying is, if you're the farmer doing it and you own the business, you're gonna do twice as much as anybody else and be twice as effective. And so don't forget that, right? When you're hiring new people, they aren't most likely going to be as effective or efficient as you. However you still need to because you care more and you're, you will go deeper and wider than anybody 'cause it's your business.
You do need to get the value out of them because it's your responsibility as a business owner with such great impact to [00:17:00] have a thriving business. So with employees. How do you maximize and have the right structure and framework to get them to be as efficient and effective as much as they can be in their given role.
But without setting expectations, without setting goals and metrics, they will likely not be as effective because they don't know what success feels like or looks like they're just showing up and doing the job. I completely relate to that, Phil, in our various departments, like people come in, they wanna reach their potential, they wanna be successful, but if you as a business owner don't say, well, this number, this is what daily good looks like, and here's what daily excellent looks like, they, they need to know.
What does good look like? What does bad look like? What does good look like and what does awesome look like? And if they know those things, you're gonna find people reaching for awesome.
Phil Bonelli: Yes. Well, okay. I love that. And that is, I talked about how I feel our business as a mission, and now once you get to start adding a team, you get to [00:18:00] add what, to me, truly is the most fulfilling part of that mission.
And that is developing people and adding meaningful vocational opportunities. And what is a meaningful vocational opportunity that is one where you allow people, as you said, Janelle, to use, somewhat paraphrasing or expanding using their God-given strengths and talents. To go reach for excellence and to use their strengths in a great way to do something that means something.
So that will bring me to another money mistake I made, and that is my first employee, Brian. Great kid, awesome kid. He entered into a completely disorganized, freewheeling, we'll call it a system, but a lack of system. Before you hire anybody, and even just to be more effective as yourself, you must have systems and processes, and I don't wanna sound boring and corporate, but like, look at my farm every day.
We have certain chores that we're doing at different times a [00:19:00] year, and we do them in order. We go take care of the chicks in the brooder, then we go take care of our sows and piglets. If we're faring, we go and take care of our feeder pigs. We move calves, we move chicken tractors, we collect eggs, and then we move our mama cow hart.
So that needs to be done in that order intentionally. There are a lot of steps in that that I took for granted. 'cause I was running around for years doing it all myself. You'll learn a thing or two and you've gotta document stuff and have some checklists. A) to help you be more effective, but B) to help this poor employee who, yeah, you might show 'em.
Things a time or two. But you need a systematic approach to get consistent results. And if you don't have that for you, don't dare even think about hiring somebody because you're not putting them in a position to succeed.
Janelle Maiocco: Agreed. Now give your, give a quick take. 'cause we need to keep double clicking down 'cause these are all such, um, rich pieces of advice, but we need the practical [00:20:00] end of it, which is, am I as a farmer wasting money if I don't have systems, process, playbook, checklist in place for my employees and myself?
How does that translate to a money mistake?
Phil Bonelli: On our farm we've gotta do our chores and some of them are weekly. So if we don't order feed at the right time, we're gonna run out of feed. If we don't move pigs at the right time, we're gonna have less pig production and soil health and all that sort of thing.
But you don't wanna waste time. So time is wasted in several ways. One, if you're doing things inefficiently, I've got this gal that does our gardens. She's out there, she's awesome, but she's out there watering stuff by hand. Well, golly, from Tractor Supply, I could get a $25 sprinkler thing to put on a T post, and you save an hour a day.
So you can't be wasting time doing things efficiently. And if you've been running your farm for a while, then you know, I mean, there's just so many things. You know, the efficiencies, a newbie can't. Then you might be doing the wrong things. So there's [00:21:00] more things to do every day than we can do.
So we have to have a hierarchy of, okay, we're gonna do the chores, and then as we move on to our next activity after chores, that's gotta be, I've gotta have a clearly defined list in waterfall of the most impactful things. And guess what? If you're out there listening, there will always be more farm work than you can do.
And so above that, better come doing some sales and marketing activities that has yet to be on the list every day. That's like milking your cow. My cow. It's gonna be really bad if you don't milk the cow. Well, if you don't do sales and marketing activities, it's gonna be really bad.
Janelle Maiocco: It's amazing to hear this consistent message. Like if you listen to the last four podcasts I've done with farms in the last probably four or five weeks, Phil, every Farmer has said, like literally, I think of marketing daily the same way I think of you just said milking a cow. But they literally are like, what is the one thing I can do today that helps me increase sales, capture sales, do marketing, which is the whole point of marketing, is [00:22:00] sales.
Ongoing recurring sales, ideally with loyal customers. Right. So, I love that you just said that as well. That's always on the short list. So that farmers have some practical takeaways from this 'cause its systems process documentation can sound overwhelming. Phil made a good point, which is the checklist.
So same here at Barn2Door and boy, it would be so fun just to talk about business for hours. We could just pick a department like marketing and go forever. But we have playbooks, right? So people know what to do. Like literally you can ask the head of any department and they have written down, so there's the documentation piece.
What is required of each individual in their department. And it might be the same, like some departments it’s the same for everybody. Other departments are different 'cause they have slightly different roles, but they know what to do daily, weekly, monthly. And in some cases, if they're higher in management, it's more monthly and quarterly.
But they know, like, they know what good looks like. What are my expectations for today? Here's the playbook. It might be that this has to be done this week. You [00:23:00] have a daily, a weekly, and a monthly checklist. And then it's documented, it's written down somewhere because you don't wanna have to reinvent the wheel.
So daily, weekly, monthly. Write it down so that anybody could slot in without knowing what they're walking into, but it's written down. and I think that is huge.
And then the other thing that Phil said was efficiency. Like we are super dialed in. My board, we’ll ask them, we'll say, Hey, do you have any feedback for us?
How could we be, you know, more efficient with this and this? And they're like, um, we send people to you for advice because you guys are so darn efficient and then shocking. The next quarter we're like, oh, but we figured out this and this. you can always look around and add a sprinkler head is what I'm trying to say.
Like there's always something and it changes, so don't feel like you have to be immediately efficient overnight because that is even actually something that will always evolve. You get efficient with a handful of things, and then you find the next layer and the next layer, or you shift a business project or process and so there's more opportunity for efficiency.
It's funny because when we talk to farms so often we're like, [00:24:00] Hey, we're gonna help you make more money. Like take out the middleman. Let's make it super easy for people to buy. That's marketing and sales, like that's juicy. But I get excited about helping them ditch the office work, which is one of our mantras at Barn2Door because there's so much opportunity that farmers are doing with, you know, sticky notes, Excel spreadsheets, taking orders by phone, text, email.
I'm like, can I please save you hours a week? Please let me do that from Barn2Door to you. That's what I wanna help with. So I am so passionate about helping farmers save time, even though I know sales and marketing are juicier.
Phil Bonelli: I love it. I gotta say two things on the playbooks. I love playbooks and I have 'em, but it was just such a mental burden. I made it such a big deal. I procrastinate forever. Brew a pot of coffee, talk to Chat GPT or something like that and just get a first draft down please.
And what I need to have, and what you, farmer friend, need to have on your playbook, you need to have the tasks. So I want my daily, my weekly, my monthly or whatever. What are the tasks? What is the DOD? What is the definition [00:25:00] of done? For example, when we move our 800 layer hands, the definition of done is that they're in their new paddock, their water's set up that they have grit. The old fence is taken down and rolled up neatly. So like, what is done? How do I know that I'm complete? And when I have problems, how do I solve them? Like what are the most likely problems? How do I figure 'em out?
Like, where do I go to for help? So that is what I want in my playbook. And then we're talking about adding things, but a lot of times to gain efficiency, you need to cut things. And I'm gonna give you a good example, man. I bought some pigs from a friend. And my pigs were really well trained on the electric fence.
His were not, which must be why he wanted to get rid of 'em. So I had this one sow, she got out all the time, knocked the fence down, all the sows would get out, and we had to spend time getting pigs back in, which stinks. And so we've wasted so [00:26:00] much time on that. And Janelle, this is a visceral, raw example. I shot that pig Janelle, and we roasted her up. You gotta shoot the pig in your operation. What is killing your time? Get rid of it. Get rid of that doggone pig. Farming is difficult and so we can get in the routine of just bearing with it, making the best of it, dealing with it. Well, maybe you shoot the pig and now 95% of my pig problems got eaten.
Janelle Maiocco: Yes. Sometimes you do. It's true. Oh, that's rich. I appreciate that. Yeah. There's different ways to improve from an efficiency perspective and sometimes, and it really, it is just looking around and saying, what's taking time? And can it be fixed or not, is really what you're saying? In many cases it can. Right? Like, when we show farmers who have let's say you have 400 customers and you're taking every order by phone, text, email, that is so many hours of time wasted when you could just send 'em a link to your online store and they can self-serve order, and then you can spit it out on delivery day.
That's what we love, that's what we live for at Barn2Door. But to your point, sometimes. Even here at Barn2Door, sometimes [00:27:00] you hire somebody into the wrong role and no matter how much training and how many different leaders or different managers try everything, it's just maybe not a good fit.
And so we might even try 'em in a completely different role. It's like you have all the talent, all the heart, all the everything. But I think you might actually be in the wrong role, because in some cases, it's taking like 95% of the time to train one person when you have eight other people who would really benefit from your attention.
So even from that perspective, you're looking at the leaders and the managers. So it really is true time is money, and whether it's people or process or, pig that can't be trained, or you know, efficiency on orders, but it's neat ' cause time saving, that's a win.
That's a win in business and it really, really saves you money and it frees up your brain to go do other things that are more valuable. Okay. Do you wanna choose the next money mistake?
Phil Bonelli: Yes, I would. I want to, uh, share a very important concept in my four years in college. This is the third most important thing I learned. The first was the name Lindsay Zonner, which is now Lindsay Bonelli, my wife. That's the best [00:28:00] by far. And then Spanish, and then something called the sunk cost principle.
All right, so the sunk cost principle. This is a human mental issue where when you have put resources, be they time or money into something, you inflate the value of that thing. I'll give you an example. I have manure, which I spread. My neighbor. Boy, he had a deal for me. I bought his old manure spreader truck and his dump truck for a combined $5,000.
What a deal, Janelle. These things were older than me. Okay. I put like a thousand bucks into one, then another 750 into another. So now I got like, you know, six grand, 6,500 in these things. So the more you spend, your brain is like, oh, I gotta get them working. The way for me to win is to keep investing in this till it works.
Guess what? Those things are, I don't need to own a spreader truck. I can [00:29:00] borrow a spreader. I use it twice a year. I don't need a dump truck. So I gave them away. It wasn't even worth putting money into fixing. So you've got to look at what I have invested in that is no longer serving me. You have to think about the future.
So when you're making financial decisions, you cannot be driven by what you have put in in the past. You have to chart the course for the future. And those were bad for me financially looking forward. So it doesn't matter if I spent a hundred thousand on them, they're bad and I needed to get rid of 'em.
It's like, think about if you've been dating somebody for five years, but they're a dud. Then hurry up and dump 'em now. Don't waste another day. So sunk cost, we all fall victim to this. I could have said with that pig, oh man, bought this pig for a couple hundred bucks and blah, blah, blah, blah, blah, and kept wasting time every day.
No, drop it. Make the bright future that you are looking for. So don't fall victim to the [00:30:00] sunk cost fallacy, please.
Janelle Maiocco: Amen. Oh, that's a powerful one. It is hard 'cause you feel like you've invested so much money in something, but if it just keeps staying broken and more money lost, it's going to be more money lost.
Or you find a solution that's better. Like, to your point, I could just borrow it.
Phil Bonelli: That's right. I could borrow it. I could rent it. And I would say that too. I mean. on capital expenditures. So like depreciating equipment, like I own a tractor and I am glad I own the tractor and I, I get used outta that tractor, but I didn't have a tractor for several years and I got round bales of hay and I put you around by hand and I got a thing that was like a metal pole and I pulled the hay bales around with that.
You can do a lot without owning stuff, And even if you're, as we get into farming, like I own a farm and I lease a farm and my growth, Janelle, I wanna be farming a thousand acres within the next five years and probably every bit of those, but the 43 acres I live on will be leased because, I mean, farmland costs like 15 grand an acre where I [00:31:00] live, but I can rent it for $50 per acre per year.
I don't have to own it. I can rent it and some people might let you farm for free, so you don't have to own stuff. Man my neighbor comes over and he spreads manure for me, and guess what? He gets a weekly delivery box from me and a Thanksgiving turkey.
Janelle Maiocco: I love that. But land, I was gonna ask you about land, but I think you've expanded that even further, which is ask yourself twice if you need to own it or not.
Phil Bonelli: Yeah, and I wanna own land. Like if you ask what I would like, I don't want anything else in life, but healthy kids and more land. 'cause I think land's fun. The way I would get the money to buy land is by Lord willing, growing my farm through leasing land first. So it's just so much cheaper.
Don't burden yourself with debt and big payments ' cause everything's more expensive and takes more time than you think. So prepare yourself.
Janelle Maiocco: As everybody who bought a house or a farm before. 'cause you do have to sink costs in. I mean, they cost money, right? More than you think. Yeah. any other big [00:32:00] financial shifts that you have encountered you've been growing your farm that you think would benefit the farmers that are listening to this?
Phil Bonelli: A hundred percent and that one would be like things generally I have found do get, you need a certain amount of scale, okay? You need a certain amount of scale. If I didn't have, you know, we'll harvest like 8,500 chickens this year and like 400 turkeys, and that justifies me owning a chicken processing plant.
And that gets my processing cost down to $3, $3.50, something like that. But if I just did a thousand chickens, it wouldn't make sense and I'd be paying 13 or 14 bucks at Georgia's other poultry processing place. So I'm saving 10 bucks a bird 'cause I'm going big on scale, which again, I have to do daily sales and marketing to do that.
But you just, if you're milking one dairy cow, there's just no way to win. You know, you, gotta start out with that. Start out with whatever you got, but build it up and [00:33:00] grow. You know, we're farmers, we work within nature and in nature things grow and then they die. Right? I mean, trees keep on growing.
The perennial grass keeps on growing so you need to grow too. and growing is hard, but so shrinking. So I'd rather have the problems of growth than shrinking.
Janelle Maiocco: I appreciate that. Would you say, 'cause you, we've talked a lot about poultry and I know you've leaned very deeply into that category, for lack of a better way to say it.
Can you tell everybody here, like, are you just doing chicken? What else are you doing? And what would you recommend, right? Because not all products are created equal, right? Are there some that are more profitable than others? 'cause I suspect you can keep looking at various product lines, whether it's poultry or pork or beef or whatever, and you're gonna tell us what it is for you.
And those are different profiles in terms of profit margin, but also, you know, you have to grow a cow for a while before you can sell it. That sort of a thing, right?
Phil Bonelli: It is very important. So you as a business, there's lots of things we're doing, but as a business needs to do two things to be successful, [00:34:00] it needs to make profit, so make more than it spends, and it needs to generate cash and those are not the same things.
So I do beef, pork, chicken, turkey, eggs. Veggies, beauty products, pet treats. So let's look at a cow that generates the most money for me, especially a cow that I raise from a calf. So I've got a certain amount in hay and minerals, and then I've got processing costs. Let's say I sell the meat from a cow for $5,000 and it costs me a thousand dollars to process it.
That's 4,000 minus my hay and my time. So it's a big hit. Let's say, let's say I net three, 3000 on it, but golly, I mean, it takes me two, two and a half years to raise a cow. A pig takes me eight and a half months before I can turn it. A chicken takes me seven and a half weeks. So a chicken, let's say I make $15 per chicken, that's way less than a cow, but I can turn it so much quicker.
And then an egg, those hens, Janelle, they lay 'em every single day. you [00:35:00] need all of the above ideally. But if I were starting out, I would start the opposite of what I did with cows. I would start with the layers and or milk. Milk is a win because I would do things people get every day. So you're producing every day and people eat it all the time.
So we do sourdough bread too, so the bread, the milk, the eggs, people get 'em every week. I don't sell milk right now, but bread, milk, eggs. Quick turn. Now, a second thing I would get after that is I would get pigs because as you scale up your eggs, if your sales are not yet meeting your supply, but you could always give old product to pigs.
And man, when I'm having my milk and eggs for breakfast, I would also love to have some chorizo or some bacon. It just goes together. So I would climb up the ladder of turn. Now, we all come from some context. So, you know, I started out with cows and, other people listening, they might already have a cattle farm, right?
So they can't just start from [00:36:00] scratch. But I would add the daily turners because man, my farm store, like, so we sell through several channels, like we do delivery and, we do some farmer's markets and we have a farm store that's honor system and, man, I got tons of eggs so I needed more people to come into the farm store and eggs are what that gets it.
And on those marketing activities, man, I had more eggs than I had customers 'cause I went from, you know, like 70 laying heads to 800. So I did a buy two, get one free special. And man, they just, they come, I post about that on Instagram. I sell $300 worth of product the next day, but I've been working for years to build up that Instagram audience.
Janelle Maiocco: Yeah. You talked about scale earlier, so I appreciate that. You were talking about, like, he's talking about, you know, eggs, dairy, bread things that people eat every day is gonna be your consistent cash flow, even though the order size is much smaller. And then literally quote unquote cash cows.
I love [00:37:00] that. You know, a two year plus cycle. Then you've got your meat birds, as an option, you have pigs as an option, et cetera. You can just map that on a calendar, right? 'cause you can go through so many batches of meat birds, sort of as a layer, quote unquote.
I don't mean layer chicken, I mean a layer in your revenue base, where you're just building one on top of each other to make sure you have that ongoing cash flow. That's awesome. I love that you did talk about scale too.
Phil Bonelli: Scale is important. And I know you, you spoke about mapping it out. I know the audience can't see, but I do map out my income and expenses, because again, I need to both make a profit and generate cash.
I need to know every other week I have payroll. I have a tractor payment. so this has some operational things, but also like when does cash come in and go out because just like I can't let my chicks run out of feed. I can't let the farm run out of cash. That's pretty important.
Janelle Maiocco: Love it. Thank you for all of that. And then you said you were gonna talk quickly about debt and loan. I just wanna tuck that in before I ask you for [00:38:00] your final bits of wisdom.
Phil Bonelli: So, I would definitely, I mean, look, if you are making good gross margins and you could keep growing sales, you will be able to grow faster if you leverage other people's money to get things.
So you need to be smart with what those investments are, and I would look at two different things. First of all, I would look at grants and there are a lot of grants out there. We're a huge fan of the NRCS EQIP grants, and I've got water systems fencing systems. I'm building a big, compost facility right now with grants.
So look to grants for both capital expenditures and marketing costs. 'cause they're out there, they're there. Go look for 'em. But then if you're going to borrow money, make sure it's for something that you feel comfortable with, you can pay back, but that is going to make you money. And you don't need a
big fancy tractor right away. And golly, man, my farm truck is a 2005 Silverado. It will need to be replaced by a different truck at some point, but [00:39:00] everyone who sees, I mean, it's beat up my son who's 12, he loves cars. He is like, dad, we gotta get a new one. There's all the dents. And I'm like, I don't care.
This thing works. I mean, I can haul pigs and cows and hay with it. And I don't need a fancy truck. ' People come to my farms, everyone who comes to my farm has a way better truck than me. They're driving a $80,000, $90,000 truck. I don't, I don't need that. So be wise with your investments, I'm certainly not against debt. But you better be smart with it. And look to grants first. look for them. They're there. Check 'em out.
Janelle Maiocco: Great pieces of advice. And I'm gonna give you a chance for some final bits of wisdom here too, 'cause I know that we're coming up on the hour. But, thank you for running through all that. It's interesting 'cause I, I'm gonna give my 2 cents because we are talking about, people and some of the efficiency, or in our case systems, like business systems. That's what we build for farmers here, right? To make it easy for them to run their business. But one of the things that you do when you're managing people.
In addition to like, here's the daily, weekly, monthly expectations, there's, this is, you will [00:40:00] relate to this Phil. There's always going to be too much to do. So there's two ways that we handle that here, which is, here's the expectations on the daily, weekly, monthly. Number two, here's the priorities.
Because there's always gonna be things fighting to be on your priority list. And especially with your most competent people. They'll just wanna do more and more and more, but you also don't wanna burn them out. So it's important to be aligned so that they know priority 1, 2, 3, and then you've got like grayed out four and five.
'cause you know they're there and you're acknowledging that they're on the radar. But they did not hit the top three spots and so that helps people kind of put their shoulders down a little bit 'cause you will never get to the bottom of that list. But as long as you know what the expectations are and the priorities are, you've got a great extra lens on what you're choosing to do and how to spend your time.
And then I have to mention this 'cause you'll get a kick out of it. For example, on our engineering side, and even in marketing, we always have a list of what we call cherry picking. This is just our bonus list of small little tasks that need to get [00:41:00] done that nobody has time for. But if you do come up for air or you need a change of scenery for a bit, go do a cherry picking task.
and we get a kick out of doing, you know, Farm branded, things like cherry picking list, but it's become a really central feature to a lot of the folks working here at Barn2Door which is, again, if you've got, you know, an extra bit of time, which nobody ever does. So sometimes it's just a change of scenery, where we'll say, okay, everybody gets to do cherry picking for half this day or something like that.
You get to work on things that are sometimes hygienic, or a treat to do. But it is neat to have that list as well, because they don't fit perfectly into the daily, weekly, monthly, but it's good to do. It's something there. It's on the list.
Phil Bonelli: I love it. One thought that I had, which is a big one based on that, is if you're going to be efficient and effective yourself, and if you'd like your employees to be as well. You have to not overwhelm them and you tell them how to prioritize by saying l ike, okay, there's five things or a hundred things we have to do. Let's work together, [00:42:00] figure out the top three. Forget about the others. Write 'em down so you're not stressing over forgetting them, but write 'em down.
But then don't think about anything else. 'cause so much of our stress is thinking about things versus doing 'em. When we feel overwhelmed, it's not generally from too much work, it's too much of a mental burden of thinking about all the work.
Janelle Maiocco: Yeah. That's so good. Well, okay, so we covered a lot of bases today. You were giving some great advice on just track all money and money out. Know your costs, know your profit, your price has to be higher than both of those. so pricing for profit. Don't apologize as you have a responsibility in keeping your business alive and healthy and well. 'cause you're making an impact. Be willing to walk away from customers too. That's good. and then some great wisdom in the various product categories and when they turn daily profit, does it take six or eight weeks to grow the birds?
Does it take, you know, eight months to grow the pig? Like, when is that cash gonna hit? So write [00:43:00] it down. It doesn't have to be overwhelming. You can start at a very high level, and some great input on loans and debt and grants. So there's a quick little fun summary, Phil, Any last bits of wisdom before we bounce out?
Phil Bonelli: Every problem, which I'm guaranteed.I'm very optimistic. I'm not optimistic because I think that everything will go great. I'm optimistic because I know everything's gonna go to crap every day and I get to fix it. And everything is a problem to be solved. And if you've got the brains enough to listen to this great podcast, you've got the brains to solve it.
You've got a network of people, which has become my favorite thing about Barn2Door is the network of knowledge. Listen to the podcast, watch the videos, read the articles. Every problem you have, there's a solution and go work on it. Like every day. Brew yourself a pot of coffee and go do the work and you will make the farm that you want it to be.
You can do it. Build that business. [00:44:00] You got this.
Janelle Maiocco: I love that you just made you own a business synonymous with your problem solver now. That's good. I love it. Folks, you should know this about Phil. So we do have a connect program, which is essentially a program for anybody who uses Barn2Door or any farmer all across the country. Who wants to access other amazing farmers like Phil, who literally hosts office hours, so that you can have regular access to him. He also happens to be one of the farmers that teaches our grassroots marketing class. So in terms of money mistakes, the brilliance of grassroots marketing is there's so much marketing you can do ideally on the daily that doesn't cost anything, costs some of your time.
But it doesn't usually cost money. It's some very smart, basic marketing that will get you a very long way. So he teaches those classes. And then he also has a business on the side that's a fractional CFO. So we're really talking to a guru here when it comes to finances, which is fun. What is the name of that
Phil Bonelli: Round Table Advisors.
Janelle Maiocco: Round table [00:45:00] advisors, that's where you can find Phil. So that's fractional CFO services. but again, also a huge help to barn to door teaching, grassroots marketing, hosting office hours for other farmers. So many rich resources we're very much all the same team here. We just want independent farmers to be wildly successful, um, not just in their farming decisions, but truly in their business decisions that help make farming possible and repeatable and scalable and profitable.
All those beautiful words. So thank you Phil. Such a joy to work, alongside you and with you and support your farm in any way we can. FYI, if you want to follow Phil directly, you can on Instagram, it's @hopewellfarmsga as in Georgia. So @hopewellfarmsga that's a plural, isn't it?
Hopewell Farms. Ga got it. All right. At Barn2Door, we're humble to support thousands of independent farmers across the country. We're delighted to offer services and tools to help farmers make more money, ditch the office work and look like a pro. We literally talk all day, every day to farmers. Farmers working with [00:46:00] Barn2Door can go to office hours, or schedule one-on-one meetings with team members for consulting on their business.
We exist to support farmers like you, like Phil. If you're an independent farmer, getting started or interested in selling direct, we have a lot of farmers who want to move towards selling more direct because there's a lot more control in their business. Please come talk to us. We want to help Barn2Doorcom/learnmore.
Thank you for tuning in today. We look forward to joining you next time on the Independent Farmer Podcast.
Speaker: Thank you for joining us on the Independent Farmer Podcast. At Barn2Door, we are passionate about empowering independent farmers to build a thriving business. To all the farmers out there, thank you for all you do to grow amazing food, care for the soil, and serve your local communities. You are the backbone of our country.
For free farm resources, or to listen to prior podcasts, go to barn2door. com backslash resources. We hope you [00:47:00] join us again and subscribe to the Independent Farmer Podcast wherever you stream your podcasts. Until next time.