Feed Bussiness

[BCCC]

The local feed store is going to be shutting down here in the next couple months. There are two other places that carry feed(however only 2 or three bags most of the time). We are a Sunglo Feed Dealer, however we dont have a Store in town, so it kind of limits our bussiness. So our plan is to buy 3 acres of land right off the highway, that is right across the highway from the local Co-op and right in between a tractor dealer and a bar, and build a 75x100 building for feed storage and the office. We were going to continue being a sunglo dealer, and also become a Purina, and Vigortone Dealer. Vigortone is where Sunglo gets all of its mineral and protein tubs, We have been feeding their tubs and sell alot of the loose mineral and we and others have got along great with it. At first we thought we would include a small feed mill, how we are now questioning if we want to bother buying all the feed mill equipment and the costs to keep it up and running. We can however get custom mixed feed fairly easy as we can have custom mixed rations made and delivered by sunglo, and/or a big feed mill that is about 2.5 hours away, that I used to use. They will also deliver for free as long as you have ordered 2 tons of feed, so I am thinking that will be the best way to go. We have also talked about selling trailers, panels, water tanks, chutes, supplys and such. Any thoughts? Anything you like and don't like about feed Stores? Thanks

 

[knabe]

inventory control will be your biggest problem.

make a deal for the custom feeds, see what sells, see the profit margin.  what is the payoff time of allocating capital towards used feedmill versus new if you wait, since someone will probably snag it.

ask the feed store what sells and what doesn't.  for the bigger ticket items, don't carry the inventory with your money.  focus on products that move rather than one's that don't.

out here trailer dealers basically set up a temporary lot, sell some trailers and move on as the sales dry up.  you need parts, different hitches, installation for some etc.  might be a bad idea.  the average life of a trailer dealer out here is about 1-2 years.  course we are a different lot out in CA.

don't sell boots, if you do, get people used to the idea of ordering, but have some basic sizes on hand to test size as fitting is extremely difficult with boots.

then people will start asking you about vaccines, saddles etc.  stay focused.

 

[justintime]

I want to wish you all the best in this venture. It is good to see someone with some optimism when all you hear is how bad things are out there. I am not sure how big you think the feed business will be, but adding a small feed mill seems to be a big investment at this point in time. I would suggest you try to make a deal with a feed mill near you, that gives you a commission of some sort for every feed order you send to them.Our local feed mill just closed it's doors in December. it was corporate owned and they just decided this store was not making enough money. Seems strange to me, as they had gone from 2 shifts a day to running 24 hours a day making feed. Their sales into Montana and N Dakota were huge, as they were the closest mill to a lot of producers there. Also,the 20% premium on the $US was a big incentive to buy in Canada.

We also have a smaller feed store that sells bagged feed, that has had a nice sized business for a few years. The owner just expanded two years ago, and built a new building. He added livestock equipment, fencing materials and a Western Wear clothing outlet to his store.After two years he is expanding.... actually doubling the size of his main building. He does not handle bulk feed other than mini bulk bags ( 1 tonne) and he does take orders for larger bulk orders for all kinds of feed. I know he gets a percentage of each sale.
I would also suggest that you carry pet food. This can  be a small gold mine. Our local store has dog, cat, rabbit, hampster and most everything horse related. He says these products are a licence to print money, as people will pay more to feed their pets or their horses ( well most of these are pets as well) than they would ever think of paying for their kids or themselves. I have seen that glazed look that comes over these people personally. When my wife sees something that she would like for her horses, it really doesn't matter what it costs. She has to have it. As I am writing this, she is on her way to our post office box  in Fortuna, ND to pick up another saddle. I guess it will look nice sitting beside the 3 other saddles we now have!!!

Good luck in this venture. I am sure you will develop a great business.

 

[Show Dad]

Are Bultman's and Standard Supply both still in town? If so both of these can if they choose be in the feed business in a large way. Bultman's have never been very dynamic but Ken at Standard could be. Just food for thought. Wish you well.

 

[BCCC]

Are Bultman's and Standard Supply both still in town? If so both of these can if they choose be in the feed business in a large way. Bultman's have never been very dynamic but Ken at Standard could be. Just food for thought. Wish you well.

Yes those were both the stores I was talking about. Standard Supply is a crystalx and showmaster dealer. However their tubs are anywhere from 200-300 and they charge 20 bucks for a bag of beef finisher, which in my mind is ridiculous. Bultmans switched hands(well switched brothers) and started dealing feed however all of it was moldy so now they cant get people to come back and try what they do have(ranch way feeds) Thank you all for your comments and advice.

 

[Show Dad]

Your advantage is that you already know what some costs are. I might suggest looking into an association like Wheatbelt in Kansas City. (www.wheatbeltinc.com) They could help you gain access to those other products you are looking for.

Just a suggestion.

 

[CM Cattle]

Good luck. (thumbsup)

 

[ATOZ]

Our local feed mill uses a tractor and portable feed mill to grind with.

 

[red]

keep your feed supple fresh. Watch for mice & etc...
Offer advice & other products to bring them in.

Good luck!

Red

 

[cowz]

Make a policy for how people pay you.  If I had $100 for everytime somebody said...."Gee, I forgot my checkbook" and I had to carry $500 worth of feed for 2-3 months, and had to track them down to get paid, I could retire now.

My suggestion in this economy is to only take checks from customers who have a credit card on file, that way, hopefully you can get your money when their check bounces.  Or require credit cards on any purchase over $300.  Feed dealers are some of the most abused businesses there are.  People would never dream of trying to stiff the grocery store, but they will try to get the local feed dealer. 

Also, make sure that you get a deposit on any special orders you get, no matter how well you know your customers.  I sat on a pallet of show goat feed for months and had to have a "sale" and sold it for less than what it cost me to get rid of it.

I do not intend my comments to sound harsh or negative.....but you need to protect yourself first.  You owe it to your family and yourself to be able to pay your bills.  I have had times when I had trouble paying my own bills because so many people owed me.....and frankly did not like it when you reminded them of it.

 

[kanshow]

Good Luck!!!  I think everyone's comments are right on. 

 

[stangs13]

Instead of having a trailer lot...you could have 1 or 2 trailers and rent them out...the feed store near us does that.

 

[AJH]

We just got out of the feed business and came out so so. Like the post above make sure you get paid we've took a bunch of hit's because of the people who didn't pay. I'm talkin some small hit's but also very large 5 digit hit's also it takes years to get back on your feet from them deals. If you can sell enough bagged feed you don't need to buy a mixer, grinder, bins, etc, but there is good money in that too. I know your talking about building a new facility If I were you, if you wanted to mix feed I'd try to go buy the old co-op if thats a possibility. If thats not a possibility then you my as well just sick to bags. The feed business is on thin ice were i'm from the econemy and feed cost are forcing people to get rid of there animals, and that means no business. We never sold gates, chutes or had a farm store so I can't tell ya much about that. People still have to eat so the feed deal will always be there maybe not for the smaller farms but the large one's there will be. Good Luck

 

[BCCC]

Thank you all very much!
Cowz-I know exactly what you are talking about. At the moment I am making an invoice for some folks that have owed me for the pig feed that I delivered 6 months ago, I would think the 15% monthly interest I add would help them get motivated a bit. At the moment most of the specialty orders I get are for mineral, I normally ask for 1/2 down when they order and the difference when they pick it up or we deliver, as I can't handle holding multiple tons of 25 dollar a bag mineral.
On the credit card note, How do you keep credit cards on hand? I can just imagine people raising hell if I was to write down their credit card number and such.

Red- I have already had my fair share of mice troubles with feed this past summer....In order to get rid of mice you can NOT use a cat. I think the cat tore up more bags then the mice did. I used a few tons of show cattle feed as feed yard feed because mice had got into it.
I am told my problem is that I offer too much advice(especially when it comes to pigs) I try and make sure I deliver feed to the family's at least every other week so I can see the projects and see if they need to change what they are feeding.

On the feed mill part I will just hold out for awhile. None of our co-ops sell feed or have feed mills, so that puts out buying an old co-op.

On the building part, we plan to make it so that if this deal doesn't work out, the building Will still be able to resold fairly easy.

As of now I normally profit 5-20% of the feed that I sell.

SD- Thank you I didn't know such a thing existed.

Keep the comments coming, Once thank you all!

 

[kanshow]

Now you make me wonder.. where does your feed come out of?  Same place as mine?  We ran into mice problems on some pig feed late last summer..  and DH swears the feed came that way.  It was a big pallet of pig feed, came in on one day & we split the pallet out the next day.  We took off the top two layers & there were mouse holes in the center.  We decided to pull apart the rest of the stacks that had come in that day and found that mice had also been in some cattle feed. 

Another thing, you sure have to watch your prices and stay on top of your pricing.  Remember last summer when feed would jump $2/bag and then freight variances.    As far as mark up...  I know around here our coops have about 40% mark up on feeds but like you, I run 5 - 20%. 

Since cowz brought up goat feed, I'll throw my 2 cents out..  I won't be selling goat feed this year unless it is a special order from an experienced goat feeder.  Monetarily, it is just not worth it to mess with goat feed.  It takes what .. 3-4 bags to feed a goat from spring to fall fairs..  and because most goat feeders in my area are complete feeding novices, it takes an insane amount of time to help them thru their feeding issues. 

 

[farmboy]

our feed store has atleast 20 cats running around. they dont have mouse issues

 

[BCCC]

Now you make me wonder.. where does your feed come out of?  Same place as mine?   We ran into mice problems on some pig feed late last summer..  and DH swears the feed came that way.  It was a big pallet of pig feed, came in on one day & we split the pallet out the next day.   We took off the top two layers & there were mouse holes in the center.  We decided to pull apart the rest of the stacks that had come in that day and found that mice had also been in some cattle feed.   

Another thing, you sure have to watch your prices and stay on top of your pricing.   Remember last summer when feed would jump $2/bag and then freight variances.    As far as mark up...   I know around here our coops have about 40% mark up on feeds but like you, I run 5 - 20%. 

Since cowz brought up goat feed, I'll throw my 2 cents out..   I won't be selling goat feed this year unless it is a special order from an experienced goat feeder.  Monetarily, it is just not worth it to mess with goat feed.   It takes what .. 3-4 bags to feed a goat from spring to fall fairs..   and because most goat feeders in my area are complete feeding novices, it takes an insane amount of time to help them thru their feeding issues.   

Our Sunglo feed comes out of Nebraska most of the time, and the mineral and tubs go from Vigortones place in Iowa to the Sunglos Nebraska plant. On the Feed Prices what I do a lot of the time, I will start start the price a little high so that I am making 2-3 dollars a bag and then all the time that the feed is going up I keep my prices the same, until I am only making 75 cents a bag and then I will up the price so that I am making a dollar a bag, in the attempt to try to keep people a little happier and not complaining about feed prices going up all the time. However I don't have many new people ordering feed at the beginning of the summer, as we are higher but torwards the end  its a different story.

Most of the time we get our feed on flats instead of pallets, they are more work to unload, but it makes sunglo look at all the bags to make sure that they are good, because for awhile I had them bring it to me on pallets and I was seeing a lot more holes in the bags.

On goat feed I normally only order one bag at a time unless its a spacial order by someone that knows what they are doing....Speaking of this I still have the one bag of goat feed that is about 9 months old :'(

 

[showtime]

I just started one Nov 1st and i've worked at one for 9 yrs and what cowz said is about everything is true. If you have any question pm me and we can talk on here or the phone. The main thing to remember is Service! Best of luck.

 

[kanshow]

We didnt' have any trouble until we started getting feed from the Nebraska plant.  

We went almost 100% with the big pallets because of ease of handling, plus most of my people buy a pallet at a time.   We set our prices pretty high but still wasn't high enough by the time they did all the increases so we had to bump up the price late summer.  

We haven't brought in any Vigertone mineral yet but will probably do so soon.  Has the mineral price dropped any yet?  

Yea.. that darn goat feed..  Actually, since it is pelleted and it's been winter.. it's probably still ok, otherwise  it's cattle feed now.  

 

[BCCC]

We havent ordered mineral in about a month now so I am not sure. We have pretty much got most of our customers to switch over to the tubs, and we are all liking them. We have been feeding them since middle summer and normally ours eats less then a 1/4 pound a day, which is better then the loose mineral with half of it blowing away.