Partners Only (Well Not Quite)
For a description as to what exactly is a shredder please refer to the following.
There will be a time when our partners will have a page or 2 of password only pages but for NOW!
It is our intention that we will keep the elements of the partnership open so as not to have to answer to questions as to the terms of our proposed partnership arrangement, but will remain quiet the research that went into the financials. Afraid of being copied by the competition, it’s possible at some future date, our books and partnership structure won’t be as open paged as today!
From the beginning!
The business model is based on a 3 year budget for a local hay business, it took months to amass this budget, with only hourly yeild estimates and known hourly equipment operating expenses as guides.
More simply put, we know exactly how many acres a machine can cover in an hour given width and proven field speeds and have from Extension and University data average hourly expenses for tractors and like equipment. We priced used equipment and shipping, so we know our availability is accurate at our budgeted investment.
At this time I am only going to tell you.......... my perspective partners ........that expenses were around 30% while ALL operating expenses including interest at bank rates, were in the 40% range. This is a mere $10/ acre net profit, yet multiplied by 5000 acres of first cut hay and 5000 acres second cut hay and the operation makes a 33 1/3% annual profit. This is on a $300,000 investment, including that of the manure tanks used in injecting manure.
With manure injection: Our figures for manure disposal weren't as accurate and storage to field distances could vary considerably, so a $100/hour fee to empty manure tanks (Using used tractors our capitol investment for manure handling was well under $100,000.), we were under $90/hour.
It thought possible the need to pack corn silage in the fall might draw some tractors into service for the same $100 price, but no more than emptying manure storage at this time, making it possible to apply a cover crop to the recently harvested corn while Pleasant Creek Hay packed bunker silos.
For snow removal, not as applicable as in the south, it was generally thought it would be a break even proposition, our baler operator hiring temps in big snow situations, he moving sold hay to maintain year round employment when he wasn’t plowing snow.
Although at this time our founder isn't demanding the partnerships lay land tile, it is highly recommended. The opportunity to lay tile for a marginal additional investment above and beyond that of that necessary to mow hay is nominal. Tiling can be part of a farms rotation, giving us dedicated work months, perhaps years in advance, free of the NOW TODAY requirements of the first, second or third crops of hay.
Budgetted our baler operator at $25/hr plus $2.50/hr/employee, sub contracting this job is probably the best financial alternative, the baler operator saving a portion of his income during peak months, spending during the lean. An even better alternative might be to sub contract the job at a reduced hourly amount, perhaps $20-$22/hour, then pay the “Baler operator” a bonus at the end of the year of 50% of the reserve, perhaps ½ of which he be paid in the form of a percentage of the partnership, retaining the reserve into the following year. Hence for example his weekly hours through March if only 30, he/she would continue to be paid, in part off the reserve!
WE have experienced big snowfalls here in the East this year and I am not at all sure we couldn't mount a caravan, keeping one machine in a less needed parking lot converging on a major city to do round the clock snow removal for a major city! ..... NOT BUDGETTED!
The banks won't lend me the capitol I need to start Pleasant Creek Hay.com..... Why? Because I have no collateral. They would love to do business once I've my government loan but in the mean time, they aren't willing to risk there capitol on an unknown, non collateralized venture!
Once denied, that leaves the Farm Service Agency......... which for a start up here in the Latham(Albany) area they are likely to grant, but for equity matching that of any number of the 51 other proposed Pleasant Creek Hay.com/YOUR CITY partnerships NO!
So why, if the bank won't finance the initiator should the dairyman partners?
UNLIKE THE BANK, YOU AND YOUR PARTNER HAVE A VESTED INTEREST IN THE SUCCESS OF YOUR PARTNERSHIP
IF YOU ARE UNCOMFORTABLE WITH THE EQUITY DISTRIBUTION, IT IS POSSIBLE TO SET UP A PARTNERSHIP, THE DAIRYMAN PARTNERS OWNING ALL OF THE EQUITY, INCOME DISTRIBUTION PER INVESTMENT AND DUTIES PERFORMED BEING DESIGNATED WITHIN THE PARTNERSHIP AGREEMENT SO AS THE INCOME DISTRIBUTION EQUALS THAT OF ONE WHERE THE INCOME EQUALS THAT OF THE AGREED INCOME DISTRIBUTION.
IT IS OF LITTLE CONSEQUENCE TO ME WHETHER I PURCHASE MY PORTION OF THE PARTNERSHIP FROM YOU MY PARTNERS OR YOUR FINANCIAL INSTITUTION!
Cornell, Farm Finance “74”