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Articles by Alpaca World Magazine:

The Bottom Line is Your Bottom Line

Deb Hill

Part Three of our series extracted from Deb Hill's book Taking Care of Business

"Hardly anybody becomes a customer by accident."
- Jay Conrad Levinson in Mastering Guerilla Marketing.

Good Farm Tours Lead to Alpaca Sales

You have been in the alpaca business for some time now. You have followed all the recommended steps: written a business plan, created a niche for your farm, begun a marketing campaign to let prospective customers know you exist, developed a breeding programme, and sent out your sales lists. People are coming to visit regularly, but you still have not sold an alpaca. Something is not working…but what?

Very possibly the missing link is what happens when customers arrive at your farm. Sometimes we are so excited to have a visitor that we charge ahead with no clear plan, which may not produce the results we- or they- hoped for. A good tour is a positive experience for both the visitor and the farm owner alike, and sets the stage for future business dealings.

While every visitor is different, and every alpaca breeder has their own unique way of handling guests, if you look carefully you will find that successful alpaca businesses use some of the same underlying principles when hosting potential customers at the farm. In list form, so they are easiest to read and assimilate, the basics of good tours include the following:

Be prepared! Unless your visitors have dropped in unexpectedly, you will have communicated with them in advance. Do your homework and find out what they expect during the time they will spend with you. Are they looking for a specific alpaca to purchase, or are they starting out and curious to see what raising alpacas is all about? Gear your presentation and tour accordingly.

Be available. Believe it or not, I have arrived at alpaca farms for scheduled visits only to be told that the owner has run into town on an errand, is busy with other visitors, or will "join me later - just look around until then". If you have arranged a tour, be ready to go at the appointed time. Your visitors deserve your utmost attention.

Follow your customers' lead. Be prepared to change your standard tour format if the current visitors have specific interests. The easiest way to determine this is to ask your guests what they hope to learn/see/do while they are at your farm, and make sure you accomplish it. Focus on the needs of your prospective customers and you will spend your time, and theirs, wisely.

Stay tuned to the comfort of your guests. If they have travelled a long way to reach you, their first need may be a trip to the restroom rather than the barn. An offer of hot drinks in the winter or cold water in the heat of August will be greatly appreciated. Have they come dressed to stand in the sun or tramp about in the snow? If not, don't make them do it! Customers whose feet hurt, who are too hot or too cold, or who are hungry or thirsty will be thinking more about their physical discomfort than about your alpacas.

Educate but don't overwhelm. You are probably an alpaca fanatic. We who are in this business have such a love for these animals that we are fascinated by the slightest detail about them. Your visitors, on the other hand, may not be ready to hear everything you know in the short time they will spend with you, and they will remember very little of it later. Why not prepare some written handouts, or copies of articles from Alpaca World magazine, to give to those who are just starting to learn about alpacas? Your clients will appreciate being able to read more about alpacas at their leisure, and the folder of information you give them will serve to remind them of you for months to come.

It's OK to toot your own horn if the melody is pleasant. No one wants to be in the grip of the proverbial "used car dealer" type of sales person. On the other hand, if you do not explain the benefits of your alpacas, products, or services, who will? Listen to what your customers tell you about their desires. Show them what you have and explain how it fits their needs. If you don't have what they want, see if you can help them get it. Become an agent working for your customers' satisfaction. If your visitors are looking for alpacas to purchase, make that the focus of their time with you. Have sales lists, medical records, pedigrees, sales contracts and other information ready. Have the alpacas nearby, and halters available. Allow plenty of time for your customers to view and discuss each alpaca. Some farms provide alpaca review forms and pencils so their customers can make notes. Photos of the customers with the alpacas they like best also make nice take-away gifts.

Follow up. Contact your customers a short time after they visit, whether it is with a card to thank them for visiting you or with a phone call or email to see if they have questions. If they need more information, send it promptly. Every pleasant contact you have with them will reinforce the positive image they have of your business.

Don't give up! Each customer has a vision of his or her perfect alpaca. You may not have just the right one this time. However, there is always next time.

If the tour was a positive experience for your guests, they'll be back. Stay in touch with the clients that have come to visit you and let them know they are welcome to return. The more often they return, the more probable it is that they will fall in love with one of your alpacas. Happy touring!

Improve Your Bottom Line: Diversify!

"Even if you are on the right track, you'll get run over if you just sit there."
- Will Rogers

An ancient adage, no doubt from Incan times, says "don't put all your fleece in one basket". This is especially true for small farms. The alpaca industry has remained quite strong, weathering several periods of economic uncertainty with hardly a blip. On the other hand, individual farms report that sales in some years are better than in others, while new breeders wonder how to fund their start-up expenses. Fortunately there is an easy way to protect and improve your farm income: diversify!

Isn't this advice contradictory? After all, small businesses are routinely taught that specialising is the best way to compete with the big guys. In the alpaca industry, breeders specialise in certain colours of alpacas, or in certain bloodlines or in coat styles. There is nothing wrong with this - developing a specialised niche for your business helps you stand out from the crowd. But what if that fuchsia coloured fleece you've been breeding for goes out of style next year? Or the bloodlines you've focused on lose favour for some reason? Breeders are well advised to maintain as much diversity of colour, style, quality and pedigree as they can, in addition to their specialty animals.

For many breeders, selling alpacas is their sole means of producing income. And a great way to earn a living it is, too. But suppose a huge farm opens right down the road from you and buyers are no longer coming your way? How about the new breeder who is still building a herd and doesn't have any alpacas for sale yet? Unfortunately the bills do not hold off until you have sales. Wouldn't it be great to have another income stream to help defray your alpaca-related costs? It could be the difference between profit and loss for your alpaca business.

There are many ways to earn farm income in addition to selling alpacas. Some breeders who started out offering a product or service as a sideline to their alpacas have discovered whole new passions. At the least, the extra pounds earned can go into your marketing fund or pay for your stud fees this year. Whether you branch out a little or a lot, do your homework to understand the financial and time commitments involved when you consider the following ideas for improving your bottom line…

Alpaca products for sale!

Oddly enough, it is not uncommon to meet breeders with closets, attics and spare bedrooms stuffed full of fleece they are not using and are not selling. For heaven's sake, get that fleece out and make some money with it. What could be easier than pooling your fleece with other breeders and having it processed into lovely alpaca yarn, which you can either sell or have made into end products? Even the raw fleece itself can be sold easily enough to handcrafters of all sorts. I sell raw fleece straight off the animal, uncleaned and unskirted for $30 (American) per pound. Cleaned, carded and bagged in 2 or 3 ounce quantities it goes for up to $30 an ounce. What will it take to make these sales? Not much more than your presence at farmers markets or fibre shows, crafts fairs or fibre guild meetings, or a listing on your web site.

If you don't shear enough fleece to produce a product line, find a wholesale distributor and purchase your inventory, or travel to South America and import your own items. It is entirely possible to begin retailing alpaca products in a very low-key way. My first "store" was an antique trunk in my living room, and it grew from there. If you include a visit to the "store" as part of your standard tour for visitors you will, at the very least, sell enough to pay for your time leading the tour. You can build your clientele from there at your own speed. Retail or wholesale, nothing sells like alpaca products.

Don't forget that other ubiquitous alpaca product: poop. Selling this commercially probably requires prohibitively expensive testing and labelling, but there is nothing to stop you from selling it by the truck or wheelbarrow load to backyard gardeners or market growers. Worm farmers are always in need of nutrient rich material. Put an ad in your local paper and see what happens next.

Alpaca services for hire!

The alpaca industry is chock full of talented folks. Whatever it was that you did prior to joining this industry could be a lucrative adjunct to alpaca breeding. Is there an expertise you have that breeders need? There are some skills or professions that come immediately to mind, such as shearing, transporting, training or providing vet care to alpacas. In addition, alpaca farms from time to time need accountants, legal services, photographers, insurance agents, real estate brokers, marketing specialists, and so on. Be on the lookout for ways to match your background, experience and talents with the needs of the industry.

Alpaca-inspired products for sale!

I know of an apple orchard where they make a great deal of money selling baskets lined with apple printed fabric. This has little or nothing to do with growing apples, but the orchard's owners realised that people who were willing to pick their own apples probably were apple lovers, and apple lovers might like anything that reminds them of apples. I suspect alpaca lovers are much the same! In my travels around the alpaca world I have seen alpaca jewelry (that is jewelry in the shape of alpacas, not jewelry worn by alpacas), soap shaped like alpacas, alpaca cookies, alpaca photographs, notepaper printed with alpacas and a large variety of other alpaca items. Find a source for products that can be imprinted with your ranch name and logo, or with a generic alpaca image, and alpaca lovers will open their chequebooks. You can market such items to your visitors, on your web site, via catalogues, or from vendor booths at alpaca events.

Farmland and outbuildings for rent!

If you are a living example of land rich and cash poor, find ways to earn money from your land. Boarding other people's alpacas is probably a break-even proposition but if you have the acreage to do it on a large scale there may be a net profit to be had. Can you rent your grass? I lease grazing land we own but don't live on to a cattle farmer and the money I earn pays my property taxes and then some. Alternatively, if you have land you don't yet use for alpaca pastures, see if one of your neighbours wants to rent it for a hayfield. Got a spare bedroom, mother-in-law apartment, or cabin? Create a bed & breakfast business, with clients drawn from both inside and outside the alpaca world, or rent it out as an artist's studio. Land costs are often the largest investment for those getting into farming. Anything you can do to offset those expenses will be a great help to your bottom line.

The list of ways to earn additional income could go on and on, but you get the idea. Whether it is through speaker's fees, stud fees, consulting or shearing, creating new income streams is like insurance for your bottom line. The successful alpaca businessperson knows the value of diversity.

What's an Alpaca Worth? Price Considerations for Buyers and Sellers

Whether you are selling alpacas or buying alpacas, when all is said and done, price is the bottom line. Appropriate pricing can help you find a buyer for your alpaca, and, as a buyer, you may consider purchasing certain animals simply because the price is right. Determining what the right price is, though, is an area where reasonable people can disagree. Pricing involves several factors, some quantifiable and some emotional.

Assessing alpaca prices certainly would be easier if it could be done with totally objective measures, and fortunately there are some measurements we can use. Qualities such as fleece fineness, staple length and density can be measured. Other measurable traits include prior reproductive ability (number of offspring vs. age of the animal if a female, number of pregnancies vs. number of breedings if a male), size of the animal (height and weight) and mothering ability (weight gain of crias over first 30 days). These are important pieces of information, and there are ways to objectively measure each one. But what are these factors worth? Once we attempt to put a monetary value on them, we are suddenly in the realm of the subjective.

How can we bring some logic to the prices asked and given for alpacas? Here are some basics that should apply.

Quality: Beauty is in the eye of the beholder but fleece quality can be measured and conformation can be observed. All other things being equal, you would expect to pay more for an alpaca that exhibited both a high quality fleece and correct conformation than one that was lacking in one or the other area. Qualities of value in the fleece go beyond those typically cited in advertising (colour and coverage) and include fineness, uniformity, staple length, density, crimp and lock structure, lustre, and lack of guard hair. Conformation and bite should be exact to command the highest prices. If something is not quite perfect (although we remember that there are no perfect alpacas) some allowance should be made in pricing, with the level of deduction being generally reflective of the level of the fault.

Experience: Not yours, the alpaca's! One of the most basic pricing factors is the age of the alpaca. A very young animal with a lot of growing left to do represents a higher risk for the buyer than one that has reached its maturity. Lots can happen to a promising youngster, so even the best will generally carry a price lower than a mature animal of the same quality. On the other hand, pricing young animals is also a risk for the seller, who may watch that run-of-the-mill cria which sold for an average price blossom into a show-stopping adult. This is why many sellers hesitate to put a price an a very young animal, or they sell it with stipulations (for example, if a young male is sold inexpensively but later turns out to be herdsire quality, an additional payment is due to the seller).

For breeding-age stock, a maiden female or unproven male also represent some risk to the buyer. There is a slight possibility that the animals will turn out to be unable to produce offspring, but there is also the larger question of what sort of offspring they will have. As my grandma used to say, "Pretty is as pretty does", and this is true of alpacas, too. Proven males and females have progeny you can look at to see the quality they produce, which means less risk. Higher risk animals usually have lower price tags than do those whose quality has been demonstrated.

Production values: What is an alpaca for? (OK everybody, repeat after me: no, they are not pack animals!) The value of an alpaca should be based on its value for production. That means both fibre production and offspring, since most of us are trying to simultaneously produce fleece and grow our herds. Animals that are healthy and produce good-quality healthy offspring, and that also continue to produce good amounts of top quality fleece would obviously command a higher price than those whose reproductive history is spotty or whose fleece becomes very short and coarse at an early age. Farm records are necessary for documenting these values.

Show quality: Alpacas that exhibit outstanding fleece characteristics and correct conformation are certainly good candidates for the show ring. But those of us that like to show are looking for that hard to define character called "presence". This is the little something extra that makes one alpaca stand out in the herd even when there are others of similar quality surrounding it. It is subjective, but, in the end, may be a measure of health, stamina, or some other vital factor. Alpacas that have presence may be worth more to certain buyers. Certainly alpacas that have won ribbons at major shows will be worth more to many buyers.

Pedigree: Some alpacas have developed a value over time based on their ability to produce outstanding offspring. Typically the animals with names we recognize as synonymous with quality are males, which stands to reason since each male can produce hundreds of offspring in his breeding life, compared with less than 20 crias for each female. Herdsires that make their mark by consistently passing on desired qualities to their offspring are able to command the highest of prices in the alpaca world. In addition their offspring may bring higher prices simply because of the family tree. Pedigrees that have more than one outstanding animal listed represent a greater potential for outstanding results, and the animals bearing those pedigrees may command higher prices.

Special characteristics: Rarity brings value to just about everything, including alpacas. Those with unusual fleece colour, or extremely fine fleece, or some other character that is desired and hard to find will be priced higher than their more common counterparts.

Guarantees: Animals sold "as is", which are not warranted for any particular purpose (meaning they are not warranted as breeding stock) should, in theory, sell for less than those that sell with a full reproductive guarantee. Strong guarantees that cover both the buyer and the seller in many ways reduce the risk of purchase, and should therefore add value to the alpaca over weak guarantees that protect only the seller.

Sales venue: Prices often reflect where the alpaca is sold as much as they reflect the quality of the alpaca. Well-known alpaca farms that have demonstrated the quality of their stock can ask more while animals of similar quality may sell for less at the new farm down the road. Auctions are notorious for both unusually high prices, which make sellers happy or unusually low prices, which make buyers happy.

All of these factors combine to influence the price for any particular alpaca. Also important is the "need-want" factor. How much does the seller need to sell this particular alpaca, and how much does the buyer want to buy it? If the seller has no particular need to sell and the buyer has a great desire to buy, the price may be quite high, whereas if the seller has an overfull barn and the buyer does not have strong feelings about these alpacas, the price may be very low.

We will probably never see alpaca prices based on solely objective measures, but by the same token they should not be completely subjective either. If you are the seller, you should be able to provide your buyer with the logic behind the prices you have put on your animals. If you are the buyer, you should have in mind the list of qualities you desire and the most you are willing to pay for the alpaca that exhibits them. And of course, it goes without saying that none of us should ever buy or sell an alpaca for a price based on emotion…unless, of course, it is love!

Deb Hill
Cloud Dancer Alpacas