How to Allocate your Farm Marketing Spend

In this week's episode, James meets with Taylor of Bridging the Gap Financial Services LLC to discuss how to allocate Farm finances across marketing efforts. Taylor explains what can be considered a write off and the importance of budgeting for marketing efforts.

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  [00:00:00] Hello and welcome to the Independent Farmer Podcast, the go to podcast for do it yourself farmers who are taking control of their own business, skipping the middleman and selling direct to local consumer and wholesale buyers. This podcast is hosted by Barn2Door, the number one business tool for independent farmers to manage their business, promote their brand and sell online and in person.

  Let's dive in to today's Independent Farmer Podcast.

  James Maiocco: Welcome to the Independent Farmer Podcast. I'm James, the COO of Barn2Door and your host for today's episode. As many of our listeners may be aware, Barn2Door offers an all in one business solution for independent farmers who are seeking to cut out the middleman and take control of their business, selling direct under their own brand. Where customers [00:01:00] can purchase from them directly online and in person. In today's conversation we're going to get into how to allocate your marketing budget and why you need to have a marketing plan for your farm. Today I'm happy to welcome back Taylor Bridges, a QuickBooks ProAdvisor and the owner of Bridging the Gap Financial Services. Taylor works with farms across the country helping them manage their finances and maintain accurate reporting along with other bookkeeping and accounting services.

   Today we're going to talk with Taylor about best practices when it comes to allocating money for your farm marketing. And why it's important to put money towards marketing efforts to grow your business. Welcome back, Taylor. It's great to see you. 

  Taylor Bridges: Yeah, super excited to be back. 

  James Maiocco: Well, I hope you are having a wonderful holiday season with your family.

   But, for our new listeners who may have not heard about you or listened to a prior podcast with you, maybe you can give a little bit of background on yourself, in your accounting practice. 

  Taylor Bridges: Sure. My name's Taylor Bridges. My family and I live on a farm in the mountains of [00:02:00] Virginia in a really rural town.

   We have horses, a dairy cow, beef cows, cattle dogs, and bees right now. I knew that when we had kids, when my husband and I got married, that I would want to stay home. So I went back to school after we had kids and went through a bachelor's and master's degrees, both in accounting, with the goal of eventually opening my own firm.

   That dream came true in 2021. I got to open my own firm and we just haven't looked back since. It's been a really awesome experience. 

  James Maiocco: Well, it's been wonderful, Taylor, to work with you, and more importantly, to see all the advice that you've been able to give to farmers, especially given that you really understand their business, being a farmer yourself, right, and just being in a rural community.

   Tell us a little bit about your accounting practice. How do you work with farms today? 

  Taylor Bridges: Sure, my firm primarily works with people in the ag industry and a few other small service businesses across the country. Growing up with a passion for ag and then pursuing accounting has really allowed me to combine my favorite things, makes work a joy for me.

   No two days ever look the same, but I find that having an ag background myself means I totally [00:03:00] understand what my farmer clients are dealing with, and that's helped me a lot. My firm handles cleanups of prior books, regular monthly bookkeeping tasks, accounts receivable, payable, and custom reporting along with other things.

   I spend a lot of time combing over expenses and reports with my farmer clients and working on ways to make sure they're getting to be profitable across their different enterprises while trying to take off a lot of the stress from their shoulders in the books department. 

  James Maiocco: Speaking of which, Taylor, I recall we did a podcast last year, talking a little bit about farm finances and what to do, your checklist for getting ready.

  So, anyone who's listening to this, you can browse back through our podcast list because Taylor gave a lot of great advice, you know, about getting ready and managing your books for the coming year. It's a really great checklist on how to manage all those expenses, because there's a lot of things.

  Today, we're going to be diving in specifically to marketing expenses. So, right, so when it comes to advising your clients on marketing, Taylor, I know marketing is treated as a variable expense, right, for farmers and often [00:04:00] perceived more of a stomachache or problem, right rather than something to invest in.

  So, maybe we can talk a little bit about the realities of how marketing is treated from an accounting perspective. So, how is marketing treated on the books?

  Taylor Bridges: From an accounting perspective, we look at marketing as a super useful tool, both for the business that's trying to expand as well as for tax purposes.

  Marketing is typically going to be an operating expense on the books, and that means that it's going to be deducted from the business's taxable income, potentially saving the farmer money on the taxes that they owe at the end of the year. 

  James Maiocco: Wow, that's a really important thing that you just said, so I'd love for you to clarify that again.

  So, marketing can be actually used as a set off against taxes that they would actually owe at the end of the year. How does that work? 

  Taylor Bridges: Yeah. So when the farmers are taxed, they're going to be looking at their income versus their expenses. And once they subtract those expenses out, since marketing can be considered an operating expense, that isn't counted towards taxable income.

  James Maiocco: That's wonderful. So, that means when farmers make these investments in marketing, it's actually going to [00:05:00] reduce their taxable income, right? Reduce what they would owe, but that's...

  Taylor Bridges: Absolutely. 

  James Maiocco: That's fantastic. So, when thinking about a farm's kind of presence, they oftentimes have a presence online and in person, right?

   Because, you know, we live in this age now where it's both in person and obviously online. Let's talk about intangible expenses first, meaning like things that are digital, what qualifies it as a marketing expense in the online arena? 

  Taylor Bridges: Sure. There are a lot of things that can be written off, so to speak, when it comes to marketing, like you said, it's a highly digital world now, as far as intangible marketing, we're going to be focusing on things like online advertising.

  So, Google ads, social media ads, and radio or TV ads as well. Any software used to facilitate sales and marketing like MailChimp, those are going to be marketing expenses. We're also going to look at expenses for purchases of digital assets, logos, or photos, like with Barn2Door Marketing Toolkit.

   Additionally, any online placement or referral fees would be included in this category. So, for example, paying out for a redirect to a partner. I even include the money I spend for someone to [00:06:00] draft social media posts for me, so I don't have to spend the time and brain cells on it, but these are all intangible marketing costs.

  James Maiocco: Isn't that amazing, right? It's a lot of times what you might expect to be a burden and something a farmer has to sit around the kitchen table at night trying to figure out, hey, how do I do this? Or why should what should I draft for social media? Using something like you said, you know, a third party partner, in our case Barn2Door, we offer a marketing toolkit.

  That's actually a deductible expense for the farmer, right? You even deduct a social media rider for you, right? Is that correct? 

  Taylor Bridges: Yeah, definitely a worthwhile expense. 

  James Maiocco: That's awesome. What about tangible expenses, though, in person, right? Because all these farmers have real property, real assets. Depending on the farm and how they go to market, there's probably a lot of tangible expenses.

  What qualifies as a marketing expense there? 

  Taylor Bridges: Yeah, so all those tangible marketing costs that you can get your hands on and are physical, we're talking about business cards, physical signage, as well as placards, the market booth you rent out every Saturday morning, those count. The trailer [00:07:00] the farmer uses to travel to market events and pop ups, those count.

   Those kinds of items are all going to be tangible marketing costs that the farmer should be keeping receipts for and they could be writing off on their taxes. Even those costs that they're spending on marketing personnel could be a write off potentially. 

  James Maiocco: Well, thinking of a trailer as a marketing expense, that's pretty awesome for a lot of people to think about, but I know many of our farmers actually do this. They pull a trailer and maybe they park in a school or church parking lot or a business. They have a QR code up on the side, so they built signage, effectively, they're paying for signage on the side of the trailer. The whole trailer and the signage on the trailer that can all be deducted as a marketing expense. 

  Taylor Bridges: Absolutely. Those truck wraps, any decals you get to put on your window. So someone, like you said, could snap your QR code or see your phone number, those all count.

  Yeah. 

  James Maiocco: Wow. That's awesome. I think a lot of farmers would be pleasantly surprised to learn that it's actually deductible, not just as a capital asset, but potentially as a marketing expense. That's awesome. At present, you know, I know you work with a lot of farmers. How often do you see farmers [00:08:00] actually setting aside a budget for marketing, or is it more of an afterthought? 

  Taylor Bridges: Honestly, I think more farmers treat it as an afterthought than not, unfortunately. When I check out a new farmer's business, it might include maybe a little bit of marketing budget here and there, but it's also one of the first budget categories they tend to rob from and apply towards other more tangible expenses for some reason.

  James Maiocco: Well, I know the core reason there, obviously many farmers are just pretty frugal, right? They may not see value in marketing because, you know, maybe there's not a clear ROI for the expense, right? So, why is it in your mind, why is it important to budget and actually honor the budget commitments that they're setting aside when thinking about marketing their farm business?

  Taylor Bridges: A marketing budget is super important for farmers. Marketing's just part of doing business, especially true in today's digital world where there's just so much information and so many options at our fingertips. If your farm isn't having good branding and they can't be recognized, then it's going to be commoditized.

   Most successful farms that are earning a premium for their products are the ones that have built a [00:09:00] brand around themselves. That's something that takes money, doesn't just appear out of thin air. But, by taking the time to specifically plan ahead for marketing costs, as well as the other parts of running a farm business, all those other budget categories, they're going to be giving themselves a much higher chance of success.

  So, financial planning is a huge part of having a successful business. Without that solid foundation, you might as well have just built your house on sand. There's no way to uphold yourself if no one knows you even exist. So, it's really important to be putting money towards your marketing efforts.

  James Maiocco: That's well said. I know talking with a lot of farmers, many times, they say, hey, I have a stable base of customers. Why do I need to build a brand? Why do I need to market? And I often remind folks, like, look, you know, one out of seven people move every year, right? So they just may move away, right?

  So, you have to be spending on marketing or putting in marketing efforts just to even keep a stable base of existing customers. Not necessarily even just growing your base of customers, right? So it does take, planning and thinking ahead. [00:10:00] When looking at small businesses, because you did mention you work with some other different types of businesses, not just farmers, what do you see is the typical set aside for the other small businesses?

  I mean, when I look online, most numbers range somewhere between like seven, eight, maybe nine percent. What do you think you see typically today with farmers? 

  Taylor Bridges: Yeah, I'd say most farmers are typically budgeting a lot less than that number, unfortunately. I'd actually venture to say many don't budget any money at all towards their marketing efforts.

  That happens frequently as well. It's a mistake. They really should be putting in the effort to market their farms in positive ways to their ideal targets. In today's brand centric world, I really encourage farmers to be planning ahead for their marketing efforts. 

  James Maiocco: Yeah, I know, certainly, if they ever want to sell their farm too, I know we work with a lot of farmers who've built great businesses with Barn2Door and build a really strong base of, build a great brand, strong base of subscription, recurring revenue, and have been really quite successful in selling that farm as well to another farmer, right?

   But it's oftentimes because they have a great brand and a great base of customers, right? It's [00:11:00] not just because they have products per se. So, when thinking about investing in marketing as a farmer, how should they think about ROI, right? How do they think about the return on investment?

  How much money, you know, should they be spending and what should they expect in return for that money? 

  Taylor Bridges: For starters, if you're making $200, 000 a year and you don't have a budget for marketing, you don't want to go and waste $20, 000 on something unproven like Facebook ads. So, just slinging money out into the universe in the name of marketing and hoping for the best is not a solid approach here.

   The goal is that the investments you make as far as marketing goes are going to make you more money than what you've spent on those efforts. You don't want it to be wasted. There's of course going to be some upfront costs and investments as you build your brand and you equip yourself to be on the playing field, but you have to be smart about them.

  So, basic branding, your online presence and your ability to market and capture orders. For example, a point of sale, those are all going to be absolutely essential. Those are all marketing investments that are going to bring in revenue and can be easily measured so that you can be tracking the value of your business.

  From there, you [00:12:00] start with grassroots marketing efforts. These are the free things like word of mouth, very popular in a lot of areas, and then slowly expanding into more paid channels. For example, targeted ads that are paid for or farmers markets, that kind of thing. 

  James Maiocco: That's really great feedback and great wisdom.

   When you think about measuring those returns, like, I know many times farmers might just look at a one time purchase. Hey, like, I went to a farmer's market, I got this customer. But I imagine, I know, talking with many of our farms, they're often looking at like, How often does that customer keep coming back, right?

  How do I convert them into perhaps a subscription buyer of my milk or my produce box or my meat box, right? Because I've seen some of our farms take, you know, the spend on acquiring one customer at a farmer's market and turn it into a meat box subscription at a hundred bucks a month. That's $1, 200.

  That's a great return on investment, right? And so, you know, it's really great to see, but if you're not measuring it, you don't really know if you can improve it, I would [00:13:00] imagine, right? Is there any other wisdom you have in terms of thinking about when it comes to marketing spend? Because I know, like you said, most of the farms you work with and many of the farms we talk to here at Barn2Door, this is new to them.

  Right? They may have previously sold through commodity markets, through an aggregator, or distributor. What are some missteps to avoid when thinking about getting started with a marketing budget for their farm business? 

  Taylor Bridges: I would advise against a shotgun approach where you're just like slinging all your marketing efforts everywhere at once.

  You cross your fingers and you just hope something sticks. Marketing spend efforts, if at all possible, should definitely be more targeted and focused. Attention put on building a strong, loyal brand presence in communities that you guys serve directly is going to be a huge boost typically. Think on scale, you don't need to take out a Super Bowl ad to sell protein, produce, or cheeses, right? So, I see the most success with those farmers that are placing their focus on their local relationships, whether that's at a neighborhood business, their churches, or even their schools. These are all focused placed in the right [00:14:00] direction for solid growth for them typically.

  James Maiocco: And people who attend a local school, church, or frequent a local business, those are more likely to be people who are going to want to support another small local business, like a local farmer, right? I know for myself, I know for myself, I go to a dentist that I found on the back of our church bulletin.

  Right. I might, you know, attend and go to a CrossFit gym that I found out from another local business that might be near me, maybe a health clinic or that type of thing. No different for accessing, healthy local food, right? Why not, again, leverage the relationships in your local community to help, again, access those types of customers?

   Is there anything else you'd like to share or anything else you want to add to our conversation here before we wrap up, you know, when thinking about marketing? Because again, this is a hot topic for a lot of farmers who are thinking about building a brand. 

  Taylor Bridges: Yeah, you're always going to have to spend money to make money.

  It's just a fact of life. And this is one of those things that's no different. You're going to have to spend a little bit of money here. Relying on a hundred percent [00:15:00] grassroots marketing strategy is going to take a lot of time and effort. The money spend would be totally worth it if you're targeting in the right directions.

  Remember, you should assume, like you said earlier, one out of every seven people move every year. You're going to expect a little bit of churn and that's just how it's going to be. And so, continuing to market yourself is going to cover some of that. It's not something you just pursue once like, oh, I did an ad this week two years ago. That's fine. And then you just get tired of it. Let it go. So, no matter what, you should definitely be continuing efforts in this category to maintain core business. And growing your business is going to take additional marketing investment from your farm. Just something you should be planning for and definitely include that in your Farm's budget.

  James Maiocco: So, talk with your accountant, talk about your budget for the coming year. Look at what you spent last year. And then, like you said, be smart. Don't take a shotgun approach. Be very measured in where you put your money and then see if it pays a return, right? Really great advice. . Great. Well, hey, I wanna extend my thanks to Taylor for joining us on this week's podcast episode.[00:16:00] 

  You can check out more of Taylor and her financial services on her website at btgfinancialservices.com. That's btgfinancialservices.com. At Barn2Door, we're humbled to support thousands of independent farmers all across the country, and delighted offer our services and tools to help farmers access more customers, increase sales and save time. If you're an independent farmer who wants to learn more, check out Barn2Door.com/Learn-More to dig into other resources that may be available to you. Thank you for tuning in today and we look forward to joining you next time on the Independent Farmer Podcast.

  Thank you for joining us on the Independent Farmer Podcast. At Barn2Door, we are passionate about empowering independent farmers to build a thriving business. To all the farmers out there, thank you for all you do to grow amazing food, care for the soil, and serve your local communities. You are the backbone [00:17:00] of our country.

  For free farm resources, or to listen to prior podcasts, go to Barn2Door.com/Resources. We hope you join us again and subscribe to the Independent Farmer Podcast wherever you stream your podcasts. Until next time.