Agent Getting Started Manual. Sample Preliminary Report: Fill & Download for Free

This is a section from our 338-page Commercial Aquaponic DIY manual on “The Business Of Aquaponics”. Although it’s about aquaponics, the information also details exactly the steps you need to be successful running a soil-based arm. It’s kind of long.The Business Of AquaponicsThis is the most important part of this manual for you to understand. There’s no simple “What To Do” explanation here. If you are successful, it’s ONLY because you understood all this stuff, not because you were just lucky. Conversely, there are many areas in which your aquaponics business can fail, and this part of the manual is designed to help you identify ways to succeed in all of those areas.Here’s a short list of those “failure-mode” areas, after which we go into detail on each area so you understand how to do it right. The big aquaponics failures of the last five years all did one or more of the following things:Started big with lots of expenses and little or no cash flow.Just “grew something” without doing test grows, market research, or financial projections first to see if it’s a good choice or not.Chose a single outlet for their product without investigating all the possible ways to sell.Started with little or no planning and no production timeline.Didn’t market themselves or their products in an effective way.Employed an aquaponics technology that couldn’t possibly produce enough to cover its expenses, labor, and overhead.Right after we cover the solutions to these six failure modes, we will do an aquaponics “Case Study” of a farmer who did everything right; and is making a good living from his aquaponic farm as a result.A.How Big Is Big? And How Small Is Small?If you’re interested in starting a commercial aquaponics operation, the most important things you should know are these:FIRST: One person can easily run 2,500 to 3,000 square feet of aquaponics system, performing all the tasks required: planting, transplanting, harvesting, feeding fish, cleaning and replanting rafts, weedwhacking around the perimeter, regular required maintenance, packing and transporting your produce, including delivering to your wholesalers or selling at Farmer’s Markets, in a total of 40 hours a week.SECOND: each 2,500 square feet of aquaponics system requires 4,000 square feet of greenhouse (or more) to house it. Anyone who tells you that you can make a full-time living with 600 square feet of aquaponics or a 20-foot by 40-foot greenhouse is lying.Having said that, a smaller system like the 600 square foot system just referred to, or one of our Micro System 64’s or 128’s, is a great way to get started in commercial aquaponics. With a small, relatively inexpensive system this size, you can do your due diligence and gain experience and confidence while making some money, and without taking too big a risk. As you build your knowledge, experience, and confidence, you can then develop a commercial AP venture that will give you a full-time income, because you have eliminated as much of the uncertainty from the equation as possible.Our point is that when you do take the plunge and invest thousands of hours and tens of thousands of dollars in an aquaponics venture designed to support you and your family, you want to have all your ducks in a row. Starting a commercial AP venture at a small size gets the ducks lined up beautifully, and gives you lots of opportunities to adjust focus and direction as necessary to succeed.THIRD: commercial aquaponics is a business; to be successful, you have to run it as a business. You need business experience, or need to involve someone who has it. Getting excited and carried away by the newness and coolness of aquaponics does not guarantee success, hard-headed business decisions based on experience and knowlege do. A lot of aquaponics newcomers who lack business experience see their vegetables growing and fish eating, but don't realize they're slowly circling the drain. Some of the better-funded ones don't even realize this until their second or third round of investors, because they've still got money in the bank; and they’re sure it will be profitable soon. Because there are no economic models for aquaponics yet, as there are for other businesses, the investors also often get taken in by the excitement and hype, until in the second or third year they realize they've funded a business that is set up to lose money.Here's an example of this phenomenon: we used the UVI (University of the Virgin Islands) system for a year after we took their course in 2007, and at the end of that year (because we kept good records) we realized that we'd grown 6,000 pounds of fish. Good, right? No, not good: we had a $2/pound loss on each and every pound; even though we were experienced business people, we lost $12,000 our first year just on the fish because we got carried away by the romance of "growing lots of fish" and hadn't realized the economic realities of the situation.An example of how people often approach commercial aquaponics is in the PowerPoint slideshow in the DropBox files: it's called "Aquaponics Failures" and details the failures of several commercial aquaponic startups who lost from $350,000 to $4,000,000. You too can fail just like this, if you don't do careful enough research, try out your ideas at a small scale first, or rely on consultants and advisors who don't really know what they're talking about.My advice? Don't be in a hurry to throw your money away. All of these failures could have tested out their "great ideas" thoroughly for less than $10,000 by building a small system using their proposed technology, and realized they lost money in the real world. Or, they could have simply filled in our "Single Crop Projection Tool V1.1.xlsx" spreadsheet with their local expense and income numbers (in the DropBox folder), and found out they also lost money on paper, without even spending the $10,000!Instead, they were in a hurry to make the big bucks that the salesmen, consultants, and dreamers promised them, and they used technology that had not been proven to be profitable. Two of these lost everything: their savings, their houses, and were forced into bankruptcy; a third is still in litigation initiated by the investors. There are more coming down the road, for as P. T. Barnum said: “There’s a sucker born every minute”.The critical thing to understand here is the phrase "technology that had not been proven to be profitable"; because all these technologies grew beautiful fish and vegetables, they simply could not turn a profit doing so. The greenhouse looked great, but the business looked horrible!B.How To Start Small And Generate Cash Flow!How To Drive Success: Don’t start big with lots of expenses and hardly any cash flow; rather, start small and generate cash flow right away!It's funny how many people claim to be "commercial aquaponics experts", but have never grown and sold vegetables and fish for a living themselves. From a couple of people who have done so, and who came up the hard way (we didn’t have our manuals, our CAD drawings, and our unlimited support services to draw on when we started!) here's our short list of what's necessary for success in commercial aquaponics:1. Research thoroughly and learn everything possible you can about aquaponics before starting. Doing your due diligence first can save you from mistakes costing hundreds of thousands of dollars, or worse, thousands of hours of your life! How do you do this?Contact people who are doing it, and confirm that their approach really works. Insist on numbers, contacts to call, and real people that you can confirm are actually operating the farm. Ask for the number of their produce distributor, or three of the markets they sell to; then call these people and confirm. You get the idea.Why This Is So Important: There’s one aquaponics farm that recently lost their $1.4 million investment after only 5 months in actual operation. When we analyzed their failure mode, we realized immediately (from publicly-available photos) that they were planting their lettuce at one-third the density we successfully grow ours at, and only using 70% of the available floor space inside their greenhouse for vegetable troughs. They had also paid three times as much for their greenhouse and aquaponics systems as they should have cost, because they simply hadn’t educated themselves and shopped around first.(Below) Dry troughs, no fish, no plants, no income. Not where you want to end up!The really sad thing about this failure is that if they’d simply invested $1,495 in one of our trainings before investing $1.4 million in their farm, they wouldn’t have made this mistake, and might still be in profitable operation.Insist on getting information from people who are actually doing it, not just talking about it. See their operation, don’t just listen to “how much they know”. If they truly want to help you, why don’t you have them send you a copy of the cash flow spreadsheet from their profitable commercial aquaponics operation? And remember: keep a sharp eye on your wallet!2. Don't wait until you have lots of money to invest in your operation: start building and operating an aquaponics system now! Build a small backyard system if that's all you can afford, or even a tabletop system out of the EASY Way book; the food you grow with it will save you money. Even with a small system, you will gain valuable experience that will be critical to your success at a commercial-scale venture.There are many reasons to start small, even if you have several hundred thousand dollars burning a hole in your pocket. Here are four of the most important ones:A. Even we have no idea what will grow best in your location, with your greenhouse, your sunlight exposure and hours, temperature, humidity, etc. After doing two or three “test grows” in a small, affordable system (and greenhouse, if necessary in your location), you will know what grows best.B. Even we have no idea what will sell best in your location, with your local economy, your local produce distributors and outlets, and your local consumers. After each of the “test grows” mentioned in “A” above, you will have produce to do test marketing with. Take this produce to all the outlets you identify that might be interested, and find out what they’re willing to pay, as well as the quantities they need. Yes, need, because commercial aquaponics is not about the “great produce” you have, how cool your aquaponics system is, or what a great farm name you’ve come up with, but about your market’s needs! If you don’t supply what the market needs, you can forget staying in business.C. Even if the aquaponics technology you are starting with is well-developed and already profitable (as ours is) your situation will be different than ours in ways we can’t predict and you can’t plan for. You will discover new information while operating your first small system which you can apply to your large commercial-scale system. If you’ve built your 20,000 square feet of aquaponics and then discover something that gives you 20% (or 100%) more production or income, it’s too late: you’ve spent your money and have to live with your system the way it is.What we can guarantee is that, in your physical environment, with your market, your temperature regime, and your skill sets; you will learn so many things in your first few growing cycles (in your small test system) that you will be able to build your large commercial system more economically, and also operate it more productively, than if you hadn’t done the test grows with the small system.D. It’s also fun: it’s easy to get started with a small system, but they’re just as much fun as a big one to see the little sprouts and fish get big, and finally harvest and eat, or share with your friends.How To Get Started:If you owned 50,000 square feet of greenhouse aquaponic systems, who would you hire to run the business? A confident, experienced, and knowledgeable person, right? But if you’re like most of our clients, you can’t afford to hire someone, and will probably end up doing this job yourself. You have to become this confident, experienced, and knowledgeable person! Only you don’t yet have the knowledge or experience required, and neither do you have the confidence. You need to develop all three in order to make your new business venture a success. It is much easier to gain experience and confidence in a new skill when you’re not under a lot of pressure to succeed financially. Starting with a small aquaponics system, with its low costs, but the exact same functionality as a big system, offers a big advantage here.In contrast to our 50,000 square foot greenhouse example, although you may dream of starting with a BIG system, you don’t want to. The worst possible situation is starting up a huge aquaponics system with a $15,000 a month loan payment on top of another $12,000 a month operating and labor expenses, beginning on the first month of operation. If you stumble here, you can hit the asphalt pretty hard!You do not want to learn to drive in a loaded 18-wheeler going down a steep hill at night in the rain! You want to start on a sunny day in a Toyota Corolla with an automatic transmission! In the same way, you do not want to learn how to "drive" in a 10,000-square-foot aquaponics system with a $3,500/month loan payment and $5,000 per month of overhead expenses! It’s got way too much inertia and way too many “moving parts”. But this is the way all the failures in our "Aquaponics Failures" PowerPoint slideshow started (this slideshow is in the DropBox files that come with this package).Those failures are why we suggest that you start at a small scale instead: if you have limited capital, you can start with a 128 square foot Micro System that only costs around $2,500; you can get the aquaponics system materials and a simple 12-foot by 20-foot hoop house to provide a controlled environment inside (this is materials cost only, triple this number if you’re going to have someone else build it for you). The production of the “128” will be 1-3 pounds per 10 square feet of system area per week; or 12-36 pounds per week of organic vegetables. If you figure your average price for organic vegetables in your area is $3/pound, then this system will bring in a gross income of $36-108 per week, or $1,872 to $5,616 per year.Not bad for a business that only cost $2,500 to set up! Even after operating expenses (which run from $200 to $400 per year, depending on costs in your area), you still have a net income of $1,500 to $5,200 per year for wages and profit, and you can use these funds to build your next larger system with. But this isn’t the most important or profitable part of starting with a small system, because you also use it to do your test grows and test marketing with. With the data generated from these, you can make projections using a Friendly Projection Tool, and predict your bottom line reasonably accurately for a large-scale aquaponic operation before you risk your savings (next!).After you run your Micro System at a profit for awhile, you may be ready to go for the big leagues! But if you don’t have the capital yet, a good way to generate the cash flow required to grow is to build the next larger sized system of 256 or 512 square feet; or even the 1,024 square foot system in the plans. Using the cash flow from your Micro System plus the cash flow from your second larger system will give you at least some of the capital required to expand. Using the money you made with the first system to finance the second, and so on, is a smart way to grow without needing to borrow money or give someone a big chunk of your company just to get some funding.Right of the top of our heads, without looking around much, on 11-3-2016, we have 20 successful students (List Of Our Successful Students - Friendly Aquaponics), which is 20 more than any other aquaponics trainer we've been following for the past nine years. The others (TBOK) do not have a single one. What it boils down to is that we can't guarantee business success for people who don't have any business experience; no one can. You have to learn to be a businessperson, and you should use any resources in your community that are available to that end. Success in commercial aquaponics is not about the aquaponic side of things, because the vegetables practically grow themselves; it's about learning to run a business successfully.We only know of 20 after eight years of doing this, because most of the people who take our course don't have the funding to do more than a Micro System in the backyard. Of the ones who are funded, a lot of them decide to use our materials as part of "something new" that they "invent" all on their own; or they combine our system with two or three others they’ve seen on YouTube. They fail because they didn't follow instructions; but need to invent a new, improved system. The problem with this is that they didn't understand anything about aquaponics yet when they invented the new system, so it doesn't work.We don't mention or showcase these students because they are: 1. Not our failures; they created the failure entirely and completely on their own by refusing to follow our tried and tested technology closely, 2. Embarassed that they failed, and 3. Their failures usually don’t provide any new information; we already recommend (in this manual!) that people not do the stuff that these people did and failed with.C.How Much Can I Count On Growing, And What Should I Grow First?You can’t count on anything, ever! You need to be flexible, adaptive, and ALWAYS pay attention to what’s going on in your aquaponics.(This is in bold, and BIG, because it’s one of the most important bits of information in this entire manual!). A good estimate, with perfect weather conditions and few to no disease episodes, if you do EVERYTHING right, and work smart and hard, would be 2 to 3 pounds per week per 10 square feet of raft during the summer, and 1 to 1-1/2 pounds per week per 10 square feet of raft during the winter. Don’t use these figures to predict “How Much Money You Will Make”. Instead, make sure to adjust these figures using actual production numbers you recorded during YOUR Test Grow before putting them into any of our Crop Prediction Spreadsheets!What should I grow first? After lettuces and other greens, basil appears to be a very good money crop. It’s super easy to grow in aquaponics, has few insect pests, and along with lettuce seems to be what everyone grows with their aquaponics system at first. So go ahead, grow basil or lettuce and sell as much as you can, but do some test grows and develop other crops so you have a Plan B when the price of aquaponic basil goes through the floor because EVERYONE is growing it!That's what happened when we started growing aquaponic lettuce on the Big Island; we got $6/lb for it wholesale at first because it was such high quality and no one else had it. Now, it's $2.50 to $4/lb wholesale because of all the people we taught to grow it, and who didn't have the imagination or foresight to develop other crops. Guess who doesn’t grow lettuce for money any longer (LOL!).D.Marketing Your Product: Research, Sell It, Then Grow It!!!How To Drive Success: Don’t just “grow something”; make sure you do test grows, market research, financial projections, and develop a marketing strategy first to see if it’s a good choice or not.Marketing: What’s That?Selling a product can be an intimidating process to people who have little experience selling. The best time for your “marketing plan” to begin is before construction of your system as you research to determine what you are going to produce during your “test grow” period (see the Test Grow section of this manual). Although you can’t get it perfect the first time around, you will do a “preliminary market survey” before you do your first test grow to get a general idea what is most valuable to try out during the test grow.After you start to get data from test grows, and take samples to potential customers to determine pricing, you will have even better information on what to grow and where to sell it. To sell everything at the best prices, you need to determine what your market (your customer) wants and needs, then deliver the perfect product to them. A good marketing plan is simply a plan for finding out what the product is, then reaching your customer and delivering that product. What does a marketing plan consist of?First Comes The Market Research:This is the research phase that will help you determine the opportunities and challenges for your product. Many good or even great products fail because the market analysis step was either overlooked, incorrect, or not extensive enough. Sometimes, the same product is later successful for other entrepreneurs due to sufficient and correct market research and analysis! This step is where you define the target market at which you will focus your marketing efforts. It is where you find answers to lots of questions, some of which are:What is the market potential for your product in the area?What competitor’s products are on the market, at what prices?How fast is your product’s market growing?What does your typical customer look like?What does that typical customer need?Where are your customers located?Demographic data (information about the location, age, income level, spending habits and family composition of your potential customers) and psychographic data (information on your customer’s hobbies, beliefs and lifestyles) help you identify your target market. Using this type of information helps determine the marketing strategies of price, promotion and placement. How do you find out this information? Talk to people!Talk to people at Farmer’s Markets, and the produce managers of grocery stores, and your friends, and the members of your church, and the local produce distributor. Ask them what they want, or have trouble getting, or is really expensive. All of this information will help you decide what is most in demand; and when combined with the information on how easy and fast things grew during your test grow, will determine beyond a shadow of a doubt what is most financially rewarding for you to grow. This information can be potentially confusing, and it can be difficult to figure out which are the most profitable crops; unless you use a “Friendly” tool to organize and compare the information in an easily understandable form.(Below) The “Friendly” Projection Tools are MicroSoft Excel spreadsheets (you need Excel to use them) and are included with this training. They can be found in your DropBox files, under the folder “Financial”. There is a spreadsheet called “SingleCropProjectionTool” and one called “Multiple CropProjectionTool”. They both come with Word .DOCX files with similar names, that are the instructions for how to use these tools. This is a screenshot of the “SingleCrop” tool.Click here to download this spreadsheet and instructions for using it (plus much more!).The tool which will determine which is the best deal for you to grow is the “Friendly Crop Projection Tool”. This is a MicroSoft Excel spreadsheet in two flavors: the “Single Crop” is for those who are just getting used to spreadsheets and want a simple tool to use. The “Multiple Crop” tool can handle four separate growing seasons in a calendar year and ten crops per season, and is specifically for those growers who understand seasons and scheduling required for multiple crops from the same aquaponic system (or for those growers whose partners understand spreadsheets really well!). Both these spreadsheets and the instructions for them are found in your DropBox folder.These are awesome tools, and will tell you if something is a good idea or not before wasting thousands of dollars and hundreds of hours growing it. You must do your homework during your test grow and record cycle times and weights accurately; the numbers these spreadsheets generate are fantasy if not derived from actual vegetable growth data from your location. Some of these numbers must come from the homework you did during your market research (see the Market Research topic in The Business Of Aquaponics section of this manual) and found out which of your test grow “winners” sold for the most money as compared to other crops.Another important part of the market analysis is the competitive analysis. This is where you identify your competition and determine their strengths and weaknesses, and if the market is already saturated. It helps you identify what it is about what you offer that is better than the competition. The competitive analysis will provide you with information to help you produce a better product so it will have a greater chance for success in the marketplace.Develop a marketing strategyThe marketing strategy is that part of the planning process where you determine the action steps you must take in order to overcome the challenges identified in the market analysis. Here you build on what are known as the “4 P's of Marketing”: Product, Price, Promotion, and Placement.Product - All the information regarding your product must be extremely familiar to you. Aquaponically-grown produce provides many benefits, features and unique characteristics that set it apart from your competition. It is imperative to know these benefits and features inside and out, and to be able to speak about them to anyone without the need for notes! KNOW YOUR PRODUCT!Price - Pricing a product is a new concept for most people with previous farming experience. Farmers in the United States have become what is known as “commodity producers”. This means they just get paid what the buyer is willing to pay for their product; and there’s no shopping around, and no negotiation. In aquaponics, with proper market understanding and development, you become the price maker.When you market your product, it is now up to you to determine the asking price. You must price your product at an amount high enough to generate a profit including total production/marketing costs. However, you must also make the price attractive enough to encourage customers and generate sales. Pricing is an art, not a science. You must be constantly alert to changes in the marketplace and changes in your business that could signal a need to adjust the product price.Promotion - Everything you do with your customer to encourage them to purchase your product is promotion. It is not merely advertising but includes public relations and networking. One way of encouraging consumers to purchase your produce is to provide easy to make, appetizing recipes. You can network with your customers at point of purchase locations by offering samples of your food product (samples are hugely effective in selling your produce!)The whole concept of promotion is to catch and hold the public's attention and get them to buy your product. The Internet has created another avenue for promotion and more questions to answer like: Are you going to develop a web site? What search engines are you going to register with? Are you going to cross link with other related web pages? Will you be available to answer email questions about your product?Placement - Getting your product to the customer when and where they want it is called “placement”. This is also often referred to as distribution. Distribution typically represents 15% to 50% of the final price of the product to the customer. Often farmers do not have the resources to individually deliver the product to the customer. They must therefore rely on established distribution channels made up of retailers, wholesalers, distributors, agents, brokers, or cooperatives.You must determine the distribution partner that best fills your needs and your customer's needs. Some non-traditional distribution channels are: u-pick operations, farmers markets, classified ads, consignment selling, and community supported agriculture (CSA’s). Many books have been written on marketing strategy. The information here just touches on a few of the basics to give you a flavor of the way you need to be able to think when moving from "selling a commodity" to "marketing your product".Sell What You Grow Before You Grow It!What does this mean? Most farmers plant some seeds, grow them out, harvest, and then try to figure out how to get rid of what they have grown and get paid for it. Or they simply grow what they grew last year and hope for the best. This is where the rubber meets the road in the farming business; you may have wasted your time because you grew something the market was saturated with, or something that no one wanted to buy. We refer to it as "The Market" because it acts a lot like it’s alive: it responds to stimuli, makes decisions, and creates results.Two places to get accurate information about what produce is selling, and what it's selling for, are these web addresses: www.usdareports.com/and www.terminalmarkets.com/where you can also get historical data as well as information for the current date. These are the official USDA report sites.It is up to you to intelligently assess what The Market wants, and plan accordingly. For example, we had 300-400 pounds per week of production long before we actually started selling vegetables. We found out the local farmer's market was full and not accepting new vendors of leafy greens. We would have to travel 45 to 60 miles each way to get to the other ones on the island, and leave home at 3am. We checked the grocery stores and found out they already had three to four small local brand names that were providing them with the same product we had grown. Recognizing that our aquaponic produce was higher quality, we did not want to displace the local farmers of this produce that were already established in the market.We had good responses to our queries from the fancy hotels and restaurants on the island; apparently they are not getting enough local produce, or enough varieties. We thought about doing a CSA (Consumer-Supported Agriculture). We thought about selling off the back of the truck on the side of the road, something still legal to do on the Big Island. We realized if we sold into a market that was already well-supplied, we would just start a price war and eventually knock smaller producers out of the market, as aquaponic produce is very sweet and has an incredible shelf life. Aquaponics simply supplies a superior product.What decided our initial course was the fact that we were building new systems all the time and increasing the size of our farm. The 300 pounds of vegetables per week would soon turn into 600-800 pounds per week, as our goal was always to expand. If we started delivering to a bunch of small accounts, we would soon be running all over the island to deliver them to hotels, restaurants, CSAs, and what-all else. We decided we didn't want to deliver, go to farmer's markets, deal with restaurants and hotels, or sell by the roadside.Deciding what to sell and how to sell it was to a great extent a personal decision; we had small children we couldn’t just leave at home, and did not want to drag them all over the island doing deliveries. We really liked just working on the farm. We contacted three different wholesale buyers, only one of whom would pick up on the farm (otherwise, we’d have needed to purchase a $20,000 refrigerated van). We started selling to them at $5.00/pound for our lettuce mix, until they went out of business during the “global economic downturn” that began in 2008.What happened? The economy crashed: the bailout, GM, the second bailout, and so on. Everybody got scared. What did we do? We saw the importance of diversification, but then pursued an account with Costco (because it wouldn’t affect all the small local producers) and found ourselves still growing just one product – lettuce. So we sold that to Costco for two years, before finally beginning to diversify into a wide variety of food crops. Expanding out of cash flow has been quite a challenge!Since then, we've planted taro, many new vegetable varieties, and are planning a poi kitchen (a taro product like pudding) to make value-added taro products, as well as planning an “Organic Farm Stand” that is built on a trailer and can be hauled anywhere and set up to sell by the side of the road, or at a Farmer’s Market.Before you invest one penny in an aquaponics venture, you should make a well-researched decision that takes into account how you want to run your farm as well as what you want to grow, and how you want to sell your produce. Your style and your interests may be different than other farmers, and you will want to grow different things and market them in a different manner to get the most satisfaction from your farming endeavor. You should also do a Test Grow (have we emphasized that one enough yet?) to determine if you even want to do this for a living! What a drag to end up being successful at something you don’t like doing!E.Pros And Cons Of The Different Ways To Sell:How To Drive Success: Investigate all the possible ways to sell, then make an objective choice that takes into account the money you’ll get as well as how much work it is, AND your “style” of doing business.Selling Through Farmer’s MarketsThere are always farmer's markets around, and they are becoming more and more popular. You apply, pay a fee, meet requirements, and for some markets, show up at an exact specific time and be broken down and out of there by another exact specific time. We were discouraged from joining one farmer's market because we grew the same produce the originators of the market did, and they didn't want competition with more sellers of leafy greens. Farmer's markets are great if you love talking to people, spending time driving to and from, etc. The prices you get can be slightly lower than retail (or else why would people come there instead of the store?), and in some farmer's markets the prices are mandated to be less than retail. If you don't want to go yourself, you can meet some sellers who are already there, and arrange for them to sell your produce.Selling Through CSA’sCSAs (Consumer Supported Agriculture) are like a subscription book club, only for vegetables and produce. We know of one successful CSA whose proprietress doesn't even grow any of her own produce; she just buys from farmers and resells it. How a CSA works is that you usually sign up your subscribers before you deliver any vegetables. Often you get full payment for a delivery period (usually eight to twelve weeks, sometimes longer). You can use newspaper ads, word of mouth, press releases, and flyers, and so on to get your subscription list filled.Then, you deliver vegetables in a predefined amount to your subscribers. You can make it extremely convenient for them by dropping their boxes of produce off at their homes or places of business, and charge more to make up for your cost of doing this. Or you can make it less convenient by having all your subscribers come to your farm on Saturdays to pick up their boxes. The level of convenience is one of the big reasons a subscriber will pick your farm over another; so make it as convenient for your subscribers as you can within reason and within your cost parameters.You deliver a different selection of produce each time depending on what you're planting and harvesting at the time. The variety is one of the appeals of CSAs to the consumer; it is kind of like Christmas when you open the box. Good CSAs include recipes with the produce to get the consumer interested in trying new kinds of produce. Because it is convenient and saves the consumer shopping for all those things at the store, especially when you deliver, you can charge the same as retail, or even a little bit more and the consumer is still satisfied with the deal.Really good CSA’s offer a wide variety of things besides the ones they grow, that they have purchased from other local farmers or processors. They are more like “mini-produce distributors” than CSA’s who only sell their own products. Think of what your customer wants, and try to procure it locally; as locally-sourced produce has a greater sales value than any brought in from a great distance. Get organic cheese and yogurt from a local dairy, honey from a local beekeeper, coffee from a local coffee plantation (Hawaii, right?), hams and bacon from a local slaughterhouse, and so on. The only real limitation here is needing refrigeration and perhaps a Health Department license to sell some of these items.Farmigo Is Here To Help With Your CSA!Farmigo is an web-based shopping cart, which has some really interesting and powerful software for member farmers to run their CSA with. You enter in all the items you wish to sell, with photos and your written descriptions, and the amount you have available for sale. It keeps an inventory and automatically removes items from inventory when your CSA members buy them. It creates “pick lists” of all the items a member has ordered for that week’s pickup by them, so your employee has an easy-to-follow list to make up the member’s box from. It acts as an online store with a “shopping cart” that your customers fill. It can create reports for you of sales, inventory, and many other things it is critical for a business owner to know. It also has an email list function so you can send your customers regular newsletters with special discount offers and recipes to keep them coming back.Farmigo will work with your existing PayPal account to accept PayPal payments as well as credit and debit cards. Farmigo charges a fee of 2% of the produce you sell, added to the PayPal processing fee of 2.2% to 2.9%, for a total fee of 4.2% to 4.9% of total sales. The payment goes into your PayPal account, and then you need to transfer any funds you require into your business bank account with a manual transfer.To configure Farmigo to accept credit and debit cards directly (meaning the payment goes directly into your bank account without requiring a manual transfer, as PayPal requires), you need some “web savvy”, or need to hire someone who does. This is because you need a “payment gateway” (Payment Processing: Accept Payments Anywhere is one), and a “merchant account”, which is an “in-between” bank in the cloud that actually accepts the funds and then automatically transfers them to your local bank account. One benefit is that you may get lower rates than with PayPal; you are still charged the 2% by Farmigo, plus whatever your merchant account provider charges. This is not simple stuff, but once it’s set up and your web person shows you how to use it, it’s a breeze, and much easier than trying to do this stuff over the phone!Either of these options allow your customers the convenience of ordering from their web-based smart devices, so now it’s easier for anyone with an Ipad or a smart phone to be a customer. This is how smart businesses set up their CSA’s.Farm StandsRoadside stands (either your own or another grower's) and pick-your-own operations provide opportunities to receive what are essentially retail prices for your produce. However, to offset those higher prices received, you will also have additional expenses for advertising, building (or leasing) and maintaining a facility, and paying employees to service your customers. With the right location and low enough operating costs, a farm store can be a really profitable way to sell your produce.With pick-your-own operations, you may save on harvest costs, but you must be willing to accept waste and possible damage and contamination from untrained people in your growing area. You also need to be able to handle the occasional lawsuit from someone who stubbed their toe on a lettuce.Selling To Wholesalers Or DistributorsIn wholesale marketing, farmers often contract with shippers to market and ship the produce for a predetermined price. If you do not use a contractor and ship your own crops to a wholesale market yourself, your product will be subject to the greatest price fluctuations. Marketing cooperatives generally use a pooled cost and price compiled daily, which spreads price fluctuations over all participating producers.The good thing about selling to wholesalers and distributors is that they will take large quantities in single deliveries, and often will pick up produce at your farm, which saves you delivery time and expense. Another good thing about selling to wholesalers and distributors is that they consolidate produce they purchase into large shipments, then resell to areas that can be quite distant, that you couldn’t afford to ship your small amount of produce to yourself. This opens up potential markets to you for produce you couldn’t get rid of locally.Example: In Hawaii, we are blessed with a 365-day growing season and can grow basil year-round. The average price in the Seattle produce market for organic basil is $13/pound, year-round. You might not be able to get rid of 800 pounds of basil a week here in Hawaii, but you sure as heck can in Seattle! If you sell to a local distributor who ships a plane’s-worth a week, you may get better prices than shipping that small amount yourself. Ask wholesalers and distributors what they can't get, or what's expensive and scarce at certain times of the year, and then grow that. This is the successful strategy of "sell it first then grow it".The bad thing about selling to wholesalers and distributors is that they pay half of retail or less for the produce. You figure it out; what's more appealing to you? More money for more work or less money for less work?Selling To RetailersLocal retailers are another possible market, but they pay only slightly more than wholesalers and distributors, ie a little more than half of retail. Selling to retailers is like selling to wholesalers and distributors except they usually will only take smaller amounts, which means you have more delivery costs to get rid of the same amount of produce. If you have a local retailer near you it may be a great relationship to have because your delivery costs will be low. Ask retailers what they can't get, or what's expensive and scarce, and then grow that if it makes economic sense. Remember, sell it first, and then grow it.Selling To Restaurants And HotelsRestaurants and hotels buy from retailers, wholesalers like Costco, and from distributors, at prices that range from full retail down to wholesale plus a bit. If you sell into this market, you will get at least this price range for your product, plus a little more if you deliver directly. This is much better than wholesale. Some really smart farmers establish direct relationships with this market where they custom grow what the restaurant or hotel chef wants. If the chefs get specialty items, delivered fresh, with a varied selection that changes frequently throughout the year, they are often willing to pay slightly more than retail. This is a great situation to be in and can really justify the extra delivery expense for the farmer.How Big? Size Your Operation Correctly For Your MarketWhile you're researching what market you want to sell into, you also research the quantities required to compete in that market. Wholesalers won't pick up 40 pounds of something each week, but they can get excited about 400 pounds. Retailers usually take deliveries in the 10-50 pounds per week range. They won't take 500 pounds a week of anything; but you may be able to sell 500 pounds a week of a single item between six or eight retailers.When you have an idea how much of what you're going to be able to move, add 10-15% for wastage, then you'll have an idea how much your system needs to produce. You can size the system accordingly, after you do your Micro System test grow right away when you get home from this course and operate it for a few months to see what grows well in your area and climate and how much is produced per week. After a few months of test growing, you will have good thumbnail estimates of yields for the different stuff you've grown, and can project how much you’ll be able to deliver from a larger aquaponics system.How To Tap Into The Big Box Stores and SupermarketsPLEASE READ THIS FIRST, Before Getting All Excited: To supply even a single produce item in the minimum quantities that a single Costco, Walmart, or Sam’s Club requires takes a facility of at least 20,000 square feet of trough area. This means you’ll need around 30,000 square feet of greenhouse space. This greenhouse and aquaponics system will cost you roughly $750,000 for materials only (you build it all yourself), or $2,100,000 to $2,750,000 to have someone else build it, depending on location and how serious a greenhouse you need. Don’t waste your time if you’re not funded for this kind of venture.If you are interested in selling to Costco, and funded for it as explained previously in this section, please contact us directly. We can’t guarantee you’ll get an account, but we ARE the only people with direct experience who can help you do so.F.Advertising, Marketing, And PromotionHow To Drive Success: Advertise, market, and promote yourself and your products in an effective and affordable way.The Importance of A WebsiteMany people will tell you that a website is of utmost importance to your new aquaponics business. That might be true if you’re selling books or software; but most aquaponics farmers sell vegetables, and vegetables aren’t usually sold through websites ( the Farmigo website for CSA’s is the exception we’re aware of; see the Farmigo information in the previous section “All The Different Ways To Sell”).There are people who sell CSA baskets of vegetables through their own websites (instead of Farmigo; see previously), but they can end up with an incredible amount of “overhead” managing customer’s special requests, cancelled orders, and so on; this is in addition to running the aquaponics. The website maintenance and modification alone can cost you thousands of dollars if you aren’t technically savvy enough to write all your website code yourself. We suggest leaving a website until you are making a profit and wondering what to do with the extra money.The Importance of Paid AdvertisingPaid advertising is a lot like a website; something to leave until you are making a profit, and can spend some of that extra money on having someone promote you and your products to get more sales. It is not necessarily the best way to create sales in the first place. If you sell your product to a restaurant, retailer, wholesaler, or distributor, there’s little to no benefit in using paid advertising (see the previous section on Pros And Cons Of The Different Ways To Sell). Advertising must result in increased sales that both pay for the advertising and increase your profit, or there’s no point in doing it at all. And even the “experts” can’t agree on what makes advertising successful: remember “New Coke”? No? That’s how successful the Coca-Cola company advertising was for its new product in 1985; New Coke only lasted three months!The Importance of Free Samples And Spreading Your Produce AroundEvery person you give a free produce item to becomes a fan! Aquaponic produce tastes so great and has such incredible shelf life that people just have to try it once to be sold on the idea! So give away as much as you can afford to to as many people as you can reach; it is the best and cheapest “advertising dollar” you can spend. Make sure to take free samples to any restaurants, hotels, produce brokers, retail stores, or anyone else you plan on selling large amounts of produce to; this is what clinches the sale. It doesn’t matter if you have a great business card if you don’t have samples of great aquaponic produce to give to your prospective client.The Importance of Farm ToursMost of our first year we spent doing construction and experimentation. Tim had attended the UVI training, and had seen a large system in operation, and hence was convinced long before I was. I am very much a “show me” kind of person, and am very reluctant to just “believe” in anything, without adequate evidence and proof. So, for the first year, we did not even talk about this to people, as there have been so many people here in Hawaii who have had huge plans and ideas, but turned out to be “all hat and no cattle” (as they say in Texas). We never wanted to be perceived as mere talkers, so we kept our mouths shut, and kept to our construction. But as time passed, more and more people heard about what we were doing, and began just showing up on the farm, asking to be shown around. During this time, we were working 12-14 hours per day, seven days a week, and showing people around became somewhat of a burden, but since the people showing up were so interested, we did not want to turn them away.One day, two men showed up in succession, and Tim spent about 45 minutes with each of them, or about an hour and a half total – away from his workday. I went up and took him aside when he was still talking to the second man, and said quietly, “Do you realize you just spent more time with two total strangers than you will spend with your children today?”. He said, “We need to set a time and do a formal farm tour, don’t we?”That is what began what up until recently was a weekly event. 10 am Saturday mornings, every week for two and a half years had us (usually me) up at the aquaponics, telling whoever showed up for the Farm Tour all about aquaponics, and all about us, and our vision. I chafed under this obligation, and even though we had tours of over 120 people at times (!), with an average of 20-30, I felt like I was not getting any work done for the two or so hours that I talked to people about what we were doing.In retrospect, I realize that probably the most important thing I did in my week was the Farm Tour. It accomplished a tremendous amount for us, most importantly, it offered me a two hour time frame to refine and hone our vision. This kept me connected with the “big picture”, the why of what we were doing, whereas I would have probably otherwise gotten lost in the details of day-to-day construction. I most certainly never would have been able to get how important this work is, and how the future of our species might arguably hang in the balance of how well we figure aquaponics out; the most sustainable, most energy-efficient, and the most labor-efficient ways to grow food. Speaking our vision once a week to a group of interested people gave me a very powerful listening, which allowed my speaking to be more full, more effective, and more powerful. As a result, our entire experience of our project has changed for the better.Also, the weekly Farm Tour taught people about us, and about aquaponics, effectively “softening” our market, so that when we began selling produce at Costco, more people were familiar with us and with aquaponically-grown produce, and therefore were more likely to buy our produce. As a corollary to this, now we do not even bother to have business cards printed! Everyone in our local market knows who we are, and knows about aquaponics.After the first two and a half years of doing weekly farm tours every Saturday, we decreased their frequency to once a month, on the first Saturday. We did this after tour attendance dropped to only four or five people each week. With the monthly tours, attendance is back to between 20-30 people each tour. Keep in mind, the total population of our island is only 184,000, according to the 2010 Census. We have presented aquaponics and our vision for it to around 4,600 people! (Calculated as an average of 25 people per tour, for seven years, or ~130 tours total.)So, if you are in or near a major population center, and you are not doing Farm Tours, in our opinion, you are missing out on a great opportunity for nearly free advertising and promotion. Please consider the time you take to share with others a profound and powerful contribution, to them, to this fledgling field, and to yourself. If you give more than you think you have to give, your return will be ten-fold.G.The Production Timeline And Getting Off The GroundHow To Drive Success: Plan carefully, set up a reasonable production timeline (and stick to it!) and “ramp-up” slowly.If you are planning a commercial aquaponics operation, one of the most important things to plan is your production timeline. You don't just plant out a 6,000 square foot aquaponics system one week and start harvesting and getting paid for 6-900 pounds of vegetables per week five weeks later. There are many things you need to do to prepare for this; here are some examples for this approximately 6,000 sq. ft. aquaponics system:A. Build a 64 or 128-square-foot Micro System first thing when you get home from the course, EVEN IF you have the funds and are ready to begin construction on a full-sized commercial system right away. The reasons are that it will be done and operational FAST; and will give you valuable experience QUICKLY in building these systems and operating them. We’ve had students build these inside their garage in the wintertime, and light them with fluorescents; it works just fine!Having one also lets you discover what grows best in your area QUICKLY, as this varies widely in sites as little as a few miles apart due to variations in microclimate. You can do a test planting in a MicroSystem's 408 or 816 pot spaces of tens of different varieties of vegetables, then you’ll KNOW what grows best without having to wait for when you first plant out your $100,000 commercial system. The MicroSystem will also give you produce to do test marketing with; I'd hate to grow a lot of something in my big commercial system only to find the market was already oversupplied with it, or that it brought such a low price I couldn't make money on it. Test marketing is one of the most important things you can do on your way up the mountain; it is just as important as getting your big aquaponic system built and operating, remember to do both!B. Build your main commercial system(s) while becoming experienced and confident with aquaponics by operating your MicroSystem and test marketing the vegetables from it. This way, you won't be a complete newbie when you start growing things in the system that has a mortgage on it! Finish your big system and inoculate it with water from your MicroSystem, then start planting the species in it that grew well in your test plantings and did well in your test marketing from your MicroSystem.C. Ramp up slowly to full production, don't plant the entire system out at once in one crop. We ran on lettuce only for two years, then had a devastating lettuce blight hit us (and many other lettuce farmers on the island) that destroyed all the lettuce plants in our systems in a few weeks. This was a good lesson about the dangers of mono-cropping (growing only one thing, over and over); it lets you in for massive plant disease episodes that can be catastrophic to your operation. Increasing production slowly will allow you to gain experience with seeding, transferring pots, feeding fish, harvesting and packaging vegetables, and all the other details that are needed to operate smoothly and with minimum labor requirements in order to be a profitable business.D. If you don't ramp up slowly, you run the risk of implementing a process or procedure that is inefficient; and at full production, this can cost you badly as you are forced to do it over and over again. You have far less flexibility about changing direction when you are in full production; you won't have the time or energy to try out new things. If you do find a successful one you want to implement, it will be more difficult to change direction when your operation is going under full momentum because of the "mass" involved.You also run the risk of missing a discovery that could have made all the difference to you and your business, e.g.: discovering that growing "this" instead of "that" requires less labor and "this" sells for more; or "this", combined with something else makes a killer value-added product that makes a ton of money for you (such as a basil pesto made from your aquaponic basil plus some organic olive oil and mac nuts).E. You may need to use temporary measures and markets to move produce at less than full value before you are at full operating capacity. For example, you might have 40 to 80 pounds a week coming from your first planting; give this away to your potential customers for additional market testing and to develop a good customer relationship. Next you'll have 120 to 150 pounds per week; give this away, and/or take to farmer's market to sell it yourself, and/or find someone already selling at the farmer's market to sell this for you, and/or sell to a restaurant(s) or hotel(s). If these are good accounts you enjoy selling to, you may decide to keep them rather than use them as a stepping-stone.Next, you'll have a couple of hundred pounds a week coming out; at this point you may be able to get a produce distributor, wholesaler, or large grocery store willing to buy this from you. If this is a good account you enjoy selling to, you may decide to continue this rather than use it as a stepping-stone. If you've already got some good accounts from step "E" previously, you may now have a significant percentage of your ultimate production spoken for. We've seen people do this several times: plan to sell to an "ultimate" market, and instead find other quite acceptable outlets for their produce on the way. These other outlets ended up taking all the farm's production, and the "ultimate" outlet wasn't even necessary.At your final production level, depending on species and varieties grown, you may have from 500-1,000 pounds per week production from this 6,000-square-foot example system. This can be all one species, as in our lettuce production heyday, but then you are risking a massively devastating disease incident that can occur due to this kind of mono-cropping. If you have this production split up between three or four vegetable varieties (or even better, ten, twelve, or twenty), you have less chance of such a disease incident. You also have a much more flexible mix of product, and a more guaranteed income due to you system’s diversification. If you have a disease, a problem, or a change in the market conditions or buyer that apply to one vegetable, you still have three (or ten) others that continue creating income for you.F. We have only talked about the vegetables so far; you will also have fish to sell. Because we lose $2/pound on fish on our farm due to high fish food and electricity costs, we just raise the fish necessary to provide fertilizer for the vegetables. A common problem when an aquaponics operation starts up is procuring enough (by weight) fish (or ANY!). You ultimately need 1,800 pounds of fish to run this 6,000 square foot system; you probably WON'T be able to just go out and buy them. Based on our experience, you will be able to procure 500 to 1,000 little fish (+/- 1 oz. or so. However, they will eventually grow to weigh a pound, then a pound and a half, and you will have 3,000 pounds of fish instead of the 1,800 you actually need. You'll have fish to sell. But they will grow slowly, and you will have plenty of warning to start telling people you have LIVE tilapia to sell from your farm. Advertise to the right ethnic groups, and you will have people calling YOU and asking if you have live fish to sell.H.Selecting The Right Aquaponics Technology To UseHow To Drive Success: Employ an aquaponics technology that is proven to be economically successful, and will easily produce enough to cover its expenses, labor, and overhead; plus give you a profit.If you use our proven, well-documented, and economical aquaponics system designs; then build and operate them exactly “according to the book”, we know you will be successful growing produce. If you are reading this, you bought information on the most commercially successful aquaponic technology in the world. If you choose to ignore it, change things without understanding how they work, or “combine” our system technology with other system technologies, all bets are off and there is no guarantee. C’mon, everybody: Ford doesn’t guarantee Chevrolets!If you find an aquaponics and greenhouse technology that produces as much as ours does, for the same cost for construction, operating expenses, and labor, and is profitable, then everything else in this section applies to you; you’re just using a different technology. However, commercial aquaponics is a very small field, and we’re not aware of even one such.I.Things ARE Going To Change!Things never stay the same; and if you try to, your business will suffer or die. You need to be flexible and meet market and customer needs in order to have a healthy, stable business. Here’s an example of how things may change very quickly in the US produce sector within a very short time span:A paleoclimatologist is a weather person who attempts to predict weather on ten-thousand year cycles rather than “the next three days in South Central”. Paleoclimatologist B. Lynn Ingram, a professor at UC Berkeley in California says, about the current drought in California: “If you go back thousands of years, you see that droughts can go on for years if not decades, and there were some dry periods that lasted over a century”. She also comments on the “mega-floods” that seem to hit California regularly every 150 years or so; the last one was in 1962 and left the City of Sacramento and a large portion of the Central Valley underwater for 3 months. See articles on the web here for more info on the droughts and floods: http://news.berkeley.edu/2014/01/21/states-water-woes/ and here: http://berkeleysciencereview.com/article/change-must-believe/ .What Percent of Our Produce Is Grown In California? 99 percent of the artichokes, 44 percent of asparagus, 20 percent of cabbage, 70 percent of all the carrots, 50 percent of bell peppers, 89 percent of cauliflower, 94 percent of broccoli, 95 percent of celery, 90 percent of the leaf lettuce, 83 percent of Romaine lettuce, 83 percent of fresh spinach, 33 percent total fresh tomatoes, 95 percent of tomatoes for canning and other processing, 86 percent of lemons, 25 percent of oranges, 90 percent of avocados, 84 percent of peaches, 88 percent of fresh strawberries, 97 percent of fresh plums, and many others too numerous to categorize.This represents a huge opportunity for aquaponics growers all around our country if California’s water supply continues to dwindle, because all of these vegetables either grow well in aquaponics systems in greenhouses, or grow well outside in the soil with drip irrigation of aquaponic water. There simply isn’t anyplace else in the US that we can “switch over to” except your greenhouses and seasonal outdoors growing! And imagine how you’ll feel as a food producer when you see the price for food just keep going up and up.California’s drought is not the only reason the price of food is likely to go up over the next (??) years; every time the price of oil has gone up in the past, the price of food goes up correspondingly. If you have an aquaponics system in a greenhouse powered by alternate energy, you will be as independent as possible of both weather and energy prices.With Warm Aloha, Tim and Susanne

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