The Epic Fail: Thinking “This Can’t Happen to Us”
Fat Toad Farm was a fledging family business, with some frisky goats, a lot of gumption and a quest to sell enough homestead goat’s milk caramel to become a profitable, sustainable business.
As with most start-ups, money was tight, so each expenditure was scrutinized. Was it a necessity or could it wait? You know how that goes…
“We live on a hill in rural Vermont, and rent warehouse space for our sugar, cardboard packaging and caramel inventory. The warehouse is by a river, but it’s also in a space designated as a100-year floodplain. A lot of things can happen here, but, a flood? Not so likely–and flood insurance was expensive,“ said Judith Irving, founder and partner of Fat Toad Farm. “The day that Hurricane Irene hit, the paperwork for flood insurance was still sitting on my husband’s desk. That thing we thought couldn’t happen to us had just wiped out the warehouse and most of what we had in it.”
It was a hard lesson, but they recovered, with help from State relief funding. But, when it comes to insurance, Fat Toad Farm is no longer willing to take the gamble. When your business is on the line, it’s better to be safe than sorry.
The Best Decision Ever: Choosing a Focus
When you live on a self-sustaining farm, you want a little bit of everything—a variety of crops, chickens for egg production, sheep and, in Fat Toad Farm’s case, goats. When this lifestyle experiment evolved into a full-time goat dairy business, Judith and family started making every artisanal product they could from the milk their goats produced. Soon they were selling seven types of cheese as well as their signature goat’s milk caramel.
When a business planner came to assess the operation, he quickly pointed out that more wasn’t necessarilybetter. Not only did the sheep compete with the goats for grazing space, but the animals shared parasites. To make the business work, the sheep had to go.
Eventually, so did the cheese.
That revelation started when daughter, Calley Hastings, had a rather unusual dream involving a deer repeating the words, “Calley, you hate cheese.” While the family initially laughed about it, the dream also prompted them to re-examine the feasibility of their business model. They learned, from a long-term profitability perspective, they (and the balance sheet) really did hate cheese.
“Our fresh cheese had a shelf life of about three weeks, which means if we sold cheese, we could only sell locally. Plus, there are a lot of great goat cheese makers out there,” Judith said. “With a shelf life of one year, our caramel gives us flexibility in production. We also believe that we were the first company in the United States to make farmstead goat’s milk caramel on any significant scale. Although a few different companies make the product now, having a unique product and a unique story at the onset became our differentiator. “
Fat Toad Farm’s specialization paid off in a big way. This 2014 FedEx Small Business Grant grand prize winner has not only built a successful business, but has created a company that connects to people around the world, one spoonful of caramel at a time.
Lesson Learned: Don’t Gamble On Insurance. Plan for the Worst.
Best Decision: Focus on the Unique Thing You Do Well. (And Eliminate the Other Distractions.)