1 00:00:01,080 --> 00:00:01,913 So, welcome. 2 00:00:01,913 --> 00:00:04,620 I'm Mark Cannella, University of Vermont A Extension. 3 00:00:04,620 --> 00:00:06,400 I'm a farm business specialist. 4 00:00:06,400 --> 00:00:09,900 I've been working with maple producers on business 5 00:00:09,900 --> 00:00:14,100 and finances for the past several years as well. 6 00:00:14,100 --> 00:00:16,920 Tonight's presentation will be on Maple Financial Planning. 7 00:00:16,920 --> 00:00:21,690 What I hope to do is bring you through 8 00:00:21,690 --> 00:00:24,930 a few different projects and a few different approaches 9 00:00:24,930 --> 00:00:29,850 that we've taken to financial analysis with maple producers, 10 00:00:29,850 --> 00:00:34,020 a little bit of financial research on maple startups, 11 00:00:34,020 --> 00:00:36,600 and our benchmarking program, 12 00:00:36,600 --> 00:00:38,370 which has been going now since, 13 00:00:38,370 --> 00:00:40,920 2014 is the first year 14 00:00:40,920 --> 00:00:43,500 we started benchmarking maple producers 15 00:00:43,500 --> 00:00:46,440 and that's detailed financial analysis, 16 00:00:46,440 --> 00:00:50,340 analyses, with active businesses. 17 00:00:50,340 --> 00:00:52,830 So, I'm gonna jump right in. 18 00:00:52,830 --> 00:00:54,810 This one's rescheduled. So, we're here on the 28th. 19 00:00:54,810 --> 00:00:57,540 We've got one more webinar comin' up next week, 20 00:00:57,540 --> 00:01:00,630 which is sap Business Models with Chris Lindgren. 21 00:01:00,630 --> 00:01:04,620 That'll be our last webinar of the fall season. 22 00:01:04,620 --> 00:01:08,253 Financial goals, so, let's dive right into it. 23 00:01:09,210 --> 00:01:11,250 I guess one of the things that I'll say 24 00:01:11,250 --> 00:01:14,973 for people watching tonight or watching the recording, 25 00:01:16,140 --> 00:01:17,700 I guess the big question is, you know, 26 00:01:17,700 --> 00:01:20,250 who's gonna benefit from this information or who wants 27 00:01:20,250 --> 00:01:22,740 to know this information? 28 00:01:22,740 --> 00:01:26,820 I know that I have been meeting on occasion with 29 00:01:26,820 --> 00:01:28,830 agricultural lenders. 30 00:01:28,830 --> 00:01:29,910 They're really interested to know 31 00:01:29,910 --> 00:01:32,100 the financial performance of businesses. 32 00:01:32,100 --> 00:01:35,520 They're also becoming increasingly interested 33 00:01:35,520 --> 00:01:37,620 in the startup investment for businesses, 34 00:01:37,620 --> 00:01:42,620 especially as they look to deploy capital for big startups, 35 00:01:43,710 --> 00:01:45,300 big setups of sugar bushes, 36 00:01:45,300 --> 00:01:48,619 so getting a sense of those investment levels has been key 37 00:01:48,619 --> 00:01:50,673 from the lending community. 38 00:01:52,020 --> 00:01:53,490 I think we're also aware that there's a number 39 00:01:53,490 --> 00:01:55,080 of maple producers that are out there, 40 00:01:55,080 --> 00:01:57,101 perhaps operating at one scale 41 00:01:57,101 --> 00:02:00,270 and considering growth generally. 42 00:02:00,270 --> 00:02:02,670 I don't hear many maple operators talking 43 00:02:02,670 --> 00:02:06,120 about giving up taps or getting smaller. 44 00:02:06,120 --> 00:02:07,980 So, the prospect of growth, I think, 45 00:02:07,980 --> 00:02:10,707 brings with it the question of what's the investment? 46 00:02:10,707 --> 00:02:15,707 What's the next step to go to a different scale? 47 00:02:16,650 --> 00:02:19,860 So, I hope tonight that some of that will be relevant 48 00:02:19,860 --> 00:02:22,170 and then, if you're actively managing maple business, 49 00:02:22,170 --> 00:02:24,180 we get into the maple benchmarks, 50 00:02:24,180 --> 00:02:26,250 the financial analyses with active businesses. 51 00:02:26,250 --> 00:02:28,350 It's just great to see what's going on under the hood 52 00:02:28,350 --> 00:02:30,608 of these businesses, so to speak, 53 00:02:30,608 --> 00:02:33,779 see what the parameters are financially, 54 00:02:33,779 --> 00:02:37,653 and consider how it relates to your business. 55 00:02:39,060 --> 00:02:40,800 So, here's some basic financial goals. 56 00:02:40,800 --> 00:02:44,040 Whether I'm doing kitchen table business consultation 57 00:02:44,040 --> 00:02:47,010 or we're doing research, these are the 'how' questions. 58 00:02:47,010 --> 00:02:49,830 How much is enough? How much money is enough? 59 00:02:49,830 --> 00:02:51,720 How much money is needed? 60 00:02:51,720 --> 00:02:54,240 How much do you need at the bare minimum? 61 00:02:54,240 --> 00:02:55,374 And how much is possible? 62 00:02:55,374 --> 00:02:58,320 What's the scope of opportunity here? 63 00:02:58,320 --> 00:03:00,150 So, let's think about that. How much is enough? 64 00:03:00,150 --> 00:03:01,260 How much is needed? 65 00:03:01,260 --> 00:03:03,780 And how much is possible in the context 66 00:03:03,780 --> 00:03:04,980 of some of these groups? 67 00:03:06,210 --> 00:03:08,520 Business establishment, startup investment. 68 00:03:08,520 --> 00:03:10,290 How much is enough to get started up 69 00:03:10,290 --> 00:03:11,940 with the right resources? 70 00:03:11,940 --> 00:03:14,133 How much is needed at bare minimum? 71 00:03:15,360 --> 00:03:18,540 Operating funds, it's not just the startup investment to get 72 00:03:18,540 --> 00:03:21,180 the tubing systems up and the tanks in place 73 00:03:21,180 --> 00:03:22,470 and the sugar house built. 74 00:03:22,470 --> 00:03:24,450 We've gotta consider that first season, 75 00:03:24,450 --> 00:03:27,930 this first several months even, labor, fuel, 76 00:03:27,930 --> 00:03:30,570 all the different expenses that are gonna happen 77 00:03:30,570 --> 00:03:32,580 that aren't investments, but are def, 78 00:03:32,580 --> 00:03:35,820 definitely necessary to get that business in production 79 00:03:35,820 --> 00:03:38,610 before even a drop of syrup gets sold. 80 00:03:38,610 --> 00:03:41,110 Theoretically, after the production season's over. 81 00:03:42,780 --> 00:03:45,330 Livelihood. What's your owner compensation? 82 00:03:45,330 --> 00:03:47,970 Are you looking for a paying job? How much is enough? 83 00:03:47,970 --> 00:03:51,210 How much is needed at minimum? How much is possible? 84 00:03:51,210 --> 00:03:52,950 Perhaps you wanna give up some other work 85 00:03:52,950 --> 00:03:56,610 and focus more specifically on the maple enterprise. 86 00:03:56,610 --> 00:03:58,860 So, we wanna think about livelihood, 87 00:03:58,860 --> 00:04:00,090 cost management for sure. 88 00:04:00,090 --> 00:04:02,010 We started to get into different cost categories 89 00:04:02,010 --> 00:04:03,840 and tonight, we'll look at a few of them, 90 00:04:03,840 --> 00:04:05,070 and we'll look at some of the frameworks. 91 00:04:05,070 --> 00:04:07,050 How much should you be spending, or could you be spending, 92 00:04:07,050 --> 00:04:10,323 on packaging compared to fuel, as an example? 93 00:04:11,550 --> 00:04:13,470 And then sales and revenue forecasting. 94 00:04:13,470 --> 00:04:17,310 A pretty important piece of the financial equation 95 00:04:17,310 --> 00:04:20,550 is setting prices, having good sales targets, 96 00:04:20,550 --> 00:04:24,150 and being able to not only plan for, but, and predict, 97 00:04:24,150 --> 00:04:26,670 but to achieve those revenue goals in order 98 00:04:26,670 --> 00:04:29,430 to have enough cash flow to do what you need 99 00:04:29,430 --> 00:04:32,550 for investments, operating costs, and theoretically, 100 00:04:32,550 --> 00:04:35,373 back to livelihood, gettin' yourself a paycheck. 101 00:04:37,260 --> 00:04:39,870 I'll start off with some startup investment research we did. 102 00:04:39,870 --> 00:04:42,464 We worked with Rob Guay at Viewpoint Ag Valuation 103 00:04:42,464 --> 00:04:45,630 and Consulting over the past year. 104 00:04:45,630 --> 00:04:48,150 I think it's important to note that some of these resources 105 00:04:48,150 --> 00:04:50,760 could be a little dated with the recent inflation 106 00:04:50,760 --> 00:04:53,130 over the past several months, so if anything, 107 00:04:53,130 --> 00:04:55,110 these cost estimates, I hate to say it, 108 00:04:55,110 --> 00:04:59,580 could be a little bit lower given that a lot of things 109 00:04:59,580 --> 00:05:02,133 have gone up in the past year. 110 00:05:03,000 --> 00:05:05,190 So, Rob went out and he basically specked 111 00:05:05,190 --> 00:05:08,430 out different maple operations at different scales, 112 00:05:08,430 --> 00:05:11,280 worked with two different equipment manufacturers 113 00:05:11,280 --> 00:05:14,880 and their dealers, and looked at what it would, 114 00:05:14,880 --> 00:05:17,760 what would it cost for a bare minimum to set up a business. 115 00:05:17,760 --> 00:05:19,470 We've got two different profiles I'll show you. 116 00:05:19,470 --> 00:05:23,007 We've got sap collection only without processing the sap 117 00:05:23,007 --> 00:05:25,047 and syrup, just the sap collection, 118 00:05:25,047 --> 00:05:27,600 and then the other profiles are gonna be Sap-to-Syrup 119 00:05:27,600 --> 00:05:29,970 where we're actually gonna bring that sap from the woods 120 00:05:29,970 --> 00:05:32,640 into the sugar house and finish it into syrup. 121 00:05:32,640 --> 00:05:36,240 The Sap-to-Syrup processing models are all based on putting 122 00:05:36,240 --> 00:05:37,440 the syrup into bulk barrels. 123 00:05:37,440 --> 00:05:42,440 We're not looking at any container-type packaging for retail 124 00:05:44,430 --> 00:05:45,510 or anything of that nature. 125 00:05:45,510 --> 00:05:47,370 It's considered a bulk business 126 00:05:47,370 --> 00:05:50,190 for simplicity on the investment. 127 00:05:50,190 --> 00:05:51,023 I'm gonna reach over. 128 00:05:51,023 --> 00:05:52,920 I've got some printed copies of the profiles. 129 00:05:52,920 --> 00:05:55,170 There's a lot of assumptions that I'll glaze over 130 00:05:55,170 --> 00:05:56,003 a little bit tonight, 131 00:05:56,003 --> 00:05:59,670 but I wanna refer you all to these profiles that are online. 132 00:05:59,670 --> 00:06:02,320 And we got several scales in different growth stages. 133 00:06:04,470 --> 00:06:09,240 Okay, so first, looking at the sap-only profiles, again, 134 00:06:09,240 --> 00:06:12,690 this is a basic financial model where Rob and I went 135 00:06:12,690 --> 00:06:16,170 and we said, "What are the basics to set up an enterprise? 136 00:06:16,170 --> 00:06:17,610 Let's get those basics down? 137 00:06:17,610 --> 00:06:20,910 Let's figure out the general cost and get it documented 138 00:06:20,910 --> 00:06:22,740 for a startup investment." 139 00:06:22,740 --> 00:06:24,480 So, we've got tubing system and setup, 140 00:06:24,480 --> 00:06:29,430 monitoring systems for leak checking, vacuum pump, or pumps. 141 00:06:29,430 --> 00:06:32,700 We've got a little bit power driveway, some basic site work. 142 00:06:32,700 --> 00:06:34,920 We've got the extractors, releasers. 143 00:06:34,920 --> 00:06:38,100 We've got tanks and Rob set these up pretty lean and mean, 144 00:06:38,100 --> 00:06:39,780 so the sap-onlys have a shipping container, 145 00:06:39,780 --> 00:06:41,850 which would be a home site in the woods 146 00:06:41,850 --> 00:06:43,143 to house the equipment. 147 00:06:44,400 --> 00:06:46,230 We looked at a bunch of different scales, 148 00:06:46,230 --> 00:06:49,830 3000 taps up to 15,000 taps. 149 00:06:49,830 --> 00:06:51,630 I'm gonna show you a lot of numbers in a second, 150 00:06:51,630 --> 00:06:53,040 so I'd just ask you to think 151 00:06:53,040 --> 00:06:54,480 about what you're most interested in 152 00:06:54,480 --> 00:06:56,070 from a scaling perspective. 153 00:06:56,070 --> 00:06:58,650 You'll see similarities across these different scales. 154 00:06:58,650 --> 00:07:01,893 It's a pretty course investment model we used, 155 00:07:03,120 --> 00:07:04,440 but rather than get overwhelmed 156 00:07:04,440 --> 00:07:06,270 with five different business models, 157 00:07:06,270 --> 00:07:10,080 be thinkin' about what scale you're most interested in. 158 00:07:10,080 --> 00:07:12,600 So, here are three of those scales, 3000 taps, 159 00:07:12,600 --> 00:07:15,660 5,000 taps, and 7,000 taps. 160 00:07:15,660 --> 00:07:17,700 You can see that across the top. 161 00:07:17,700 --> 00:07:21,630 And then we've got two rows here in this table. 162 00:07:21,630 --> 00:07:24,990 We've got the startup investment for the sap enterprise 163 00:07:24,990 --> 00:07:26,790 without the purchase of the real estate, 164 00:07:26,790 --> 00:07:29,400 so this is gonna be the investments I just mentioned, 165 00:07:29,400 --> 00:07:31,440 and then we've done a little bit of an add-on. 166 00:07:31,440 --> 00:07:34,980 That bottom row is the total investment plus the cost 167 00:07:34,980 --> 00:07:37,560 of forest real estate, assuming it's a purchase. 168 00:07:37,560 --> 00:07:38,550 And for this line, 169 00:07:38,550 --> 00:07:43,550 we used a basic metric of $2,000 per acre. 170 00:07:45,480 --> 00:07:48,330 Some of you are gonna be in regions where the values 171 00:07:48,330 --> 00:07:52,680 could be lower, 500, $800,000 an acre for forest land 172 00:07:52,680 --> 00:07:54,900 in pretty rural places. 173 00:07:54,900 --> 00:07:58,950 I also know that folks in Western New York and Pennsylvania 174 00:07:58,950 --> 00:08:00,210 are looking at expansions 175 00:08:00,210 --> 00:08:02,460 and because of the real estate costs there, 176 00:08:02,460 --> 00:08:05,280 they could be looking at well over 2,000 an acre. 177 00:08:05,280 --> 00:08:07,620 So, these are really basic course estimates 178 00:08:07,620 --> 00:08:10,470 that at least get you, you know, on the planet, so to speak, 179 00:08:10,470 --> 00:08:13,383 and then you can fine tune from there. 180 00:08:16,110 --> 00:08:18,420 And I've got two more samples here. 181 00:08:18,420 --> 00:08:21,990 I've got the 10,000 tap and the 15,000 tap model. 182 00:08:21,990 --> 00:08:23,010 Again, same rows. 183 00:08:23,010 --> 00:08:25,740 We've got the no forest investment, just the equipment, 184 00:08:25,740 --> 00:08:29,820 and then we've got the forest estimate below. 185 00:08:29,820 --> 00:08:32,943 I'm gonna circle the things that I think are most important. 186 00:08:34,950 --> 00:08:37,440 The dollar values across the scales obviously change 187 00:08:37,440 --> 00:08:39,810 because there's more taps out there, 188 00:08:39,810 --> 00:08:43,243 but if you look at that top table, the 3000 taps, 189 00:08:43,243 --> 00:08:46,140 5,000 taps, and 7,000 taps, 190 00:08:46,140 --> 00:08:49,530 you're gonna see that we feel like the sap-only setup 191 00:08:49,530 --> 00:08:53,010 in a very modest system is gonna be running in that range 192 00:08:53,010 --> 00:08:56,790 of $34 a tap down to $31 a tap. 193 00:08:56,790 --> 00:08:57,810 That's a number. 194 00:08:57,810 --> 00:08:58,753 It's a number that you can take. 195 00:08:58,753 --> 00:09:00,720 You can, I wouldn't say you could take it 196 00:09:00,720 --> 00:09:02,190 to the bank just like that. 197 00:09:02,190 --> 00:09:03,720 Build it out and and work from it, 198 00:09:03,720 --> 00:09:06,210 but these are the magnitudes we're lookin' at 199 00:09:06,210 --> 00:09:07,950 for these sap-only setups. 200 00:09:07,950 --> 00:09:12,090 Obviously, when we start to add in the cost of real estate, 201 00:09:12,090 --> 00:09:16,350 these numbers are gonna go up and if I click, let me see, 202 00:09:16,350 --> 00:09:17,636 nope, it's gonna go away. 203 00:09:17,636 --> 00:09:21,873 So, when you start with that 34, 32, $31 at the top table, 204 00:09:23,137 --> 00:09:27,510 $31 for the 10,000 taps and the 15,000 taps, 205 00:09:27,510 --> 00:09:30,090 I'm gonna check if that's a typo, 37. 206 00:09:30,090 --> 00:09:32,520 I know that some of our systems haven't gotten cheaper 207 00:09:32,520 --> 00:09:35,220 with scale, but for some reason, 208 00:09:35,220 --> 00:09:37,240 I think that is gonna be a typo 209 00:09:39,390 --> 00:09:41,970 and I'm not gonna be able to check that now. 210 00:09:41,970 --> 00:09:43,170 So, I'll ask you to make a note. 211 00:09:43,170 --> 00:09:48,170 If you're lookin' at that 15,000 tap, double check that 37. 212 00:09:48,360 --> 00:09:50,250 All these guys are now posted online 213 00:09:50,250 --> 00:09:52,233 and we'll cross-reference that. 214 00:09:53,760 --> 00:09:55,927 So, you can look at those numbers. 215 00:09:55,927 --> 00:09:58,470 $30 tap, if you add the real estate on, 216 00:09:58,470 --> 00:10:00,290 we're certainly bumping it up. 217 00:10:00,290 --> 00:10:02,764 $2,000 per acre. 218 00:10:02,764 --> 00:10:07,764 It's, you know, adding almost another 35, $36 an acre, 219 00:10:11,502 --> 00:10:15,840 or a tap, I'm sorry, 35, $36 per tap additional. 220 00:10:15,840 --> 00:10:19,530 So now, you're up to $70 per tap, $68 per tap. 221 00:10:19,530 --> 00:10:21,450 Significant investments for sure. 222 00:10:21,450 --> 00:10:24,540 Definitely a more modest investment here 223 00:10:24,540 --> 00:10:26,820 with a sap-only enterprise than if we're gonna go 224 00:10:26,820 --> 00:10:29,283 into syrup processing, which I'll do in a second. 225 00:10:31,170 --> 00:10:33,630 I'll leave that up for a minute so you can take a look, 226 00:10:33,630 --> 00:10:35,580 find your numbers you're interested in. 227 00:10:38,340 --> 00:10:42,093 Okay, now, we're gonna go on to sap and processing combined. 228 00:10:43,590 --> 00:10:45,150 Generally, I think the, 229 00:10:45,150 --> 00:10:48,660 whether it's nostalgia or mindset, perhaps control, 230 00:10:48,660 --> 00:10:51,720 people certainly love the idea of harvesting sap and making 231 00:10:51,720 --> 00:10:55,830 a finished syrup product, so we're gonna start to add, 232 00:10:55,830 --> 00:10:58,050 or we're gonna start with the investments we had before, 233 00:10:58,050 --> 00:10:59,850 everything from sap collection. 234 00:10:59,850 --> 00:11:01,650 Then, we're gonna add some basics to sugar house, 235 00:11:01,650 --> 00:11:06,270 reverse osmosis, concentrate tank, additional tanks, 236 00:11:06,270 --> 00:11:08,370 permeate tanks, evaporator filter press, 237 00:11:08,370 --> 00:11:11,463 miscellaneous tools, barrels, again, lean and mean. 238 00:11:12,540 --> 00:11:14,040 I think it's important to note 239 00:11:14,040 --> 00:11:17,760 that this investment profile generally will show 240 00:11:17,760 --> 00:11:19,110 a lower investment level 241 00:11:19,110 --> 00:11:21,090 than the benchmarking project I'll show later 242 00:11:21,090 --> 00:11:22,650 in the presentation. 243 00:11:22,650 --> 00:11:23,730 With the benchmarking work, 244 00:11:23,730 --> 00:11:24,990 we're going out and we're meeting 245 00:11:24,990 --> 00:11:27,870 with actual business owners and we're stacking up all 246 00:11:27,870 --> 00:11:28,770 the things that they own, 247 00:11:28,770 --> 00:11:29,970 everything in their sugar house, 248 00:11:29,970 --> 00:11:31,620 everything in their business office, 249 00:11:31,620 --> 00:11:33,300 everything in their garage, 250 00:11:33,300 --> 00:11:34,980 and there's a lot more things included 251 00:11:34,980 --> 00:11:36,570 in an active business. 252 00:11:36,570 --> 00:11:38,310 We've got laptop computers. 253 00:11:38,310 --> 00:11:41,910 We've got specialized equipment that didn't necessarily make 254 00:11:41,910 --> 00:11:43,507 it into this model. 255 00:11:43,507 --> 00:11:46,380 Some people have towing equipment 256 00:11:46,380 --> 00:11:48,510 to pull logs out of the woods. 257 00:11:48,510 --> 00:11:53,070 All that stuff that we would expect is relevant and, 258 00:11:53,070 --> 00:11:54,180 I don't wanna say necessary, 259 00:11:54,180 --> 00:11:57,270 but not a surprise given a specific site 260 00:11:57,270 --> 00:11:59,820 or a particular type of management. 261 00:11:59,820 --> 00:12:03,360 These models are gonna be, I'd say, as lean as you get. 262 00:12:03,360 --> 00:12:05,760 So, I'm gonna pop up tables again with a lot of numbers. 263 00:12:05,760 --> 00:12:08,850 We're gonna see 5,000 taps, 10,000 taps, 264 00:12:08,850 --> 00:12:11,790 two models with direct-to-sugar-house systems. 265 00:12:11,790 --> 00:12:13,890 Then, we're gonna also look at some hybrid models here, 266 00:12:13,890 --> 00:12:17,100 which we think is very relevant for operators. 267 00:12:17,100 --> 00:12:19,830 10,000 taps is gonna be 7,000 taps directly 268 00:12:19,830 --> 00:12:23,700 to the sugar house plus a 3000 tap woods 269 00:12:23,700 --> 00:12:25,773 that's adjacent for sap hauling, 270 00:12:26,700 --> 00:12:29,190 not particularly, not necessarily owned. 271 00:12:29,190 --> 00:12:30,780 We've got the 20,000 tap model, 272 00:12:30,780 --> 00:12:32,160 which is the assumption 273 00:12:32,160 --> 00:12:35,400 of a 15,000 tap enterprise going directly to the sugar house 274 00:12:35,400 --> 00:12:38,070 and that same operator going and finding a lease 275 00:12:38,070 --> 00:12:41,054 for 5,000 taps nearby and hauling the sap back 276 00:12:41,054 --> 00:12:43,833 to the processing facility. 277 00:12:45,870 --> 00:12:48,300 We've gotta circle there, but we've got no numbers. 278 00:12:48,300 --> 00:12:49,890 Let's open it up here. 279 00:12:49,890 --> 00:12:52,050 I'm gonna go through a couple of slides 280 00:12:52,050 --> 00:12:54,870 with the two different models here that are direct 281 00:12:54,870 --> 00:12:58,083 and then in a second, I'll flip over to the hybrids. 282 00:12:59,340 --> 00:13:01,140 I circled that per tap number again. 283 00:13:01,140 --> 00:13:03,240 You can certainly see the magnitudes. 284 00:13:03,240 --> 00:13:06,480 5,000 tap direct over $250,000 285 00:13:06,480 --> 00:13:10,200 before the forest real estate, 10,000 tap direct, 286 00:13:10,200 --> 00:13:13,473 almost a half a million before we buy the real estate. 287 00:13:14,850 --> 00:13:16,830 Those numbers certainly are gonna flex depending 288 00:13:16,830 --> 00:13:18,840 on what you're considering yourself. 289 00:13:18,840 --> 00:13:20,040 So, I think it's always great to look 290 00:13:20,040 --> 00:13:22,050 at that per-tap metric. 291 00:13:22,050 --> 00:13:26,313 5,000 tap direct, we got $52 per tap investment. 292 00:13:27,840 --> 00:13:32,640 10,000 tap direct, we've got $45 per tap. 293 00:13:32,640 --> 00:13:36,870 What I've noticed with this project is that the economies 294 00:13:36,870 --> 00:13:40,800 of scale seem to stack up a little bit better once you're 295 00:13:40,800 --> 00:13:44,010 into processing and I'm gonna check that typo again 296 00:13:44,010 --> 00:13:47,550 on the largest sap-only enterprise cause I think 297 00:13:47,550 --> 00:13:49,354 that 37 was off, 298 00:13:49,354 --> 00:13:53,700 but what we'll see is that there is some cost savings 299 00:13:53,700 --> 00:13:56,550 as sap-only enterprises get larger, 300 00:13:56,550 --> 00:14:01,260 but I think the numbers have shown that the economies 301 00:14:01,260 --> 00:14:03,510 of scales kick in a little bit more 302 00:14:03,510 --> 00:14:05,940 with that processing facility. 303 00:14:05,940 --> 00:14:07,920 Now, I don't wanna tell you that, 304 00:14:07,920 --> 00:14:10,050 in order to save $7 per tap, 305 00:14:10,050 --> 00:14:13,140 you've gotta spend $400,000 more making syrup 306 00:14:13,140 --> 00:14:14,250 at a processing facility, 307 00:14:14,250 --> 00:14:16,350 but if you're thinking on a per-tap basis 308 00:14:16,350 --> 00:14:18,030 and you're thinkin' as I start to add units 309 00:14:18,030 --> 00:14:21,270 of production here, it looks like processing does start 310 00:14:21,270 --> 00:14:23,883 to experience some economies of scale. 311 00:14:25,320 --> 00:14:27,060 So, I know that's kind of a misnomer at the bottom, 312 00:14:27,060 --> 00:14:29,850 that processing gets cheaper as the scale increases 313 00:14:29,850 --> 00:14:32,250 cause I think everyone would agree that processing 314 00:14:32,250 --> 00:14:35,343 is quite an expensive endeavor to get set up for. 315 00:14:37,110 --> 00:14:40,740 So, here's our direct models, $52 per tap, $45 per tap, 316 00:14:40,740 --> 00:14:41,850 and, yeah, I mean, 317 00:14:41,850 --> 00:14:45,000 we start adding real estate in that 10,000 tap direct model 318 00:14:45,000 --> 00:14:48,030 and over $800,000 at minimum. 319 00:14:48,030 --> 00:14:50,313 These are significant capital investments. 320 00:14:53,460 --> 00:14:56,220 Now, we've got the next two models which incorporate 321 00:14:56,220 --> 00:14:58,530 a direct-to-sugar-house setup 322 00:14:58,530 --> 00:15:02,850 and then there is this 3000 tap satellite bush. 323 00:15:02,850 --> 00:15:05,400 The larger 20,000 tap operation has got 324 00:15:05,400 --> 00:15:08,433 the $5,000 satellite bush. 325 00:15:09,660 --> 00:15:10,800 Lookin' at those numbers again, 326 00:15:10,800 --> 00:15:14,280 you'll still see that cost reduction on a per-tap basis. 327 00:15:14,280 --> 00:15:18,120 Again, the processing facility savings starts to kick in 328 00:15:18,120 --> 00:15:21,960 and we see $46 per tap with that 10,000 tap model 329 00:15:21,960 --> 00:15:25,410 and $40 per tap, this is our lowest so far, 330 00:15:25,410 --> 00:15:27,120 with the 20,000 tap model. 331 00:15:27,120 --> 00:15:29,580 Of course, when you look at the total cost 332 00:15:29,580 --> 00:15:31,320 there fully loaded with real estate, 333 00:15:31,320 --> 00:15:33,600 we're lookin' at over 1.3 million dollars. 334 00:15:33,600 --> 00:15:36,540 So, again, I don't wanna keep harping on saying 335 00:15:36,540 --> 00:15:39,033 that it's cheaper to process at a large scale. 336 00:15:40,110 --> 00:15:42,543 It's certainly a significant capital investment. 337 00:15:44,160 --> 00:15:45,690 These are barely basic numbers. 338 00:15:45,690 --> 00:15:47,880 These are great guidelines, I think, for people, 339 00:15:47,880 --> 00:15:50,160 especially someone that's at 2,000 taps, 340 00:15:50,160 --> 00:15:53,520 maybe thinking about seven or 10,000 taps, 341 00:15:53,520 --> 00:15:56,430 it's very likely that a large amount of your system 342 00:15:56,430 --> 00:15:59,310 would be completely overhauled, possibly liquidated, 343 00:15:59,310 --> 00:16:00,840 in order to set up your new system. 344 00:16:00,840 --> 00:16:04,137 So, being able to peg the number, whether it's 30, 345 00:16:04,137 --> 00:16:07,080 $35 per tap for a sap setup, 346 00:16:07,080 --> 00:16:10,950 or we could be 45 to 50 for a processing setup, 347 00:16:10,950 --> 00:16:12,030 at least gives you the sense 348 00:16:12,030 --> 00:16:14,340 of how much capital you're gonna be investing 349 00:16:14,340 --> 00:16:15,840 in this business to get goin'. 350 00:16:17,160 --> 00:16:18,990 Okay. So, shifting gears now. 351 00:16:18,990 --> 00:16:22,203 That got us through our startup investment models. 352 00:16:23,460 --> 00:16:24,780 Lookin' at cost analysis, 353 00:16:24,780 --> 00:16:27,690 this is gonna be a mix of some of the benchmarking work 354 00:16:27,690 --> 00:16:30,150 that we've done and hopefully getting you to think 355 00:16:30,150 --> 00:16:32,160 a little bit about your own business. 356 00:16:32,160 --> 00:16:34,953 Cost analysis first or last? Is it business planner? 357 00:16:36,000 --> 00:16:39,240 Boy, it's really tempting to count revenue. 358 00:16:39,240 --> 00:16:40,200 I think, as a business owner, 359 00:16:40,200 --> 00:16:41,033 I think everyone loves 360 00:16:41,033 --> 00:16:44,790 to do sales forecasts as a discipline. 361 00:16:44,790 --> 00:16:47,370 It's great to consider doing cost analysis first. 362 00:16:47,370 --> 00:16:50,370 If you can do the cost analysis, 363 00:16:50,370 --> 00:16:53,070 you can start to line other aspects of your business up 364 00:16:53,070 --> 00:16:54,600 with the cost structure. 365 00:16:54,600 --> 00:16:57,570 So, what does cost analysis improve? 366 00:16:57,570 --> 00:16:58,710 Certainly cost management, right? 367 00:16:58,710 --> 00:17:00,480 We're gonna look at specific line items 368 00:17:00,480 --> 00:17:01,313 and we're gonna think 369 00:17:01,313 --> 00:17:02,980 about how we can better manage the costs. 370 00:17:04,170 --> 00:17:05,160 Setting sales goals, 371 00:17:05,160 --> 00:17:07,680 if you have a sense of your cost structure, 372 00:17:07,680 --> 00:17:10,320 you can then be a little more thorough, 373 00:17:10,320 --> 00:17:13,140 more accurate in setting sales goals 374 00:17:13,140 --> 00:17:15,600 that certainly cover your costs 375 00:17:15,600 --> 00:17:17,970 and cover your costs theoretically, plus profit, 376 00:17:17,970 --> 00:17:20,940 plus margin, for your owner and management. 377 00:17:20,940 --> 00:17:23,250 So, knowing your cost really becomes the key 378 00:17:23,250 --> 00:17:27,450 to having a good marketing plan, having a sales forecast. 379 00:17:27,450 --> 00:17:29,250 And I mentioned setting prices as well, 380 00:17:29,250 --> 00:17:33,090 not just total revenue, but setting the specific prices. 381 00:17:33,090 --> 00:17:35,943 If you're in a position to do that, certainly is, 382 00:17:37,050 --> 00:17:39,600 it's part of the equation and knowing your costs is gonna be 383 00:17:39,600 --> 00:17:41,043 the first part of that. 384 00:17:43,590 --> 00:17:45,690 With any enterprise, whether I'm talking to a manager 385 00:17:45,690 --> 00:17:47,100 or I'm looking at the financial statements, 386 00:17:47,100 --> 00:17:49,770 I try to identify the top three costs. 387 00:17:49,770 --> 00:17:52,110 There's a lot of costs that's on a financial statement. 388 00:17:52,110 --> 00:17:55,140 I don't think it necessarily is worth the effort 389 00:17:55,140 --> 00:17:59,853 to go chasing certain cost categories that are minor. 390 00:18:00,810 --> 00:18:03,660 I certainly would look for the largest ones first 391 00:18:03,660 --> 00:18:07,140 and then the second question is to ask which of the ones 392 00:18:07,140 --> 00:18:09,360 that are possible to manage. 393 00:18:09,360 --> 00:18:12,600 An example of a fixed cost, like, maybe an insurance policy. 394 00:18:12,600 --> 00:18:13,710 Yeah, you could shop it around, 395 00:18:13,710 --> 00:18:15,330 but will you be able to have 396 00:18:15,330 --> 00:18:17,730 any major cost reduction on insurance? 397 00:18:17,730 --> 00:18:18,870 You have to ask yourself that. 398 00:18:18,870 --> 00:18:21,150 You have to know the system and try it. 399 00:18:21,150 --> 00:18:23,673 That's very different than looking at a cost like, 400 00:18:24,570 --> 00:18:27,480 let's say, packaging and trying to figure out, 401 00:18:27,480 --> 00:18:30,300 do you have the option to make any improvements 402 00:18:30,300 --> 00:18:33,030 on how much you spend there or not? 403 00:18:33,030 --> 00:18:33,863 So, those are gonna 404 00:18:33,863 --> 00:18:36,090 be really specific questions per business. 405 00:18:36,090 --> 00:18:37,470 What are your top three costs? 406 00:18:37,470 --> 00:18:40,020 And then, of those largest costs, 407 00:18:40,020 --> 00:18:42,600 I would try to highlight the ones where you feel like you 408 00:18:42,600 --> 00:18:44,130 have an opportunity to make a change, 409 00:18:44,130 --> 00:18:46,983 make a management decision that could impact that. 410 00:18:48,330 --> 00:18:50,295 Looking at these categories here, 411 00:18:50,295 --> 00:18:53,280 this is what we found in our benchmarking work. 412 00:18:53,280 --> 00:18:56,700 This is somewhat of an aggregate over the past few years. 413 00:18:56,700 --> 00:18:59,460 The percentages will change a little bit, but we, 414 00:18:59,460 --> 00:19:01,080 what we found, by and large, 415 00:19:01,080 --> 00:19:04,293 is the largest two cost factors for most businesses, 416 00:19:05,130 --> 00:19:08,550 labor, combination of paid labor and the unpaid labor, 417 00:19:08,550 --> 00:19:11,283 the value of unpaid owner labor. 418 00:19:12,330 --> 00:19:15,060 Next largest cost is depreciation. 419 00:19:15,060 --> 00:19:16,680 The sleeper here is both of these 420 00:19:16,680 --> 00:19:19,650 are potentially non-cash expenses. 421 00:19:19,650 --> 00:19:21,570 The paid labor is certainly a cash expense, 422 00:19:21,570 --> 00:19:25,140 but unpaid owner labor, not necessarily a cash expense. 423 00:19:25,140 --> 00:19:27,990 Definitely, operators out there running business entities, 424 00:19:27,990 --> 00:19:30,000 they'll keep what's left over if they can. 425 00:19:30,000 --> 00:19:33,330 If there's nothing left over that's just, you know, 426 00:19:33,330 --> 00:19:37,350 it gets rolled back into the business for investments or 427 00:19:37,350 --> 00:19:39,570 operating costs and that's the nature of running 428 00:19:39,570 --> 00:19:42,810 a small business on good years and bad years. 429 00:19:42,810 --> 00:19:44,910 So, there could be a lot of non-cash expense there 430 00:19:44,910 --> 00:19:47,070 with unpaid and then depreciation, 431 00:19:47,070 --> 00:19:49,260 definitely a non-cash expense. 432 00:19:49,260 --> 00:19:52,710 You've already had your investment outlay on the equipment, 433 00:19:52,710 --> 00:19:54,960 but the depreciation is the wear and tear and the loss 434 00:19:54,960 --> 00:19:57,900 of value on that equipment over time. 435 00:19:57,900 --> 00:20:00,420 It's not a cash cost that you write a check for. 436 00:20:00,420 --> 00:20:02,460 Theoretically, you could put that money away 437 00:20:02,460 --> 00:20:05,400 in a side account so that when the RO times out 438 00:20:05,400 --> 00:20:06,600 and hits its lifespan, 439 00:20:06,600 --> 00:20:09,663 you actually have that money available for the reinvestment, 440 00:20:10,980 --> 00:20:13,770 but it is not necessarily a check that you write, 441 00:20:13,770 --> 00:20:15,570 it's an economic calculation. 442 00:20:15,570 --> 00:20:17,730 It's an accurate calculation, we feel, 443 00:20:17,730 --> 00:20:21,330 to evaluate profitability, but I certainly get beat up 444 00:20:21,330 --> 00:20:22,417 when I work with people and they say, 445 00:20:22,417 --> 00:20:23,419 "You're, you know, Mark, 446 00:20:23,419 --> 00:20:26,250 you give me all these costs that don't actually exist." 447 00:20:26,250 --> 00:20:28,110 And I say, "I know. They don't exist." 448 00:20:28,110 --> 00:20:31,230 But depreciation can catch up with you and believe me, 449 00:20:31,230 --> 00:20:33,720 unpaid owner labor, I hate to say it, 450 00:20:33,720 --> 00:20:35,520 but it's startin' to catch up to owner managers 451 00:20:35,520 --> 00:20:37,290 that are lookin' at maybe business sales, 452 00:20:37,290 --> 00:20:39,090 exits, or transfers. 453 00:20:39,090 --> 00:20:41,700 It's one thing to wanna run your business for the passion 454 00:20:41,700 --> 00:20:44,790 and maybe sacrifice some compensation. 455 00:20:44,790 --> 00:20:46,530 It's a whole nother thing to try to transfer 456 00:20:46,530 --> 00:20:50,190 that business entity to another person and expect them 457 00:20:50,190 --> 00:20:52,800 to make that same compromise on compensation. 458 00:20:52,800 --> 00:20:57,540 So, we want people to factor that cost in and try to find 459 00:20:57,540 --> 00:21:00,153 a business model that can start to chip away at it. 460 00:21:01,320 --> 00:21:04,590 So, labor, depreciation, and we've got a whole bunch 461 00:21:04,590 --> 00:21:06,330 of other categories and it really will depend 462 00:21:06,330 --> 00:21:07,792 on your business model there. 463 00:21:07,792 --> 00:21:11,190 Packaging and supplies. I don't say supplies. 464 00:21:11,190 --> 00:21:12,690 Supplies is a general. 465 00:21:12,690 --> 00:21:13,890 You all know that from your accounting. 466 00:21:13,890 --> 00:21:16,050 Supplies is your biggest expense category 467 00:21:16,050 --> 00:21:17,511 cause it's all dumped in, 468 00:21:17,511 --> 00:21:21,510 but packaging specifically can be extremely high 469 00:21:21,510 --> 00:21:23,340 with retail-focused businesses. 470 00:21:23,340 --> 00:21:27,000 So, I'd say paid labor, depreciation, and then, 471 00:21:27,000 --> 00:21:28,140 once we get past those, 472 00:21:28,140 --> 00:21:33,140 we really get into this business-specific analysis 473 00:21:33,840 --> 00:21:34,800 to figure out, what's number three? 474 00:21:34,800 --> 00:21:35,793 What's number four? 475 00:21:37,770 --> 00:21:39,020 So, what do we do though? 476 00:21:40,290 --> 00:21:42,510 These aren't numbers that necessarily tell us 477 00:21:42,510 --> 00:21:45,210 that we're gonna shop for a better evaporator. 478 00:21:45,210 --> 00:21:49,197 These aren't numbers that are tellin' us specifically 479 00:21:49,197 --> 00:21:53,040 if we can maybe use some different components 480 00:21:53,040 --> 00:21:55,530 in our tubing system to save money. 481 00:21:55,530 --> 00:21:57,870 These numbers tell us that we need 482 00:21:57,870 --> 00:22:00,990 to focus on labor efficiency. 483 00:22:00,990 --> 00:22:02,940 If, theoretically, we're paying ourselves 484 00:22:02,940 --> 00:22:04,800 or we're worth something to pay 485 00:22:04,800 --> 00:22:06,510 and we're paying other employees, 486 00:22:06,510 --> 00:22:09,660 we wanna focus our cost management on keeping labor 487 00:22:09,660 --> 00:22:12,000 as efficient as possible 488 00:22:12,000 --> 00:22:13,620 and then making appropriate investments 489 00:22:13,620 --> 00:22:14,640 and maintaining property. 490 00:22:14,640 --> 00:22:19,080 If we can maintain our equipment longer, if we can tune it, 491 00:22:19,080 --> 00:22:22,170 service it, take care of it, avoid accidents, 492 00:22:22,170 --> 00:22:24,930 then we could be having potentially the biggest impact 493 00:22:24,930 --> 00:22:26,700 on our maple business because these 494 00:22:26,700 --> 00:22:28,563 are the biggest pieces of the pie. 495 00:22:31,050 --> 00:22:33,120 So, when I talk to managers about this idea 496 00:22:33,120 --> 00:22:37,140 of being effective as labor, our labor managers, 497 00:22:37,140 --> 00:22:39,430 managing our labor time, 498 00:22:39,430 --> 00:22:41,475 I hear people basically saying, 499 00:22:41,475 --> 00:22:45,510 "You know, what we need to focus on is paid labor," 500 00:22:45,510 --> 00:22:47,433 and let's say, unpaid owner labor. 501 00:22:49,110 --> 00:22:53,250 Every effort should be made to making sure that extra labor 502 00:22:53,250 --> 00:22:56,760 or the focus of labor is placed on yield 503 00:22:56,760 --> 00:22:59,310 and revenue enhancing activity. 504 00:22:59,310 --> 00:23:01,380 I know that's a big generalization to say 505 00:23:01,380 --> 00:23:04,110 that you're always gonna be finding a way to make money 506 00:23:04,110 --> 00:23:08,010 because there's, there is stewardship of the forest. 507 00:23:08,010 --> 00:23:09,660 There's plenty of activities off-season 508 00:23:09,660 --> 00:23:14,660 that don't seem like they're directly related to harvesting 509 00:23:14,670 --> 00:23:18,930 the sap, but for those that can and when the time is right, 510 00:23:18,930 --> 00:23:22,260 to be very specific about when you deploy time, 511 00:23:22,260 --> 00:23:25,200 make sure that it's doing something to enhance the yield of 512 00:23:25,200 --> 00:23:30,200 the sap and or the overall revenue of the business 'cause 513 00:23:30,360 --> 00:23:33,418 that's gonna be able to compensate for your time. 514 00:23:33,418 --> 00:23:36,030 Some strategies, setting targets, 515 00:23:36,030 --> 00:23:39,210 setting targets on time spent rather than just 516 00:23:39,210 --> 00:23:40,890 having it be until it's done, 517 00:23:40,890 --> 00:23:43,530 but setting targets on how much time's available, 518 00:23:43,530 --> 00:23:48,360 setting targets on criteria for improvements projects 519 00:23:48,360 --> 00:23:51,600 in the woods, and then, as far as employee management, boy, 520 00:23:51,600 --> 00:23:55,980 there's a whole world out there on building strong teams, 521 00:23:55,980 --> 00:23:59,670 strong communication, giving employees the incentive 522 00:23:59,670 --> 00:24:01,530 to perform within your business, 523 00:24:01,530 --> 00:24:04,440 and I would highly encourage you to, when you get a chance, 524 00:24:04,440 --> 00:24:06,150 to grab some leadership books, 525 00:24:06,150 --> 00:24:08,850 grab some resources that really can help you form your team 526 00:24:08,850 --> 00:24:11,400 because there is opportunity to compensate. 527 00:24:11,400 --> 00:24:14,760 There's opportunity to create incentive and certainly, 528 00:24:14,760 --> 00:24:17,070 celebrating performance with employees is, 529 00:24:17,070 --> 00:24:21,000 are great strategies to keep them invested, 530 00:24:21,000 --> 00:24:23,820 and not just the hour of work and the wage, 531 00:24:23,820 --> 00:24:26,433 but the overall success of the business. 532 00:24:29,610 --> 00:24:32,103 Some of the big ticket items, tapping training, 533 00:24:33,360 --> 00:24:34,193 making sure that people 534 00:24:34,193 --> 00:24:35,820 that are tapping your trees are skilled. 535 00:24:35,820 --> 00:24:39,240 They've been trained. You've got the right equipment. 536 00:24:39,240 --> 00:24:41,820 Leaks from the tap hole, 537 00:24:41,820 --> 00:24:45,150 inappropriate tapping is often cited as one of the things 538 00:24:45,150 --> 00:24:48,690 that can really wreck the yield 539 00:24:48,690 --> 00:24:50,760 and can really hurt a business. 540 00:24:50,760 --> 00:24:51,840 Leak checking in general, 541 00:24:51,840 --> 00:24:54,330 in-season if you're on high-vacuum systems, 542 00:24:54,330 --> 00:24:56,040 spending the time, again, 543 00:24:56,040 --> 00:24:58,440 putting that paid labor out there to keep 544 00:24:58,440 --> 00:25:01,680 the leak check going and to keep the system tight 545 00:25:01,680 --> 00:25:04,560 is a yield and revenue-enhancing activity. 546 00:25:04,560 --> 00:25:06,480 And then the mistakes. We do hear this. 547 00:25:06,480 --> 00:25:11,340 Different mistakes: veils, cutoffs, hookups, 548 00:25:11,340 --> 00:25:15,395 making sure you can avoid those spills, or those overflows, 549 00:25:15,395 --> 00:25:17,640 that's given away the money that we all need 550 00:25:17,640 --> 00:25:19,623 to make these businesses viable. 551 00:25:21,240 --> 00:25:23,160 Yield investments here. Just a couple examples. 552 00:25:23,160 --> 00:25:25,410 Theoretically spreading fixed cost over more units. 553 00:25:25,410 --> 00:25:26,670 Again, that's the scaling thing, 554 00:25:26,670 --> 00:25:28,140 which I know is difficult 555 00:25:28,140 --> 00:25:29,790 for some people given their constraints, 556 00:25:29,790 --> 00:25:34,500 but we do see some efficiency as the scale gets 557 00:25:34,500 --> 00:25:36,030 a little bit larger, 558 00:25:36,030 --> 00:25:39,300 and then yield-enhancing investments again. 559 00:25:39,300 --> 00:25:41,310 So, not just the labor to increase yield, 560 00:25:41,310 --> 00:25:43,650 but what are the things you can spend money on 561 00:25:43,650 --> 00:25:45,690 to enhance your yield? 562 00:25:45,690 --> 00:25:47,280 Maybe it's a forestry practice. 563 00:25:47,280 --> 00:25:51,360 Maybe it's that tapping equipment, the things like that. 564 00:25:51,360 --> 00:25:52,980 Scales, another thing comes up, 565 00:25:52,980 --> 00:25:54,990 scales and measurement devices, 566 00:25:54,990 --> 00:25:58,560 a way for people to really fine tune what's goin' on, 567 00:25:58,560 --> 00:26:01,210 whether it's production or whether it's retail-based. 568 00:26:03,570 --> 00:26:04,403 A few more here. 569 00:26:04,403 --> 00:26:08,490 Tubing upgrades, not putting 'em off if you can, 570 00:26:08,490 --> 00:26:09,990 making sure pumps are functioning, 571 00:26:09,990 --> 00:26:13,290 certainly hear about aging pumps not drawing like they were. 572 00:26:13,290 --> 00:26:15,510 Remote sensors and leak checking, I think, 573 00:26:15,510 --> 00:26:18,030 is something I've certainly come to realize, 574 00:26:18,030 --> 00:26:21,330 for some people, is a way to enhance yield. 575 00:26:21,330 --> 00:26:24,930 Sometimes, leak checking comes with a trade off 576 00:26:24,930 --> 00:26:26,310 of more labor, more time, 577 00:26:26,310 --> 00:26:29,100 possibly more payment going out for employees 578 00:26:29,100 --> 00:26:31,710 that have to check leaks, so there is a trade off there, 579 00:26:31,710 --> 00:26:33,600 but generally I think people have been finding 580 00:26:33,600 --> 00:26:35,980 that they can get their yield levels up 581 00:26:37,710 --> 00:26:38,580 across the board, right? 582 00:26:38,580 --> 00:26:42,150 How do we increase yield and then yield in price? 583 00:26:42,150 --> 00:26:45,003 All those things factor into the costs. 584 00:26:46,680 --> 00:26:47,790 I'm a little light on marketing. 585 00:26:47,790 --> 00:26:50,610 I'm a finance guy, so I do leave it to the creativity 586 00:26:50,610 --> 00:26:55,610 of you all to figure out what investments can be made 587 00:26:56,520 --> 00:26:59,670 to increase the value of your final product. 588 00:26:59,670 --> 00:27:02,400 It's one thing to be chasing more sap in the woods. 589 00:27:02,400 --> 00:27:05,280 For some people, they've already hit their maximum already 590 00:27:05,280 --> 00:27:08,700 at 27 inches, vacuum pullin' as much as they can 591 00:27:08,700 --> 00:27:10,590 on strong, healthy trees. 592 00:27:10,590 --> 00:27:11,940 That's gonna give you the sap to make 593 00:27:11,940 --> 00:27:13,443 as much sugar as possible. 594 00:27:14,760 --> 00:27:16,920 But then what happens once you've got that syrup finished? 595 00:27:16,920 --> 00:27:20,070 Is it going into bulk barrels? Is that the best fit for you? 596 00:27:20,070 --> 00:27:21,540 I know, for some people, 597 00:27:21,540 --> 00:27:23,730 getting rid of that syrup before they have to market it 598 00:27:23,730 --> 00:27:25,950 is the cleanest and the most efficient use 599 00:27:25,950 --> 00:27:27,510 of their time because they're gonna move on 600 00:27:27,510 --> 00:27:30,450 to other activities over the rest of the year. 601 00:27:30,450 --> 00:27:32,670 For others that have more of a marketing bent, 602 00:27:32,670 --> 00:27:35,716 what are the investments you can make to increase value? 603 00:27:35,716 --> 00:27:37,830 Not just to increase costs, you know, 604 00:27:37,830 --> 00:27:41,403 to add cost to retail, but increase that value of syrup. 605 00:27:42,300 --> 00:27:47,142 All right. We're gonna flip gears here now to benchmarking. 606 00:27:47,142 --> 00:27:48,390 There's a look. 607 00:27:48,390 --> 00:27:51,990 The 2020 Northeast Benchmark Report is in our website 608 00:27:51,990 --> 00:27:53,070 and if I didn't mention it, 609 00:27:53,070 --> 00:27:56,730 those startup guides that I showed the numbers for earlier, 610 00:27:56,730 --> 00:28:00,600 each of those, I think there's six or eight of 'em total, 611 00:28:00,600 --> 00:28:05,250 those are posted on www.maplemanager.org, 612 00:28:05,250 --> 00:28:07,450 so you can see those startup guides as well. 613 00:28:08,790 --> 00:28:10,020 Let's look at some of the numbers here 614 00:28:10,020 --> 00:28:13,260 from our 2020 analysis. 615 00:28:13,260 --> 00:28:14,850 Sticking with a theme of startup costs, 616 00:28:14,850 --> 00:28:17,640 I thought I'd start with intermediate investments 617 00:28:17,640 --> 00:28:19,650 in intermediate assets here. 618 00:28:19,650 --> 00:28:21,660 Average investment over the, I think, 619 00:28:21,660 --> 00:28:24,900 12 to 14 businesses we worked with in 2020, 620 00:28:24,900 --> 00:28:28,773 about $47 per tap total investment, 621 00:28:30,120 --> 00:28:32,550 that's the average across all of them. 622 00:28:32,550 --> 00:28:36,510 I will say, the, I don't know if I've got the sample here, 623 00:28:36,510 --> 00:28:38,790 in 2020, we've definitely shifted gears 624 00:28:38,790 --> 00:28:41,220 from prior benchmarking years. 625 00:28:41,220 --> 00:28:45,270 I think our smallest participating business is around seven 626 00:28:45,270 --> 00:28:50,270 or 8,000 taps in 2020 and we're up to a couple businesses 627 00:28:51,240 --> 00:28:55,260 over 50,000 taps, so we are moving to much larger scales 628 00:28:55,260 --> 00:28:57,480 when you look at this benchmark project. 629 00:28:57,480 --> 00:29:01,680 If you looked at some of the reports from 2014, 2015, 16, 630 00:29:01,680 --> 00:29:03,990 we had some smaller enterprises here and some 631 00:29:03,990 --> 00:29:06,390 of the investment numbers could be a lot larger. 632 00:29:07,260 --> 00:29:09,600 So, $47 to tap average. 633 00:29:09,600 --> 00:29:13,170 We've done some different breakouts here and we'll find that 634 00:29:13,170 --> 00:29:17,640 the above average yield producers in this study are lookin' 635 00:29:17,640 --> 00:29:22,640 at $56 per tap, definitely higher than the $47 average, 636 00:29:22,950 --> 00:29:25,710 and then we look at the below average yield producers. 637 00:29:25,710 --> 00:29:29,730 In this same group here, we've got an average of $39 a tap 638 00:29:29,730 --> 00:29:32,040 and this is something we've seen consistently 639 00:29:32,040 --> 00:29:34,680 for the past few years here, 640 00:29:34,680 --> 00:29:38,040 that the larger yielding operations tend 641 00:29:38,040 --> 00:29:43,040 to have newer systems, higher value systems, 642 00:29:44,070 --> 00:29:47,610 higher startup investment, or more recent investment 643 00:29:47,610 --> 00:29:48,840 to achieve that yield. 644 00:29:48,840 --> 00:29:51,373 So, the high yield is certainly possible. 645 00:29:51,373 --> 00:29:54,663 High investment in order to accomplish it. 646 00:29:56,460 --> 00:29:59,400 On the bottom right, that chart shows you 647 00:29:59,400 --> 00:30:04,400 the different average investment level per tap at scales 648 00:30:04,476 --> 00:30:08,340 and this one, I look at this having worked with a couple 649 00:30:08,340 --> 00:30:10,230 of these producers directly and seen the numbers 650 00:30:10,230 --> 00:30:11,340 on the other ones, 651 00:30:11,340 --> 00:30:15,810 I'm not exactly sure why we've got a spike $68 per tap 652 00:30:15,810 --> 00:30:19,567 for the 8,500 to 15 or 14,999. 653 00:30:22,560 --> 00:30:23,640 With any of these projects, 654 00:30:23,640 --> 00:30:26,398 the small cohort studies we've got, 655 00:30:26,398 --> 00:30:29,220 I like the idea of breaking into two groups there, 656 00:30:29,220 --> 00:30:32,100 the above average yield and the lower, below average yield. 657 00:30:32,100 --> 00:30:33,930 Once we start breakin' it into these small groups, 658 00:30:33,930 --> 00:30:36,840 we could potentially have maybe only three or four people 659 00:30:36,840 --> 00:30:37,673 in one of those groups, 660 00:30:37,673 --> 00:30:42,560 so I'm not ready to say that 8,500 to 14,000 is gonna be 661 00:30:43,860 --> 00:30:46,023 a huge additional investment. 662 00:30:47,910 --> 00:30:50,460 It could be, but I'm not exactly sure if the numbers 663 00:30:50,460 --> 00:30:52,650 are biased 'cause of the small sample. 664 00:30:52,650 --> 00:30:54,900 Going through the producers that I know are in this group, 665 00:30:54,900 --> 00:30:59,460 one thing that I will say is that I have a feeling 666 00:30:59,460 --> 00:31:02,550 that we've got a couple more businesses in this scale 667 00:31:02,550 --> 00:31:05,073 that are heavy into retail and wholesaling, 668 00:31:06,150 --> 00:31:10,634 which adds another level of equipment to their setup, 669 00:31:10,634 --> 00:31:14,070 potentially delivery vans, delivery vehicles as well, 670 00:31:14,070 --> 00:31:15,630 are costed out in these models. 671 00:31:15,630 --> 00:31:19,777 So, that could be what's goin' on with that 8,500 to 14,999. 672 00:31:21,330 --> 00:31:24,120 It could be the additional investments 673 00:31:24,120 --> 00:31:28,740 for packaging retail delivery. 674 00:31:28,740 --> 00:31:30,180 I do know that larger enterprises 675 00:31:30,180 --> 00:31:35,180 over 15,000 almost exclusively, well, not always bulk, 676 00:31:35,430 --> 00:31:36,300 most of 'em are bulk, 677 00:31:36,300 --> 00:31:39,060 but there's a couple people doing retail in that group 678 00:31:39,060 --> 00:31:40,623 of $41 per tap. 679 00:31:42,210 --> 00:31:43,830 So, I'm just talkin' through the nuance here. 680 00:31:43,830 --> 00:31:45,975 Small benchmark study here. 681 00:31:45,975 --> 00:31:47,640 We do wanna be cautious. 682 00:31:47,640 --> 00:31:49,260 We want the numbers to get us to think, 683 00:31:49,260 --> 00:31:52,200 but we don't wanna make some conclusion 684 00:31:52,200 --> 00:31:54,330 that could be misguided. 685 00:31:54,330 --> 00:31:58,410 Now, we're gonna look at cost of production right here. 686 00:31:58,410 --> 00:32:00,663 I'm just gonna look at the bulk group. 687 00:32:02,490 --> 00:32:07,490 Cost of production on the retail and retail wholesale mix 688 00:32:07,950 --> 00:32:11,310 can be confusing with a small benchmark study, 689 00:32:11,310 --> 00:32:14,820 so I've got some estimates I'll show you in the next slide, 690 00:32:14,820 --> 00:32:16,140 but the bulk one, 691 00:32:16,140 --> 00:32:18,210 we do think it's worth looking at these and trying 692 00:32:18,210 --> 00:32:19,944 to figure out if there's a trend. 693 00:32:19,944 --> 00:32:22,770 I wanna look at the pounds per pound I've got circled there. 694 00:32:22,770 --> 00:32:25,440 Average in 2020, $2.41 a pound. 695 00:32:25,440 --> 00:32:27,990 It feels like the right average you're looking for, 696 00:32:27,990 --> 00:32:31,260 the low $1.62, certainly low cost of production there, 697 00:32:31,260 --> 00:32:34,680 and the high, $3.07. 698 00:32:34,680 --> 00:32:36,707 I'm not gonna jump ahead and say that the 60, 699 00:32:36,707 --> 00:32:40,410 80,000 tap enterprises in the study are necessarily all 700 00:32:40,410 --> 00:32:45,240 the $1.62 or $1.80 per pound cost of production. 701 00:32:45,240 --> 00:32:47,160 Some of the newer enterprises certainly 702 00:32:47,160 --> 00:32:49,320 are running higher cost. 703 00:32:49,320 --> 00:32:51,990 It's not just a function of scale. 704 00:32:51,990 --> 00:32:53,818 I think it'd be dangerous to assume that just when you, 705 00:32:53,818 --> 00:32:55,650 just because you get big, 706 00:32:55,650 --> 00:32:58,530 you can drop your cost of production below $2 per pound. 707 00:32:58,530 --> 00:33:02,643 I think it's possible, but I don't think it's a guarantee. 708 00:33:04,158 --> 00:33:06,000 We also do have the potential 709 00:33:06,000 --> 00:33:07,200 of having some older businesses 710 00:33:07,200 --> 00:33:09,720 with some really worn down equipment that often 711 00:33:09,720 --> 00:33:12,630 get us to lower, a lower cost of production, like $1.62, 712 00:33:12,630 --> 00:33:15,510 if the sugar house has been fully depreciated out. 713 00:33:15,510 --> 00:33:19,290 So, some of this is also gonna be age of the business. 714 00:33:19,290 --> 00:33:22,350 Anyway, $2.41, this is consistent over the past few years. 715 00:33:22,350 --> 00:33:23,760 We've definitely seen these spreads 716 00:33:23,760 --> 00:33:26,850 of low cost and higher cost bulk producers, 717 00:33:26,850 --> 00:33:28,320 but we've often found this average 718 00:33:28,320 --> 00:33:32,193 is somewhere around $2.30, $2.40 a pound cost of production. 719 00:33:33,300 --> 00:33:35,130 So, look at that retail wholesale mix. 720 00:33:35,130 --> 00:33:37,230 These are numbers that really don't exist anywhere other 721 00:33:37,230 --> 00:33:38,883 than an average on paper. 722 00:33:40,170 --> 00:33:42,660 We do see this average of $4 a pound, 723 00:33:42,660 --> 00:33:45,360 or around $44 per gallon equivalent, 724 00:33:45,360 --> 00:33:48,660 for some of these businesses that mix retail and wholesale. 725 00:33:48,660 --> 00:33:51,150 The reason I say the average doesn't really show up anywhere 726 00:33:51,150 --> 00:33:54,090 on paper, we've got large differences 727 00:33:54,090 --> 00:33:56,040 with someone who maybe is, 728 00:33:56,040 --> 00:34:00,000 maybe they're selling 70% of their syrup bulk and 30% 729 00:34:00,000 --> 00:34:05,000 is going to a very high value retail, direct marketing, 730 00:34:06,690 --> 00:34:08,040 and in another situation, 731 00:34:08,040 --> 00:34:10,190 we could have someone with 60% or 50% 732 00:34:10,190 --> 00:34:13,170 of their syrup being sold as bulk and the rest 733 00:34:13,170 --> 00:34:16,680 of their syrup may be going to some mid-value retail, 734 00:34:16,680 --> 00:34:18,180 but maybe some more wholesale accounts. 735 00:34:18,180 --> 00:34:21,390 So, the, that price, the $44 a gallon, 736 00:34:21,390 --> 00:34:24,540 probably doesn't specifically show up across the board. 737 00:34:24,540 --> 00:34:26,790 It may for a particular package size, 738 00:34:26,790 --> 00:34:30,753 but it's kind of a, an aggregate of the the whole business. 739 00:34:32,100 --> 00:34:35,250 But again, going from $2.40 a pound cost of production 740 00:34:35,250 --> 00:34:37,080 to this $4 a pound, 741 00:34:37,080 --> 00:34:41,010 we're almost not quite twice as much on cost of production 742 00:34:41,010 --> 00:34:42,750 to have these mixed models. 743 00:34:42,750 --> 00:34:45,330 Now, going the next level, the heavy retail mix, 744 00:34:45,330 --> 00:34:49,050 we have worked with a few enterprises anywhere from 2000 745 00:34:49,050 --> 00:34:53,790 to 8,000 taps that are doing heavy retail and what we find 746 00:34:53,790 --> 00:34:56,430 by and large is their per gallon equivalent cost 747 00:34:56,430 --> 00:35:01,053 of production, anywhere from 75 to $90 per gallon. 748 00:35:02,400 --> 00:35:03,900 What does that tell us? 749 00:35:03,900 --> 00:35:08,460 This tells us that anyone that's running a large amount 750 00:35:08,460 --> 00:35:12,150 or majority of retail sales probably is not 751 00:35:12,150 --> 00:35:14,700 in a great position to be selling syrup strictly 752 00:35:14,700 --> 00:35:16,680 by the gallon or half gallon. 753 00:35:16,680 --> 00:35:20,070 You do need to be finding retail price points 754 00:35:20,070 --> 00:35:23,280 for package sizes that are gonna be up to 75 755 00:35:23,280 --> 00:35:24,930 or $90 per gallon equivalent. 756 00:35:24,930 --> 00:35:28,350 So, I can't spec you the prices right off my memory here, 757 00:35:28,350 --> 00:35:31,020 but that means we've gotta find the comparable price 758 00:35:31,020 --> 00:35:35,490 for quarts, pints, and half pints that will get us 759 00:35:35,490 --> 00:35:39,540 into that $80 range per gallon equivalent. 760 00:35:39,540 --> 00:35:42,677 Again, we're not selling gallons here for 75 761 00:35:42,677 --> 00:35:44,340 or $90 per gallon. 762 00:35:44,340 --> 00:35:46,500 The per gallon equivalent means when we take our whole crop 763 00:35:46,500 --> 00:35:47,430 and we spread it, 764 00:35:47,430 --> 00:35:50,130 everything from NIPs to a small number of gallons, 765 00:35:50,130 --> 00:35:55,130 we're gonna get that 75 to $90 range net returns. 766 00:35:55,140 --> 00:35:58,983 So, we've seen investment. We've seen cost of production. 767 00:36:00,840 --> 00:36:02,520 Now, we gotta look at what's left. 768 00:36:02,520 --> 00:36:04,083 This is what we found in 2020. 769 00:36:05,220 --> 00:36:06,600 I've got two groups there on the left. 770 00:36:06,600 --> 00:36:09,150 I've got a less than 15,000 tap group 771 00:36:09,150 --> 00:36:11,820 and a 15,000 tap and larger group. 772 00:36:11,820 --> 00:36:15,030 Those are the rows on the left hand side. 773 00:36:15,030 --> 00:36:16,050 And then we've got some ranges. 774 00:36:16,050 --> 00:36:18,270 We've got a low, a high, and an average 775 00:36:18,270 --> 00:36:19,653 that we'll look at tonight. 776 00:36:21,270 --> 00:36:23,160 This is what we saw in 2020. 777 00:36:23,160 --> 00:36:26,580 We've got the 15, less than 15,000 tap group. 778 00:36:26,580 --> 00:36:31,580 We had -12% margin, -12% profitability, 779 00:36:31,650 --> 00:36:33,630 range high up to 9%, 780 00:36:33,630 --> 00:36:37,920 and an average of 2.2% positive profits. 781 00:36:37,920 --> 00:36:40,590 The larger operations, again, a small group here, 782 00:36:40,590 --> 00:36:43,620 we've got several people over 15,000 taps. 783 00:36:43,620 --> 00:36:47,070 We've got a range of -10% to positive 9%. 784 00:36:47,070 --> 00:36:52,070 The overall average -1.6%. What does this tell us? 785 00:36:52,320 --> 00:36:53,790 I don't know if this tells us so much 786 00:36:53,790 --> 00:36:56,280 that larger enterprises are less profitable. 787 00:36:56,280 --> 00:36:57,660 Again, with a small group, 788 00:36:57,660 --> 00:36:59,610 I'm not gonna jump to that conclusion. 789 00:36:59,610 --> 00:37:03,450 What I would say is equal opportunity for profit, 790 00:37:03,450 --> 00:37:08,450 equal opportunity for losses here across the industry. 791 00:37:08,700 --> 00:37:13,700 Site-specific, management-specific situations, no guarantee, 792 00:37:14,340 --> 00:37:16,020 no silver bullets here. 793 00:37:16,020 --> 00:37:18,720 Getting bigger clearly doesn't necessarily put you 794 00:37:18,720 --> 00:37:20,447 in the profit zone and I think some 795 00:37:20,447 --> 00:37:23,460 of the things we mentioned earlier, there's investments, 796 00:37:23,460 --> 00:37:24,993 there's costs, there's labor, 797 00:37:26,070 --> 00:37:27,900 and there's sales plans and all those things 798 00:37:27,900 --> 00:37:30,990 have to come together in the right way to drive 799 00:37:30,990 --> 00:37:33,483 a maple business into profitability. 800 00:37:34,740 --> 00:37:38,850 Now, at the bottom, I do have the bulk profit margin. 801 00:37:38,850 --> 00:37:42,780 We had -1% and the retail 1%. 802 00:37:42,780 --> 00:37:43,920 Very close numbers here. 803 00:37:43,920 --> 00:37:46,350 Really right on the fringe there on 2020. 804 00:37:46,350 --> 00:37:47,790 I think there's some people that did well, 805 00:37:47,790 --> 00:37:50,130 some people not so well. 806 00:37:50,130 --> 00:37:51,300 I'm gonna make a note here. 807 00:37:51,300 --> 00:37:55,020 In 2020, people were pulling in revenue 808 00:37:55,020 --> 00:37:59,190 from the recovery programs, the CFAT program, 809 00:37:59,190 --> 00:38:00,023 and for this study, 810 00:38:00,023 --> 00:38:03,355 we actually withdrew government-related income. 811 00:38:03,355 --> 00:38:05,490 It's not syrup-related income. 812 00:38:05,490 --> 00:38:08,850 So, anything that wasn't directly related to syrup sales, 813 00:38:08,850 --> 00:38:10,380 we did pull out of the equation. 814 00:38:10,380 --> 00:38:11,820 So, in some cases, 815 00:38:11,820 --> 00:38:14,490 these businesses may have cash flowed just fine 816 00:38:14,490 --> 00:38:15,990 'cause they got a check from the government, 817 00:38:15,990 --> 00:38:17,460 but the syrup business 818 00:38:17,460 --> 00:38:20,283 on their own didn't necessarily cut it. 819 00:38:21,390 --> 00:38:24,210 Okay. Some takeaways from the benchmark here. 820 00:38:24,210 --> 00:38:26,550 Marketing strategies are a significant driver 821 00:38:26,550 --> 00:38:28,320 of the variable costs. 822 00:38:28,320 --> 00:38:30,180 We've got a few businesses that certainly look 823 00:38:30,180 --> 00:38:32,310 at retail, wholesale blends. 824 00:38:32,310 --> 00:38:34,541 They're doin' different sales activity. 825 00:38:34,541 --> 00:38:38,130 These sales activities add labor. 826 00:38:38,130 --> 00:38:41,010 They add costs, first and foremost. 827 00:38:41,010 --> 00:38:44,340 I know that the literature, the agricultural literature, 828 00:38:44,340 --> 00:38:47,250 specifically often talks about adding value, 829 00:38:47,250 --> 00:38:48,660 which is terrific. 830 00:38:48,660 --> 00:38:50,460 I think it's important as a cost manager 831 00:38:50,460 --> 00:38:53,880 to realize these activities add costs first. 832 00:38:53,880 --> 00:38:58,880 It requires labor and time to execute a direct online 833 00:39:01,890 --> 00:39:04,380 or wholesale, retail marketing strategy. 834 00:39:04,380 --> 00:39:07,290 Those costs get incurred and then we've gotta find a way 835 00:39:07,290 --> 00:39:09,990 to price and we've gotta find a way to move enough product 836 00:39:09,990 --> 00:39:11,880 to make good on those. 837 00:39:11,880 --> 00:39:13,740 We certainly see that high labor costs 838 00:39:13,740 --> 00:39:16,530 with intense marketing strategies, yield strategies, 839 00:39:16,530 --> 00:39:19,143 high-yield producers like we showed earlier here, 840 00:39:20,400 --> 00:39:24,210 we can produce a lot of syrup per tap. 841 00:39:24,210 --> 00:39:27,090 It will drive investments up. 842 00:39:27,090 --> 00:39:29,070 It will drive investments up and I think 843 00:39:29,070 --> 00:39:33,210 this is a classic for business managers, humans in general. 844 00:39:33,210 --> 00:39:37,410 Some people, whether they've got capital, equity to invest, 845 00:39:37,410 --> 00:39:42,120 or they're really less concerned on risk, the idea of debt, 846 00:39:42,120 --> 00:39:46,230 the idea of borrowing, some people are investors, 847 00:39:46,230 --> 00:39:47,400 other people are doers, 848 00:39:47,400 --> 00:39:49,380 They're workers and they'd rather put time in it. 849 00:39:49,380 --> 00:39:51,344 They'd rather have their hands on things. 850 00:39:51,344 --> 00:39:54,060 Certainly, marketing is its own skillset, 851 00:39:54,060 --> 00:39:55,830 but I see some divergence there. 852 00:39:55,830 --> 00:39:56,790 I do see some people 853 00:39:56,790 --> 00:39:58,620 that are definitely more investment-minded, 854 00:39:58,620 --> 00:40:00,480 investment-driven, and other people 855 00:40:00,480 --> 00:40:02,107 that are a little bit more operational and saying, 856 00:40:02,107 --> 00:40:06,060 "I wanna put my time into this or I just don't have the half 857 00:40:06,060 --> 00:40:08,520 a million dollars to invest in that scale." 858 00:40:08,520 --> 00:40:10,770 So, they're gonna run a business differently. 859 00:40:13,170 --> 00:40:14,553 Couple more takeaways. 860 00:40:17,100 --> 00:40:19,440 Profitability we looked at just at the end there. 861 00:40:19,440 --> 00:40:24,240 Profitability is not always directly related 862 00:40:24,240 --> 00:40:29,073 to low production costs or scale of the operation. 863 00:40:30,480 --> 00:40:34,530 There's a real connection across the whole system, 864 00:40:34,530 --> 00:40:38,580 which is gonna be costs and revenue and how they integrate. 865 00:40:38,580 --> 00:40:42,210 So, just having a low cost of production or just being 866 00:40:42,210 --> 00:40:43,680 at a large scale 867 00:40:43,680 --> 00:40:46,743 does not necessarily make you profitable at all. 868 00:40:47,880 --> 00:40:50,280 So, from a management perspective, what are you gotta do? 869 00:40:50,280 --> 00:40:51,150 You've really gotta go back 870 00:40:51,150 --> 00:40:53,340 to that cost analysis we talked about earlier. 871 00:40:53,340 --> 00:40:56,370 Gotta find a way to understand your costs, 872 00:40:56,370 --> 00:40:57,540 understand your model. 873 00:40:57,540 --> 00:41:00,930 Is it an investment model? Is it a heavy labor model? 874 00:41:00,930 --> 00:41:05,880 Understand that cost structure and then pair 875 00:41:05,880 --> 00:41:09,900 the ideal revenue generation with that, 876 00:41:09,900 --> 00:41:11,940 the ideal price setting, 877 00:41:11,940 --> 00:41:14,670 the ideal marketing plan and sales forecast, 878 00:41:14,670 --> 00:41:17,490 to bring in the revenue need, 879 00:41:17,490 --> 00:41:19,170 pay down that cost of production, 880 00:41:19,170 --> 00:41:23,400 and then ideally have some margin left. 881 00:41:23,400 --> 00:41:25,263 Okay, cost versus revenue. 882 00:41:26,160 --> 00:41:27,570 A couple things related to sales plans 883 00:41:27,570 --> 00:41:28,920 'cause sales are important. 884 00:41:29,850 --> 00:41:31,440 Sales are important to finances. 885 00:41:31,440 --> 00:41:35,070 These are some things I've seen with the bulk producers. 886 00:41:35,070 --> 00:41:37,440 We've already talked about emphasis on yield per tap, right? 887 00:41:37,440 --> 00:41:38,717 We don't wanna leave any sugar in the woods. 888 00:41:38,717 --> 00:41:41,040 We wanna get it out, get it through our lines, 889 00:41:41,040 --> 00:41:43,593 and get it converted into sap. 890 00:41:45,187 --> 00:41:47,340 We've got bulk producers that are definitely looking 891 00:41:47,340 --> 00:41:48,870 at the option to purchase sap. 892 00:41:48,870 --> 00:41:50,730 You've heard me say this over and over again, 893 00:41:50,730 --> 00:41:52,710 the idea of bringing in some extra sap, 894 00:41:52,710 --> 00:41:54,300 running it through your system, 895 00:41:54,300 --> 00:41:56,100 can certainly spread some more 896 00:41:56,100 --> 00:41:58,860 of those fixed costs over more units produced. 897 00:41:58,860 --> 00:42:00,300 So, the idea of bringing in sap 898 00:42:00,300 --> 00:42:03,276 to increase sales, great strategy. 899 00:42:03,276 --> 00:42:06,750 And then always there are people with creative solutions 900 00:42:06,750 --> 00:42:08,370 to move just a small fraction 901 00:42:08,370 --> 00:42:11,043 of their crop at higher prices. 902 00:42:12,870 --> 00:42:15,270 First off, well, let me just say, 903 00:42:15,270 --> 00:42:17,220 certified organic premiums, yes, plus 10, 904 00:42:17,220 --> 00:42:19,530 plus 20 cents per pound, a great strategy. 905 00:42:19,530 --> 00:42:21,510 That's gonna reprice your whole crop. 906 00:42:21,510 --> 00:42:22,800 So, that's the whole thing, 907 00:42:22,800 --> 00:42:25,800 but that idea of just finding a restaurant, 908 00:42:25,800 --> 00:42:29,400 finding a low intensity outlet where you 909 00:42:29,400 --> 00:42:32,610 can move some syrup retail can be a dramatic shift 910 00:42:32,610 --> 00:42:34,920 for even a large business. 911 00:42:34,920 --> 00:42:37,350 The key with all of that, anytime you bring on marketing, 912 00:42:37,350 --> 00:42:42,350 the key there is to really be mindful of your costs. 913 00:42:43,260 --> 00:42:47,370 Figure out what the costs are gonna be in order to figure 914 00:42:47,370 --> 00:42:49,980 out if that extra marketing effort is worth it. 915 00:42:49,980 --> 00:42:50,813 Yeah, good question. 916 00:42:50,813 --> 00:42:54,270 So, Andy asked, "Would you say that below 3000 tap syrup 917 00:42:54,270 --> 00:42:56,100 has shown not profitable?" 918 00:42:56,100 --> 00:42:58,410 Quick answer, not necessarily. 919 00:42:58,410 --> 00:43:01,050 Would you say below 2,500 tap sap 920 00:43:01,050 --> 00:43:03,630 has not shown to be profitable? Not necessarily. 921 00:43:03,630 --> 00:43:05,040 The reason that we've really kind 922 00:43:05,040 --> 00:43:09,870 of steered away from that, couple of reasons. 923 00:43:09,870 --> 00:43:10,980 I do think there's challenges. 924 00:43:10,980 --> 00:43:14,089 I do think that there are some significant challenges 925 00:43:14,089 --> 00:43:19,089 when you're at that scale, 1,000, 2,000, 926 00:43:19,690 --> 00:43:24,390 3,000 taps because you are gonna be heavily invested 927 00:43:24,390 --> 00:43:27,360 and generally, at that point, 928 00:43:27,360 --> 00:43:29,430 the family and the volunteers sometimes 929 00:43:29,430 --> 00:43:33,930 become less interested or they do trail out 930 00:43:33,930 --> 00:43:36,780 after a little while and you're left with a lot to manage 931 00:43:36,780 --> 00:43:40,350 and maybe having to give up more of your paid time 932 00:43:40,350 --> 00:43:43,920 at another job or possibly pay some people to help out. 933 00:43:43,920 --> 00:43:46,050 I have definitely seen two 934 00:43:46,050 --> 00:43:49,053 and 3000 tap enterprises be profitable, 935 00:43:50,100 --> 00:43:51,810 profitable in the sense that it's generally 936 00:43:51,810 --> 00:43:54,600 a part-time income, complimentary enterprise 937 00:43:54,600 --> 00:43:58,080 to someone who's generating some money in other directions. 938 00:43:58,080 --> 00:43:59,490 The other reason we've steered away 939 00:43:59,490 --> 00:44:03,390 from the smaller enterprises is we found, in a good way, 940 00:44:03,390 --> 00:44:04,980 there's so much creativity 941 00:44:04,980 --> 00:44:07,473 and there's so much uniqueness at small scales. 942 00:44:08,430 --> 00:44:12,550 I don't necessarily see those models as being replicable 943 00:44:13,410 --> 00:44:15,480 from my job in the university. 944 00:44:15,480 --> 00:44:18,840 Part of the job that I feel is important 945 00:44:18,840 --> 00:44:21,960 is to find agricultural models that we can, 946 00:44:21,960 --> 00:44:23,460 I don't wanna say train everyone on, 947 00:44:23,460 --> 00:44:25,260 but we can show that there's some patterns 948 00:44:25,260 --> 00:44:28,290 and there's some trends and there's so much creativity 949 00:44:28,290 --> 00:44:31,410 at the small scale that I love to leave 950 00:44:31,410 --> 00:44:32,670 that to the entrepreneurial world. 951 00:44:32,670 --> 00:44:33,537 I'd love to leave that to, 952 00:44:33,537 --> 00:44:37,560 for people to figure out what to do with that, you know? 953 00:44:37,560 --> 00:44:39,127 How can you get 150, 954 00:44:39,127 --> 00:44:43,188 $200 per gallon equivalent from syrup at a small scale? 955 00:44:43,188 --> 00:44:46,080 Can you turn that into a 50, $80,000 business? 956 00:44:46,080 --> 00:44:48,000 And I've seen people do it, for sure. 957 00:44:48,000 --> 00:44:50,340 So, I'm not trying to steer people away 958 00:44:50,340 --> 00:44:52,953 from those smaller scale models, 959 00:44:54,120 --> 00:44:56,460 but I will say that they're unique and they're, 960 00:44:56,460 --> 00:44:58,170 I think they're often difficult to, 961 00:44:58,170 --> 00:44:59,770 I'd say, quote, like, replicate. 962 00:45:01,573 --> 00:45:04,350 So, great question. Definitely a great question. 963 00:45:04,350 --> 00:45:09,350 I think you can run those as a viable part-time enterprise. 964 00:45:09,480 --> 00:45:11,400 One of the reasons we have gone 965 00:45:11,400 --> 00:45:13,470 to larger business models for this, 966 00:45:13,470 --> 00:45:15,900 the benchmarking research particularly, 967 00:45:15,900 --> 00:45:18,900 is from a rural development perspective, 968 00:45:18,900 --> 00:45:20,460 we know that there are a lot of people lookin' 969 00:45:20,460 --> 00:45:23,490 for meaningful livelihood, meaning more than, like, 970 00:45:23,490 --> 00:45:26,211 a very fractional part-time job. 971 00:45:26,211 --> 00:45:27,949 Being in rural communities, 972 00:45:27,949 --> 00:45:30,540 not everyone's got opportunities for other employment. 973 00:45:30,540 --> 00:45:32,873 So, we are trying to get a better sense 974 00:45:32,873 --> 00:45:35,610 of those business models that can, 975 00:45:35,610 --> 00:45:38,760 could return maybe $30,000 a year back 976 00:45:38,760 --> 00:45:41,010 to the owner manager or more. 977 00:45:41,010 --> 00:45:42,900 So, that's another reason where you'll see a lot 978 00:45:42,900 --> 00:45:45,270 of the projects I'm on gearing towards some 979 00:45:45,270 --> 00:45:47,700 of the larger tap enterprises. 980 00:45:47,700 --> 00:45:49,770 Oh, so, we mentioned the bulk strategies. 981 00:45:49,770 --> 00:45:53,400 This is the strategy that we've been advocating from 982 00:45:53,400 --> 00:45:55,470 for people that are doing retail or wholesale. 983 00:45:55,470 --> 00:45:58,560 We've got this pricing and sales forecasting calculator. 984 00:45:58,560 --> 00:46:00,090 I've had a lot of fun teaching classes 985 00:46:00,090 --> 00:46:01,233 with this with people. 986 00:46:02,430 --> 00:46:04,590 I'll wait now and see who's on the line, 987 00:46:04,590 --> 00:46:08,160 but I can certainly go on and do an example if people want, 988 00:46:08,160 --> 00:46:09,390 but in this calculator, 989 00:46:09,390 --> 00:46:12,790 you can go and basically put a theoretical crop value in 990 00:46:14,070 --> 00:46:17,430 and you can determine if you wanna do bulk sales only, 991 00:46:17,430 --> 00:46:20,220 if you wanna do bulk sales and retail and wholesale, 992 00:46:20,220 --> 00:46:22,623 or just retail and wholesale. 993 00:46:23,460 --> 00:46:24,990 So, getting away from the cost side here, 994 00:46:24,990 --> 00:46:26,670 now we're getting the sale side, 995 00:46:26,670 --> 00:46:30,540 being able to itemize how many packages 996 00:46:30,540 --> 00:46:32,397 at what price you wanna sell. 997 00:46:32,397 --> 00:46:34,020 It's been great in our classes. 998 00:46:34,020 --> 00:46:36,547 We, you know, set challenges up and said to people, 999 00:46:36,547 --> 00:46:37,410 "Show us, you know, 1000 00:46:37,410 --> 00:46:40,740 show us how you can get to $110 per gallon equivalent." 1001 00:46:40,740 --> 00:46:43,350 Or, "Here's a cost structure where, 1002 00:46:43,350 --> 00:46:44,183 if you can get 1003 00:46:44,183 --> 00:46:46,770 to $80 per gallon equivalent across your crop, 1004 00:46:46,770 --> 00:46:49,760 you're gonna cover your cost and break even. 1005 00:46:49,760 --> 00:46:50,970 So, I highly recommend it. 1006 00:46:50,970 --> 00:46:54,840 If anyone watchin' the video or watchin' live tonight 1007 00:46:54,840 --> 00:46:59,700 is doing retail, go to www.maplemanager.org, 1008 00:46:59,700 --> 00:47:02,730 put in your crop, and start to deal it out in half points 1009 00:47:02,730 --> 00:47:05,970 at a certain price, quarts at a certain price. 1010 00:47:05,970 --> 00:47:06,803 I think we've got, like, 1011 00:47:06,803 --> 00:47:09,930 over 15 package sizes built into the calculator. 1012 00:47:09,930 --> 00:47:13,380 You can set the package size, set the price, 1013 00:47:13,380 --> 00:47:15,920 and look at a total sales forecast. 1014 00:47:15,920 --> 00:47:18,543 Top right there, you're gonna go to unit one, 1015 00:47:19,380 --> 00:47:21,390 pick your pint, set your price, 1016 00:47:21,390 --> 00:47:23,730 specify how many gallons you're gonna sell. 1017 00:47:23,730 --> 00:47:26,370 Unit two and you can keep adding more and more units there 1018 00:47:26,370 --> 00:47:29,370 until you utilize that whole crop. 1019 00:47:29,370 --> 00:47:33,330 Get yourself a good high-blended price, then ask yourself, 1020 00:47:33,330 --> 00:47:35,400 how am I gonna develop the marketing plan 1021 00:47:35,400 --> 00:47:38,130 to execute all those sales? 1022 00:47:38,130 --> 00:47:40,280 That's what I've got tonight, I think. Yep. 1023 00:47:41,520 --> 00:47:43,830 Couple of photos there. Chris Lindgren in there, top left. 1024 00:47:43,830 --> 00:47:45,750 He'll be doing a sap presentation, 1025 00:47:45,750 --> 00:47:48,960 sap business presentation next week. 1026 00:47:48,960 --> 00:47:50,190 I'm gonna open it up. Great. 1027 00:47:50,190 --> 00:47:52,140 Well, if we've got no questions, 1028 00:47:52,140 --> 00:47:56,070 certainly thanks to those that came live tonight. 1029 00:47:56,070 --> 00:47:58,720 Hopefully, we'll have some people watching the video. 1030 00:48:01,320 --> 00:48:02,850 Have a great evening. Keep an eye out. 1031 00:48:02,850 --> 00:48:06,420 We've got a couple more UVM Extension projects comin' up, 1032 00:48:06,420 --> 00:48:07,980 webinar next week, 1033 00:48:07,980 --> 00:48:09,960 and then we're gonna be in a conference season. 1034 00:48:09,960 --> 00:48:14,370 So, some of you may see UVM Extension specialists in Ohio 1035 00:48:14,370 --> 00:48:18,300 or out in Wisconsin and potentially, or obviously, 1036 00:48:18,300 --> 00:48:20,760 the Vermont Conference is comin' up. 1037 00:48:20,760 --> 00:48:21,870 All right, thanks a lot, everyone. 1038 00:48:21,870 --> 00:48:22,870 Have a good evening.