Refusing Expansion (MFB 61)

0:00Welcome to Market Farming Basics. I'm your host Diego, DI, EGEO. In each episode I'll share everything that I have learned over the last 10 years of doing podcasts to help you create a profitable farm without breaking the bank. Each episode delivers actionable strategies you can implement right away if you prefer watching. Check out the video version on YouTube at Modern Grower Co. In business we're told that more growth equals success, more space, more staff, more sales. But what if this smartest move isn't to grow? What if it's to stop? I would put them on the waiting list and wait for another 5 to be on that waiting list. That's what I would do. I would not act on it before we would have something seriously more relevant than 40 tries a week.

1:02Yeah. In Upstate New York, a farmer running a business that generated between $350,400,000 in annual revenue decided to say no to expansion even with buyers waiting. Let's find out why. Most entrepreneurs see growth as progress, but expansion multiplies risk long before it multiplies the reward. Vincent Cunio saw this firsthand. His 1,000 square foot facility was totally full. Demand was strong, but when new buyers came calling, he put them on the wait list. Oh, the risk is low sales. The risk is high capital investment. Because this stuff, I mean, yeah, it's low bear to entry, but it's not nothing. You still have to have the infrastructure in place.

2:02Here in our climate, we need an insulated, finished building. You know, utilities, a lot of shelving, a lot of power consumption, all the gear that goes on the shelves, and the trays, and the capital investment to get started on growing a lot of trays on the rotation. So, yeah, I mean, maybe it's a bit too cautious, but that's how I see it. Top line hovering between 350 and 400, and we hope to get above 400. If you want to look at it in terms of tray production, and revenue per tray, we're a little bit above 20 bucks revenue per tray that we grow. At this scale, his operation runs with precision, about 40 total hours to harvest around 400 total trays. That's roughly 10 trays per hour or 6 minutes per tray. Top line hovering between 3 and 400,000 dollars in revenue,

3:04a little above 20 dollars in revenue per tray. That's 20 percent profit margin after all costs. It's a nice little business. Instead of building bigger, Vincent builds different. I think once you sell something to a customer every week, if you have another product that's good, it's not that hard to get going. So, that's our approach. We're going to try to continue on the same trajectory there. Once you sell something to a customer every single week, if you have another product that's good, it's not that hard to get them to buy that too. Same customer, new revenue stream. If we were to land more stores of the caliber that we were working with, they would be geographically spread out way more. Now, we would become a regional type company, and then the logistics of that serving customers, dotted out throughout the region, when it comes to tracking,

4:07and distribution and all that, that would be a different ballpark. If Vincent had expanded microreens to new stores, they'd be geographically spread out, something he wasn't interested in. And the logistics of serving customers would be dotted throughout a large region, making the game that he was in, now being played in a totally different ballpark. Staying small has its advantages. And when Vincent decided to stay small, he could maintain something that automation couldn't replicate. Absolute quality control. We do everything with very sharp ceramic knives by hands, and this way, every time that we harvest a handful, we can look at it, and there's anything wrong with it, any dead little thing, it can be removed, or it goes to the bin as not packed. Every time they harvest by hand, they can look at it,

5:09if there's anything wrong with their microrein product, any little dead thing, it can be removed, and they can adjust. Hand harvesting gives the products more than 12 days of shelf life, sometimes even up to 16, automation won't get you that. It introduces debris, and shelf life drops dramatically. A few harvest was one of those automated harvesters. Individibly, you will have debris in it, you will have little pieces of cut microgreens in it, you will have dead stuff that should have been picked out right away, that you will not be able to remove, you will have little debris of soil, which we grow in soil, so we also have to be very careful to keep everything clean and not have any soil going in there, and your shelf life will drop dramatically. It isn't about lack of ambition. It's just about defining success, a little bit differently.

6:11Vincent had the temperament where he likes to start a business, not run it. He knows why he works, it's not just for the business, it's to support his lifestyle, he wants to go see his kids at 5 o'clock in the afternoon, and after six years of running that business, he and his partner each take in an income that ranges somewhere between 50 and $100,000 per year, not bad for a business that chose not to grow. So remember, sometimes saying no, is the smartest yes? I'm Diego, DiIeGio, thanks for watching this video. If you enjoyed it, you can check out the full length interviews that's plural that I've done with Vincent, link to below. I appreciate all the feedback and comments. Until next time, be nice, be thankful, and do the work.

7:16Thanks for tuning in to Market Farming Basics. If you found this valuable, hit subscribe wherever you get your podcasts and join our growing community of profitable market farmers. I'm Diego, and I'll catch you on the next episode. Until then, keep growing smarter, not harder, find the video version and more resources. On YouTube, at Modern Grower Pro. Thanks for listening, and until next time, be nice, be thankful, and do the work.