What Does it Take to be
Successful in a
Producer Owned Business?
By Marsha Laux
Iowa State University Extension
Value Added Agriculture Program
Success = _______
(you fill in the blank)
Define Success
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Is it just $$$$?
Know where you are going – be specific
Goals – timelines – plans
If Profit, then what level, when?
Specific for your business plan
Re-evaluate life’s priorities as it relates to
your producer-owned business
Unique Selling Proposition?
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Comparative or
competitive
advantage?
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Better than
Cheaper than
Different than
_______ than
Is it all about the PRODUCT?
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Product sell itself?
Better than, different than,…… how?
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Competitive positioning
Packaging, labeling, pricing, brand
Delivery, ease of transaction, availability
Margins, service, market share
Customer relations
Telling a story with your product
Food is Big Business
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$800 billion spent on
food/US/2001
Adding 50-80 million
people in US by 2020
Add another $200
billion to food
expenditures
“With $800 billion in
food sales, I can
th
easily get 1/1000 of
a percent!”
NOT!
Verify & Test
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Who are your customers?
Test market – customer focus groups
Letters of interest from customers
Validate your idea
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Go sell something --- sales trump surveys
every time
Specific & quantitative
Key Questions:
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Can you make a business case?
Is this fad, growth or highly competitive?
Will you have revenue diversity?
Can you execute a good business model?
Will your actual business structure make
sense?
Can you convince a stranger to buy or
invest in your product or idea?
Know thy competition!
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Research, research,
research…… PLAN
Who are you going to
replace in the market?
Identify parallel
customer choices
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Time, Money, Family,
Social & cultural
Eat out, dine in
What is the value of your product?
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Priced comparatively…
What is your advantage?
Know yours and
competitors margins,
costs, prices
Constantly scan other
products – how do you
compare?
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Review & modify
Be ready to adapt
Revisit your business plan
Be paranoid about the market!
(at least adopt a healthy paranoia)
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Listen to what the
market is telling you
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Great marketers are
great listeners
Don’t ever assume
you know it all or
enough
Be tenacious
What is your business model?
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How do you make money?
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By being the most efficient
producer
By buying cheap inputs
Deliver cheaper
Perception is REALITY
Value is created in distribution
and via marketing, NOT in
PRODUCTION
Know the “Numbers”
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Have a sound knowledge of the
financial dynamics of your business
Don’t need to be a CPA, but know&
focus on key results areas:
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Gross margins, return on investment
Monthly fixed costs
Sales/employee
Cash flow
Plan to which business measures you
will manage to!
Cash is LIFE &
Lack of Cash is DEATH!
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Know and understand your cash flow
Plan for the ebbs & flows
Work with your banker, your CPA, revisit
your business plan
Have enough capital!
(and then some…)
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It doesn’t work without enough
working capital……..
Plan for the unexpected
The biggest cause of failure is
inadequate capital
Go accrual – review your ratios
Don’t do this for the bank, do it for
yourself and your business!
Your business is a reflection of YOU
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True entrepreneurs take things
personally
Take the blame and the credit
Success or failure
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Determined by what you do, how you
plan
Your willingness to adapt, to fight for
what you want
Refusal to make excuses – make it
happen
Plan, Plan, …. EXECUTE!
Create action plans
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Strategic objectives
Know where you are going
How are you going to get there?
Detailed budgets
Assign responsibility
Work on timelines --- “DEAD”-lines
ANTICIPATE!
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Anticipate what will
happen --- plan for the
unplanned
Do you have a fallback
plan?
Contingencies will help
make your business a
success
If you fail to plan you
plan to fail!
Get your mental focus right
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Focus on priorities
Is your ladder leaning
against the wrong wall?
Peter Drucker: replace
“achievement” with
“contribution”

By contributing, you are
keeping your focus where it
should be – your customers,
family, employees,
shareholders & industry.
Be PASSIONATE!
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Without a fire in
the belly, you will
not be successful
Passion – be
willing to fight for
what you must
believe in:
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YOU
YOUR BUSINESS
Contact Information:
Marsha A. Laux mlaux@iastate.edu
Iowa State University Value Added Agriculture
Agricultural Marketing Resource Center
1111 NSRIC
Ames, Iowa 50011-3310
Phone: 866-277-5567
Fax: 515-294-9496
www.agmrc.org
Thank you!