For a lot of farmers, the off season is a great time to get equipment ready for the next season and make those put-off repairs. It also often means doing a bit of experimenting to see if it’s possible to make the little things work a little smoother.
For John Gehrer, owner of the Never Spill (grain) Spout, what started out as a workshop invention project to avoid spilling grain on his own farm, has turned into a pretty significant business venture.
John presented a seminar at the Manitoba Ag Days event to offer his advice on how to turn that brilliant workshop invention a viable business, and allow others to learn from his experience what pitfalls to avoid.
“To run a successful business is very simple: take more money in than you spend,” he said jokingly. And he described his approach to doing that was a cautious one.
“When you have something that is new and unproven, it was very hard for me to spend money,” he continued. “So I went slowly. We made sure that if this didn’t work out at all, there would be no negative situation to our family. We had less than $1,000 invested in this project. So if we hadn’t sold any and people thought it was a stupid idea, we would have probably just left it at that.”
However, when presenting his Never Spill Spout at his very first trade show, it proved there was interest in his invention.
“We had orders on paper for 30, so I thought we better start manufacturing them,” he said. “Our house and our shop turned into a little factory.”
Marketing and sales
While many farmers may be good at the engineering end of creating a product, the marketing and sales efforts required to launch it successfully are another matter entirely. For Gehrer, that meant allowing his wife to take the lead in sales and presentations.
“My wife does much of the selling of our product at farm shows,” he told the audience.
The next challenge came in learning how to get the word out on his product without breaking the bank.
“We had to rely on our friends to get it out in the public,” he said. “I had no idea how to do this. My only thought was we’d have to buy a lot of advertising, which would be very expensive.”
It turned out he didn’t need to. At least, not initially.
“We ended up in the New Inventions (showcase) in 2003 at Manitoba Ag Days,” he added. “We could get a booth for a good price. We got some free newspaper articles (as a result) and the advertising that came with that. And it turned out quite good.”
Since then he has experimented with different advertising mediums.
“For print advertising, western Canadian publications are very good, but they’re not cheap,” he went on. “I thought these days everyone did everything on their smartphones, but there are a lot of people still reading… newspapers.
“Annual farm advertising books are quite good. American newspapers are quite a bit cheaper, but we just don’t get the response we’d like, possibly because we don’t double expose with trade shows. We did try radio once, but that didn’t go. We have a website and a YouTube video. The free (online) things like discussion forums are quite good.”
Three quarters of Gehrer’s Never Spill Spout sales are the result of word of mouth.
“The neighbour has one, so they come and buy one,” he said. “Many people buy two or three. Every spout sold in the last 15 years has our phone number on it. We think that is our best advertising.”
Trade show exhibits have remained the mainstay of Gehrer’s marketing plan. Attending them also helped him understand his markets, and that helped him focus his sales efforts.
“It’s really important to know where you’re selling to,” he explained. “Western Canada is all very similar. Many farmers have many 2,000- to 5,000-bushel grain bins. They fill up many of them in a day. And this is where our product fits the best. And Saskatchewan is by far the best, because it has the most farmers.”
Selling to U.S. farmers, however, has presented challenges.
“You’d think North Dakota would be almost the same as Saskatchewan or Manitoba. We went to the Minot trade show for three or four years and sold three or four spouts every year. We were going to give up and then we sold 30. It seems like people need to see it again and again before they will buy something like this.
“We do have free trade, but it still is a quite a bit of work and some expense to get your product across the border into the United States. When we go to a U.S. trade show we sell with a dealer. That means they (spouts) get shipped to a broker’s storage place. Then we have to go there and pick them up. So it’s a little bit more cumbersome than going to Brandon or Regina.”
He now also has sales overseas.
“We did have a dealer from New Zealand come to us. They sell Brandt augers and they order 10 spouts from us every year. And we thought, why is Australia not working for us also? We had over 15 inquiries from dealers in Australia, but not one took on our product. I’m not sure Australian farmers are that much different from us here. It would be a good opportunity to go there and investigate.”
Of course making the sale is one thing, getting his spouts delivered in a cost-efficient way is another. For that, and to help with collecting revenue, he turned to Canada Post.
“We usually send them out COD by Canada Post,” he said. “We find Canada Post is cheaper than a courier. They also go to farms. On our own farm it’s really hard to get a courier to come to us. It’s actually surprising how quickly Canada Post gets things there. We can have a turnaround from Winnipeg to Alberta in three days. COD works really good for us. The farmer has to pay when they pick it up. In over 10,000 spouts, we haven’t had one cheque that bounced.
“We don’t take credit cards, because that’s like giving three to four per cent right off the top to someone we don’t think did that much to make us successful. Since our spouts are around $600, the transaction costs would be quite high. If it was something around $30, you’d have way more deposits. And making deposits is a lot of work. Then maybe it would be more useful to do credit cards.”
Finally, Gehrer says standing behind the product and treating customers at least as good as he’d want to be treated may have been the most useful effort in continuing to grow his small manufacturing business. A failure of the alarm they were buying from a supplier forced him to spend an extensive amount of money on warranty replacement parts. But it drove home the lesson.
“I think every dollar we spent giving stuff away for free under warranty probably came back many times in more sales and more trust.
“For three or four years after that we would ask people at trade shows if they had (the updated) alarms. Then we’d give them free alarms. It’s really funny when you talk to someone that phones when something doesn’t work and they’re really upset and you give them a free alarm, they’re almost happier that it broke and they got something for free than if it hadn’t broken.
“My point is: stand behind your product and support it, and if something goes wrong try not to say ‘it’s your fault.’”