The Family Cow’s Path to Profit:
A $600K Turnaround
The Family Cow, an organic farm in southern Pennsylvania, is a testament to the resilience and innovative spirit of a family dedicated to their mission.
The farm has been owned and operated by the Shank family for the past century. Edwin Shank, a fourth-generation farmer, led the farm’s switch from conventional to organic methods in the early 2000s. The change not only revitalized the farm but also paved the way for direct sales to customers.
But despite the promising shift that led to more than a million dollars in sales, there was still one problem: the farm’s finances were a mess. The Shank family were seasoned farmers. But, they lacked the bookkeeping needed to keep their business healthy. With the help of Ted LeBow and Kitchen Table Consultants, the Shanks turned their finances around and set their family up for success.
Revitalizing The Family Cow: The Transition to Organic Farming and Direct Sales
As a conventional farm, the profitability of The Family Cow was in the hands of a volatile commodity market. Sometimes earning only 11 cents a pint, Edwin realized they needed to make a change to put the farm’s fate into their own hands. He had an epiphany: invest in organic grass-fed Jersey cows and sell directly to their customers.
The family took ownership of the entire production process, from raising the cows using organic methods to production, packaging, distribution and marketing. The farm’s offerings quickly expanded from milk to include cheese, butter, cream, grass-fed beef, pastured chicken, turkeys, and pork—all meeting organic standards.
“What drives us along is the health of the earth and respect for the animals,” says Edwin. “But also the health of the communities. There’s so much more camaraderie when we’re working together to provide food for our neighbors.”
The transition to organic farming also rejuvenated the Shank family, who felt they were more closely serving their mission of “honor[ing] God’s design, to dress and keep a diversity of nutrient-dense foods from His good earth.”
A Lifeline in Numbers: Restructuring The Family Cow’s Finances
While the farm was in the capable hands of the Shank family, their books were another story. Still financially struggling, their friend and customer John Rhoads, who had some financial understanding, offered to help by taking a look at their financial records.
“It didn’t take him long to realize that we were going to commit financial suicide because we didn’t know what we were doing,” says Edwin.
John introduced the Shank family to Kitchen Table Consultants Co-CEO Ted LeBow to help them get the financial clarity they needed. Ted’s first step was a comprehensive reorganization of their chart of accounts, enabling the Shanks to track and manage their financials with precision. Ted also helped problem-solve the family’s deteriorated relationship with their bank by connecting them with a new one that offered better rates and a deeper understanding of their operations.
The Family Cow was originally managing multiple enterprises as a single business. The enterprises were broken out into four separate companies, with subclasses within to get financial clarity on the profitability of each enterprise.
When looking at the enterprises’ combined profits, the business looks healthy. By splitting out enterprises, you can see all the profits were coming from Enterprise 1, while Enterprise 2 was losing money.
Setting the Next Generation for Success
Over the years, The Family Cow’s work with Kitchen Table Consultants has grown to focus more on becoming self-reliant, making steady improvements, and planning for the future. This includes quarterly reviews, annual budgeting, and recently, focusing on benchmarking to compare and improve their performance with other dairy farmers. These efforts are now paving the way for Edwin’s sons to become the fifth-generation stewards of the farm.
“Working with Ted has enabled us to scale better while maintaining stability,” says Rodrick. “It’s also part of our mission and vision to help other people. Since working with Ted and gaining financial stability and success, we’re able to help more people.”
From Financial Uncertainty to Profitable Sustainability
“You can have a tremendous mission and vision, but if you’re not financially stable and don’t have cash to work with, you can’t move your mission. Your mission is dead in the water if it isn’t a profitable mission.” – Edwin Shank
One of the biggest mental hurdles the Shank family had to overcome in their work with Ted was the perceived hardship of paying for his services at a time when they were in poor financial shape. The farm was losing around $300,000 a year when they began working with Kitchen Table Consultants. A year into working with KTC, The Family Cow had made a profit of $300,000.
“It was a mental challenge to bite off a cost when we didn’t feel like we didn’t have two pennies to rub together,” says Edwin. “But if you have a financial mess that you’re trying to straighten out, it will pay off.”
Edwin and Rodrick add that working with a consultant takes some getting out of your comfort zone, from using certain technologies to simply trusting the process.
“Be willing to take some steps that you may not think are necessary or don’t understand,” Rodrick says. “Ted knows what he’s talking about; he has a tremendously good track record with his coaching clients….If you’re going to engage [KTC], be willing to listen, take action, and put your own hard work into it.”
Today, The Family Cow continues to offer its certified organic goods directly to its customers through their farm store and local pickup locations as well as nationwide delivery. By embracing strategic business management, focusing on sustainable practices, and maintaining a direct relationship with its customers, The Family Cow has not only navigated financial challenges but has also cemented its role as a leader in the sustainable agriculture movement.
Key Strategies for Success at The Family Cow:
- Financial Reorganization: A complete reorganization of their chart of accounts was necessary to turn things around.
- Banking Relationships: They improved their financial stability by networking and getting referred to a bank that understands and supports their business.
- Continuous Improvement and Planning: Regular financial reviews, annual budgeting, and strategic planning helped create a culture of continual improvement.
- Leadership Training: Ongoing education and leadership training helps prepare the next generation of farmers.
- Adaptability: Team members had to be willing to learn new technologies and adapt business practices to meet financial goals.