How much are you able
to invest? How much are you willing to invest?
Initially, these two questions should be considered separately as the
answers will become the essence of your business strategy. Once you have
determined the level of financial commitment you are comfortable with, the
next step is to figure out how to best use those dollars.
Foundation Stock
If you have chosen to breed alpacas you will need to further define your
breeding strategy by choosing what type of foundation stock you will begin
with. Begin by defining short term goals (i.e. 1-3 years) and long term
goals (i.e. 4-7 years). By splitting this time frame you better be able to
decide how you allocate your investment dollars. Remember that you can
always redefine your long term goals as you achieve your short term goals.
Here are some examples of various approaches and things to consider with
each approach:
- Purchase fewer very high end animals.
This approach emphasizes the creation a genetically high end herd.
High end animals may potentially retain their value longer than lesser
quality animals.
- Purchase bred females. The number is
then determined by your herd growth goals.
- Purchase weanling females: Determined by
both your growth and time goals, this approach often gives new
breeders more time to become aquatinted with alpaca husbandry as they
build their business.
- Purchase lesser quality females usually
at a lower price. This strategy may offer lower start up costs with an
opportunity for genetic gain through breeding to higher quality males.
However, it requires a higher outlay of cash for the services of
superior males if genetic gain is to be achieved.
Facilities to run a livestock breeding
business
If you don't currently own land on which to breed and raise livestock
careful consideration to the proper facilities is an important factor in
your overall strategy. How much land, buildings, fencing, water, and
manure management are all things that require capitol investment and
ultimately effect the allocation of dollars for breeding stock. *Don't
forget to familiarize yourself with local zoning ordinances so you do not
run into costly design requirements after you have purchased your new farm
property.
Approaches to consider may be:
- Setting up all infrastructure needs for
long term growth up front. This approach may have benefit in
maximizing Section 179 deprecation. (For more information consult with
your accountant)
- Fencing available pasture and/or
building several smaller structures on an as needed basis. This
approach retains more capitol for breeding stock.
- The make due approach - using only
available infrastructure until positive cash flow is available.
Replace existing income with business
income
The level of effort and investment required to supplement existing income
is completely different than it is to replace it. The investment level for an income replacement strategy is directly
proportional to the amount of income that will need to be replaced. When working toward income
replacement, planning for realistic herd growth numbers is critical - luck and fate can and do play a role in what is produced. A farm with 3 breeding females might have 3 female crias
in year one, which translates into faster herd growth, or they might get 3
males.
Hard Work
Alpaca breeding is a wonderful and enjoyable business, but it also entails
hard work and planning. Raising the alpacas is in fact the easy part. The
work involved comes in terms of educating yourself about business,
marketing and breeding, planning marketing strategies, budgeting, setting
herd goals, setting up facilities, attending shows, educating and working
with customers and hundreds of potential customers who never actually
become customers, etc.
Patience
The alpaca business is NOT a get rich quick scheme. If you do not have the
assets to purchase enough animals to immediately begin marketing and
selling them, you must wait until you herd produces and grows. Most
livestock breeding businesses take on average, 3-6 years to achieve
profitability. US tax code is expressly written to take this into account.
The same holds true with alpaca breeding. The time it takes for females to
mature (approx. 2 years) and produce (one cria per year) which has in turn
played a significant role in the 18+ years of industry price stability.
Although there are farms that do very well their first year or two, most
spend several years building their herd, infrastructure, reputation and
clientele. During this time many farms choose to diversify and supplement
their incomes though support services to other breeders. Shearing,
advertising and marketing services, selling finished goods and transport
services are just a few ways to generate income inside the alpaca
industry.
Alpaca breeding can be a viable source of income if you are willing to
treat it as a business. Those that create a workable business strategy,
business and marketing plans, and invest as any small business start-up
would, greatly improve their chance of success.
Kim
Dougherty Creek Alpacas
Argyle, WI |
