Planning: The Road to Success

By Stephen Bratkovich

Vision and mission statements, strategic planning, and business planning may sound more like Wall Street or Madison Avenue lingo than terms tree farmers should be concerned with. While it’s true the “big boys” have well-crafted vision and mission statements, detailed strategic plans, and spend millions of dollars on market development, there are certain aspects of planning that apply to tree farmers (and all businesses for that matter) of all sizes.

Vision and Mission

All planning activities should clearly answer the basic question, “Where am I going?” A vision statement is a compass bearing that tells everyone the direction in which you are headed. Perhaps the most well remembered vision statement in modern times came from President John Kennedy in 1961. While delivering a speech to Congress, he declared that by the end of the decade the United States would “send a man to the moon and return him safely to earth.” With this one simple phrase, JFK provided the “vision” for NASA for the 1960’s.

So what is your tree farm vision? If you can spell out in simple and concise language what you want your tree farm to be, you will have taken the first step to success. As food for thought, here are some examples of tree farm vision statements:

“To become the premier grower and marketer of southern pine timber in Forest Country.”
“To provide unlimited forest-based recreational opportunities for family and friends.”
“To develop a sustainable tree farm-based business that can be passed on to posterity.”
A vision can be defined as a dream (such as going to the moon in the early 1960s). However, when it is combined with a mission, it becomes a destination. Your tree farm mission should describe how to reach your vision.

For example, considering the first vision statement above, an accompanying mission statement might read: “The Tall Timber Tree Farm in Forest County is committed to implementing state-of-the-art forest management practices and timber marketing activities while protecting soil, water, and wildlife resources.”

A well-developed mission statement provides direction to you and others actively involved in managing your tree farm. The mission statement should remind and motivate you not to lose focus on your tree farm’s vision.

Strategic Planning

Wall Street executives develop long-term plans describing the methods of reaching their firm’s vision and mission. This is called strategic planning. One of the important steps in strategic planning that will benefit tree farmers is a careful identification of (1) internal strengths and weaknesses, and (2) outside opportunities and threats.

For example, after an honest assessment of your situation – preferably with your forester or tree farm advisor – you might find that your greatest strengths are the productivity of your proximity to various markets (nearby wood-using industries). However, a weakness in your dream of generating immediate cash flow might be the realization that your crop trees are still many years from harvest age. Carefully identifying your strengths and weaknesses will highlight specific areas that help or hinder your tree farm vision and mission.

Tree farmers also need to stay on top of what is happening outside the tree farm by assessing external opportunities and threats. For example, does a nearby large metropolitan area offer you the opportunity to market some recreation activities – hiking, camping, hunting, and fishing – to weekend outdoor enthusiasts? Does the growth of tourism in your area present an opportunity to establish some type of forest-based retail shop on your tree farm?

Conversely, does the arrival of an exotic pest threaten the long-term productivity and value of your tree farm? Is offshore competition in the form of cheap wood imports threatening to close local mills that you were depending upon as an outlet for your tree farm products? The key to identifying outside opportunities and threats is to prepare you to respond effectively before a crisis develops or an opportunity is lost.

After evaluating the tree farm’s strengths, weaknesses, opportunities, and threats, you need to decide if any of the identified “issues” can be addressed. If yes, then “strategies” are needed and an “action plan” must be developed and implemented. (See below, “Strategy Makes the Most of Dead Trees”).

Strategy Makes the Most of Dead Trees

Chuck Leavell, National Outstanding Tree Farmer in 1999, described an “issue” he was faced with on his Georgia tree farm. In his book, Forever Green, he writes about the problem of having individual trees struck by lightning, killed by insects, and blown down by wind. These single trees, scattered throughout his tree farm, were typically not utilized for products. Leavell, however, devised a strategy to use the dead and dying trees for projects on the farm. He purchased a portable sawmill and built a home-made grapple for his tractor. His ‘action plan’ consisted of (1) felling dead and dying trees, (2) bucking logs to length depending on the anticipated final product, (3) skidding the logs to a central point with his tractor and grapple, and (4) sawing the logs into lumber.

“We’ve salvaged enough of these otherwise lost trees to build a 40-foot-by-78-foot horse barn, along with a shop and storage facility, to build over a mile of wooden fencing for our horses, and to renovate the interior of one of our lodges,” says Leavell.

Market Planning

A discussion of marketing – creating and exchanging goods and services for a monetary return – typically is of great interest to tree farmers. Numerous articles and publications have been written on the subject, especially regarding timber sales, so the specifics won’t be discussed in this article. However, many tree farms are expanding their operations to include products other than timber, such as Christmas trees, maple syrup, wreaths and greenery products, lumber, wood carvings, walking sticks, basketry, and so on.

An appreciation for, and understanding of, basic marketing principles is critical for success. The principles of market planning should focus all activities on meeting the needs and wants (desires) of the customer. For example, if you like to grow “pine” Christmas trees, but most of your potential buyers prefer “spruce,” you’re not meeting the wishes of the customer. Also, a product that is preferred today by your customers may be out-of-fashion five years from now. The key is keeping the pulse on market trends to satisfy the needs and wants of customers.

Tree farmers marketing products should understand the 4 P’s of the market – product, price, place, and promotion. The 4 P’s are often called the “marketing mix”.

Product – A choose-and-cut Christmas tree farm, for example, has the potential to sell much more than simply a tree. The complete package (product) that you supply can include wagon rides, wreaths and greenery, tree stands and ornaments, food and drink, a crackling campfire, and much more. The important point to remember is that whatever you market can be more than just the physical product.

Price – Be sure to build in profit in your pricing of goods and services. In order to do this, you need to know your production costs, which means good record keeping is a must. Too many people fail by not knowing what they “have in” a product so the price they set is either too low (lose money on every sale) or too high (not enough buyers).

Place – Another word for “place” is location. A tree farmer who makes willow furniture, for example, needs to consider his or her location; marketing directly to the public is the goal. Will customers travel to your tree farm to buy your furniture? Is your business located beside a busy highway that will provide high visibility? If your goal is to wholesale your product to a broker, how will you ship it from your place to his or her place?

Promotion – A difficult task for tree farmers is often not the growing or making of a product but rather the communicating of benefits of the product. For example, if you hope to establish a lease hunting enterprise on your tree farm, will you advertise? If yes, will you advertise in newspapers, hunting magazines, or sports shows? Should you develop a sales brochure? Who does the sales? Promoting a product or service is an activity some tree farmers prefer not to do. However, by avoiding it you’re missing a key element in the marketing mix.

Tree farmers should adopt a customer focus and practice the four P’s of marketing. If you’re not skilled in these areas, then work with someone who is. For specific but simple marketing steps practiced by one small home-based specialty wood products company, see the box below, “Six Steps to Improve Profits.”

Six Steps to Improve Profits

John and Marci Krantz of Forest Lake, Minnesota, US, specialize in providing lumber products to the woodcarving industry. Begun in 1987 as a part-time venture, Krantz Wood Sales is now full-time and specializes in basswood and butternut carving stock, ovals, crosscut rounds, glued-up panels, barn-on boards, and other wood items in demand by carvers and woodworking hobbyists.

John Krantz has developed six marketing steps to improve the profitability of his business. Krantz’s six steps are applicable to tree farmers looking to expand into specialty products and services.

Step 1: Decide on your market niche. Krantz believes that you should know what you do best and then become a specialist in that market. For example, his business focuses on wood-carvers who pay premium prices for properly sawn, soft hardwoods that are 3-, 4-and 5-inches thick. “We do not sell oak or maple – we let others handle that business,” he says.

Step 2: Market a quality product or service. Krantz’s motto is that a quality product will sell itself. “A customer told me the other day that he would drive 200 miles for my wood because of its quality,” he says.

Step 3: Try to sell retail. Krantz Wood Sales is successful because it takes the product directly to the customer by way of woodcarving shows. “Why let someone else take 40% of your profits,” Krantz asks, “when you can do it yourself?”

Step 4: Presentation is worth 50% of the sale. Krantz is meticulous about the “presentation” of his wood at carving shows. “I always lay carpet on the floor,” he says, “and ask for wall space to lean my large products upright and stack similar sizes together by species. I use tables for small pieces with a table cover in colors to accent the wood. It’s important to keep small pieces at waist level so customers can easily view and handle the product.”

Step 5: Price the product or service for the market. Krantz recognizes that customers attending an art show are more willing to pay higher prices for his wood than folks stopping by a small sawmill. Mill prices are typically commodity prices whereas art show prices tend to be specialty markets where the sky can be the limit.

Step 6: Stay close to your customers. One of the “secrets” for the success of Krantz Wood Sales is the attention given to the customer. The philosophy of his business is that “every customer has a unique need.” “I keep a notebook handy,” Krantz says, “to jot down the name, address, and special needs of customers. When I have a product a customer can use, I check my notebook and contact them. This is a special touch that keeps the customer coming back to you time and again.”

Business Planning

Tree farmers seeking outside financing to buy additional forestland, a portable sawmill, or building materials for a barn or shop will often need to develop a business plan. Numerous books have been written on business plans, so check with your local library or small business development center for detailed information. The important point to keep in mind with a business plan is that’s usually written for someone else, such as a banker, lender, or investor.

The ideas discussed in this article – vision, mission, strategic, and marketing plans typically are required, at least in part, in a business plan. Therefore, the better job you do in writing down on paper the suggestions outlined here, the easier it will be for you to put together a good business plan. In addition, anyone thinking about lending you money will want to see your “numbers” – your financial plan relating to how you intend to pay back the loan. The lender will typically let you know the specific numbers he or she needs to see. An accountant can help you with the financial aspects of the business plan. Planning is important to the success of tree farmers just as it is for major corporations and organizations. The principles are the same; only the size and scope are different.

Tree farmers who take the time to think about their vision, craft a mission statement, analyze and implement their strategies, and adopt appropriate marketing techniques and business practices will be well on the path to success.
Stephen Bratkovich is a forest products specialist in St. Paul, Minnesota, USA. He is a member of the Forest Products Society and the Society of American Foresters.

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