Owning a rural feed store

AnthonyF · #1 10/21/13, 06:27 PM

If this isn't the right spot please feel free to move or delete.
Hello all, just curious in your input on buying and owning a semi rural feed store. There is a local feed store that has come up for sale and I am considering possibly buying this. It is a feed store 2 min down the road from my house and about 15 minutes outside of town. Currently it is very basic just selling animal feed a bit of hardware some consignment tack along with cat and dog food. I would like to expand it in some ways to further the income but not sure the best way to go about it. My few ideas would be to put on some seminars with local 'experts' that could teach people who are new to things as the are alot of hobby farms in the area along with some large ranches. Secondly I am a certified HD mechanic and could get in touch with locals to work on their equipment. Any other suggestions or ideas. As well as experience or opinions on taking on such an endeavor. The down side at this point is taking a BIG pay cut as I work as a certified hd mech in a mine. But the big benifit is I would leave the long days and long travel to get to work everyday. Opinions? Thanks in advance.

chickenista · #2 10/21/13, 06:32 PM

You need to talk with the current owner about his pros and cons.
I know that a lot of the feed mills ahve upped their minimum tonnage and that has driven many a feed store out of business. It jsut takes too much cash to get too much feed delivered.
But with the extras, like the mechanic's work, you might be able to survive.
Multi-tasking is the only way to make these days.

AnthonyF · #3 10/21/13, 06:56 PM

Thank you, and they are getting out of this business because they are moving out of the area. Nit necessarily financial reasons.

jwal10 · #4 10/21/13, 07:09 PM

Have you ever owned a business? Do you have livestock, know a lot about feeding animals? Tough to make a living from a feed store. Everyone wants a special item and you cannot stock everything. I worked at a small feed store until it sold, the new owner was only there for 5 months after it sold. He could not keep the stock that sold and had too much specialty items that sold once and no one else wanted/needed. Would the owner stay and help you learn the business?

....James

haypoint · #5 10/21/13, 07:13 PM

Sort of like being a used car dealer. You buy grains locally, or import when you can get it cheap. Then jack up the prices to cover your costs and earn your wage. Seems fair, but most folks don't like used car dealers and horse traders.

I know a guy that makes a good part time income mixing feed, between prefabing log homes.
In my home town, the feed mill also sets up a greenhouse and sells flowers and veg. flats in the spring.
Seems places like TSC can sell low quality horse feed cheaper than what it'll cost you to mix up some good stuff. IF you can educate people AND get them off their billfold, you might make it.

Would help if you could see their gross income and reportable net income. You don't want to just handle money, you want to hold on to some of it.

Old Vet · #6 10/21/13, 07:22 PM

Quote:

Originally Posted by AnthonyF

Thank you, and they are getting out of this business because they are moving out of the area. Nit necessarily financial reasons.

If that is the only reason then you might have a chance. But on the other hand if they are moving because they feel that their money will run out because of the added pressure on the feed mills you might not be so lucky. How far is the nearest feed mill and what is the smallest order they will take? Can you haul the load your self or can you get on a load of one kind of food by the trailer load? Where will you get the dog food from and what is the smallest load they will deliver? Just because the feed mill has some it may not make sence to buy it from them.Can you get into a co-op that has all your needs? Around here it is the Southern Farms co-op and they have everything you will ever need. I am sure that in your area there is a good Co-op.It will have everything from tires to all sorts of feed.

plowjockey · #7 10/21/13, 07:43 PM

We have just sold all of our livestock, because it's setting too expensive to feed them. We still have dogs and cats, but it's even painful, to pay $25 for a bag of cheap dog food, let alone the good stuff.

Times are "not bad" around here, but I'm noticing more empty livestock barns, especially for hobby farms. Our feed store, completely revamped their feed sales area last year, (after they tore down the beautiful old wood mill

) but they are also a very large grain/ ag chemical center and grind/bag their own feed, at another location.

The current owners may likely tell you anything, but the real reason they are selling, so looking at the books (if you are serious) would be a must, IMO. market reaearch would be a great plan also. Hide out and spy, on what traffic shows on a Saturday morning. Ask around.

Times have really changed in the livestock market, in recent years, when corn and bean prices, have started looking more like gold prices, than grain prices

May be do- able. Good luck.

AnthonyF · #8 10/21/13, 08:07 PM

Quote:

Originally Posted by jwal10

Have you ever owned a business? Do you have livestock, know a lot about feeding animals? Tough to make a living from a feed store. Everyone wants a special item and you cannot stock everything. I worked at a small feed store until it sold, the new owner was only there for 5 months after it sold. He could not keep the stock that sold and had too much specialty items that sold once and no one else wanted/needed. Would the owner stay and help you learn the business?

....James

Yes I do own livestock, mind you its just a hobby farm but I still have an idea of what I am doing. And yes I believe the current owners would help out in the transition.

Quote:

Originally Posted by Old Vet

If that is the only reason then you might have a chance. But on the other hand if they are moving because they feel that their money will run out because of the added pressure on the feed mills you might not be so lucky. How far is the nearest feed mill and what is the smallest order they will take? Can you haul the load your self or can you get on a load of one kind of food by the trailer load? Where will you get the dog food from and what is the smallest load they will deliver? Just because the feed mill has some it may not make sence to buy it from them.Can you get into a co-op that has all your needs? Around here it is the Southern Farms co-op and they have everything you will ever need. I am sure that in your area there is a good Co-op.It will have everything from tires to all sorts of feed.

From what I understand they are in the middle of a divorce thats why they are moving. The nearest feed mill is about 7 hours away. Something I would look into before I made a decision. Part of the reason I think this could be profitable is our local co op is going though major changes and people are actually avoiding buying there becasue of what they have done. People are going out of there way to shop and support local, which would be a big part of what I would like to do there local products and services.

AnthonyF · #9 10/21/13, 08:12 PM

Also I forgot to mention that my wife is working full time and the hospital getting benefits as well. So the feed store would not be the only income, although at the current time my income is a large part of the household income. However we would loose all day care costs as I could watch the kids(our day care bill is about 500 dollars a month) Also the style of life would be a lot better for the family with me being around more. I still have lots to think about

Fae · #10 10/21/13, 08:14 PM

My oldest daughter and her husband own a feed store in a very small town that is nearly rural it is so small. They love the business but it is a real struggle these days. I wish she was on here so she could let you know how it is for them but, she doesn't have a lot of free time. They also do other jobs to make money.

jwal10 · #11 10/21/13, 08:25 PM

Can you talk to a business realtor, look at the books and give you some feedback? Usually you do this if buying a listed property, if the owners are serious they may do this with you. Is there a quality feed brand that a lot of people in the area use that you can stock or is stocked there now? They have a lot of programs that help a lot. We sold Purina brand, it pretty well sold its self. Knowing what you sell and what to feed to what goes a long way. If buyers can trust you, it will go a long way on repeat customers. Are you in an area with a growing livestock community? Find a supplier for fence/gate material, we sold a lot of it. Gates were a good money maker but we bought a truck load at a time, delivered by the maker. I really enjoyed the feed store, the people were fun, great job. I was able to have my DS with me almost every day, he was 4 at the time....James

jwal10 · #12 10/21/13, 08:32 PM

Would you be buying the building? Taking over the current inventory or buying it. I know the owner I worked for sold the inventory to the new buyer. He knew nothing about the business and bought a lot of old/not selling inventory. Paid good money for "stuff" that did/would not sell. When he started having money problems he started hauling small amounts and was gone a lot, then didn't have inventory and people stopped coming around. Takes a people person to "cater" to the farm people, they want someone like them, not a store owner....James

sugarspinner · #13 10/21/13, 08:42 PM

Are you planning to just handle pre-packaged feeds or would you be grinding/mixing feed to order? Do you know, or would there be someone available who did know, about animal nutrition enough to make recommendations, etc. Would you be delivering feed with a bulk truck or would it be a pick-up deal? All of these things, and many others, affect the customers you will draw and, ultimately, your bottom line.

**clovis** · #14 10/21/13, 08:49 PM

I don't know a thing about owning a feed store, but I have been self employed and owned businesses for most of my life.

I don't make a ton of money, but I am not chained to a desk working for a bad boss. I do wish my income was better, but I do enjoy the freedom.

A couple of things to ponder:

1. Cash flow. How are you with money management?
2. Taxes. Can you put enough back to pay the IRS every April or every quarter?
3. Retirement. There is no pension or employer provided 401k when you own a business.

These are rhetorical questions, but you need to answer them in your own mind.

All of the above questions are NOT to scare you, but they can be pitfalls if you are not careful.

Lastly, I'd like to add that while I believe that high feed prices have pushed many hobby farmers and the "we have two horses" people out of the market (at least temporarily), outstanding customer service and a super friendly attitude at all times can help you build a superb business.

ronron · #15 10/21/13, 08:51 PM

We have one down the street, it is part of a little country grocery store, has a post office in the store, she is a notary, does hunting and fishing licenses, copies, U-Haul, sells gifts, cards, sells forest access permits, she knows all the hunting and fishing information, has a huge candy department it is a big deal, she sells potting soil seeds and plants in the spring, she raises replacer chickens for backyard flocks, pumpkins in the fall and Christmas trees... You have to be diversified. Can you build anything, small chicken coops or planters, can you have a small fruit and veggie stand, or farm stand with milk and bread, can you bake bread and sell eggs? It can be done best of luck.

Michael W. Smith · #16 10/21/13, 10:43 PM

I guess it all depends on the local situation - is this the only feed store in the area? How close is any other feed store? Are there enough people with livestock that will support the business now and in the future, or is it mostly "hobby" people that get into livestock and discover the cost and work aren't worth it and get back out?

As for the mechanic side of things, you may want to look into the business - find out if they are making a profit, how big of profit, and find out if you would be renting the building, buying the building, how long would it take for the profit to pay for the building and stock and business? If the business does make money, and would make enough for you to live on - then look on the mechanic side of things.

Is there room in the building that would make repairs easy to do? Would you be able to hire family to run the business, and you could continue working and do mechanic work on Saturdays - hold on to your regular job until you saw for sure things would work out?

In our area, at one time we had 3 feed stores. An old Agway store and an old, old milling store, and a feed store that opened up out of town. The Agway store closed down and sat empty for years until the feed store that opened up out of town ended up buying the Agway building and moving in there. They did alright, but the couple were some kind of religion that they were closed on Saturdays - when regular people who work during the week were looking for supplies. The old, old mill caught on fire and shut down, leaving the religious couple the only place in town. But eventually, it wasn't even enough to stay open and all of a sudden, the store closed and the bank took ownership.

A local guy who sold tractors (and had one heck of a dealership) ended up buying the property and contents for next to nothing from the bank. He needed more room, and the feed store had enough room to do what he needed. So he took ownership, had an auction and sold everything in the store from the previous feed store. (I'm quite certain he made out on the deal from just the merchandise that was in the feed store.)

He then moved his tractor/lawn mower dealership to the new place and bought in brand new food and reopened the feed store. The only problem is, one of the local feed stores in the next town over, opened up right across the street from him a new feed store, where they had cheaper food. Due to some shady dealings with the tractor manufacturer, he ended up having his dealership pulled. His more expensive food sat in the store, while the cheaper place next door has done well.

About 2 months ago, his place was taken over by the bank. The current feed store does good, but not only do they sell name brand food, they also have a mill in the next town over where they make their own cheaper brand. So people can buy name brand feed or cheaper "their brand" feed.

Take your time and investigate, investigate, investigate. Get to know the owners and perhaps put in a couple Saturdays with them to see how business really is. Look over the books, the cost of business, building, insurance, etc and determine if there is any way to keep your current job while you take over the business until you are sure it can support you.

Best of luck in your journey.

SilverVista · #17 10/21/13, 10:53 PM

I would never consider buying any kind of business without a full review of the books for at least the last three years. You need to have a very realistic view of inventory values, inventory turnover, cash flow, vendor terms, customer terms, cyclical demand, much more. If you don't have enough accounting savvy to judge what you see, pay a local accountant/CPA to look through the numbers with you and point out anything that is questionable. Look very, very hard at your overhead costs (rent, insurance, utilities, equipment purchase, repair and maintenance, purchases of long-term assets, software, all that) and remember that your mark-up over COGS has to cover all of that too. Be prepared to constantly re-price as the commodity market fluctuates and know that your bookwork will be nearly a full-time job once you get going.

Besides all the physical work of warehousing and selling your products and keeping your books, it would be a very good idea to get a fast and deep education in modern livestock nutrition. Not everybody who comes to the counter is going to know what to feed when, and will expect your good advice. In the last few years, our co-op went from having experienced retired farmers at the counter, to having high-schoolers with a horse in the back yard at the register. It's scary sometimes to hear their answers to questions about minerals, vaccines and so on. Make best friends with the nutritionist at whichever brand name you carry and pump him dry of information.

I know what a dream this kind of opportunity is for many people, and I hope you can see your way to make it work. I imagine that even with the stress of getting everything going, it would be a lot more fun than re-sealing pistons, replacing spools on valve stacks, tearing down gear pumps and changing filters on the kidney loop! (Guess what kind of shop I work in? LOL!) Best of luck to you!

Vosey · #18 10/22/13, 08:35 AM

I think it all hinges on your area. If the closest feed store is 7 hours away and you have a mix of population of farmers/ranchers and hobby farms along with people who are doing just backyard animals you stand a good chance. If the shop/eat local movement is strong in your area an even better chance.

Our local feed store is a co-op that also focuses on gardening and even canning supplies, has chicken workshops in the spring and most importantly, very knowledgeable and friendly staff. They have their own line of organic feeds, bird seed etc. We buy most of our soil amendments from them.

Sounds like it's worth a close look at! I'll leave the small business advice to the experts.

irondale · #19 10/22/13, 08:39 AM

Quote:

Originally Posted by AnthonyF

Also I forgot to mention that my wife is working full time and the hospital getting benefits as well. So the feed store would not be the only income, although at the current time my income is a large part of the household income. However we would loose all day care costs as I could watch the kids(our day care bill is about 500 dollars a month) Also the style of life would be a lot better for the family with me being around more. I still have lots to think about

Running a business is a ton of work. I would not count on being able to watch kids and run a store at the same time.

k9 · #20 10/22/13, 08:57 AM

I hope your back is good, and your nerves are steady.... best of luck to you if you do it.