Cool, best of luck
to you. I hope you know more about it than I do! If not I hope you
are ready to learn.
I'm writing this up
today because someone asked me for details on my “alpaca operation”
and I wanted to put the reply in one place so in the future I can
link others to it rather than typing it out again and again. Does
that sound lazy or smart?
Smart right?
It should. I grew
up working in the construction business and one of the first things I
was taught was that if I was on a job site and moving my hands should
not be empty. Because something needed to be carried to wherever I
was headed and why walk there twice? You never do anything twice if
you don't have too. So with that in mind lets blog on.
We are here to
talk about “Operation Alpaca” and I already told you I don't know
much about the fiber business so all I can really offer you is some
common sense and perhaps my experience.
“Uh.. .so if you
live on an alpaca farm how do you know nothing about the fiber
business?”
Good question. My
wife knows about the fiber business. I mostly build barns and fences
and more barns and more fences.
So how did we get
here? Well 7-8 years ago my wife started selling hand spun and hand
dyed alpaca fiber (predominately alpaca though she also does some
other fibers as well. She mainly focused upon alpaca because it
sells well.) She did the work for this at night, after work, and I
thought of it as a hobby. For years that was all I saw.
On a given day we'd
both go to work and then we'd come home and I'd cook dinner (yeah, I
do the cooking. We're like really progressive and I'm an awesome
cook) and then she'd head out to her workspace to do the fiber thing
and I'd head out to the garage to uh..
Drink beer and work
on my motorcycles. True story.
Then one night after
dinner but before beer + motorcycles she said
“I am thinking
about buying some alpacas. What do you think?”
And I replied:
“What's an
alpaca?”
And she filled me
in.
Now comes the
important part and the part where some real advice can be given. I
had been running my own business for 15 years at this point (damn I
am getting old.) Anyway the basics of any business are similar. The
first thing I asked her was:
“Well how much do
these animals cost and what is the product you can make with them?”
Showing me the
product wasn't difficult. She had our guest room filled with the
stuff and had for years at this point.
What she did next is
the part that is worth hearing. She broke down the profit on her
products over the past several years and showed me her costs in terms
of time and raw material. Purchasing the alpacas would allow us to
harvest our own raw material at a lower cost.
Then we figured out
the value of the raw fiber sold without any modifications and checked
that vs. the cost of maintaining the livestock for a given year.
It's profitable but significantly less so. However this is an
important step and well worth doing. I was now aware of the fact
that if my wife had the time to add value to this raw material
through her labor we were in a good spot and if she did not have that
time the project was still sustainable and profitable. Marginally
profitable but hey, we would not lose money.
Not losing money is
really cool.
She was able to show
me that she was earning a profit and what the increase in profit with
the livestock would be through a very boring and tedious gimmick that
we call the miracle of accounting. That's quite important as well. If
someone asks about the viability of your operation and you can hand
them the books you are rolling in credibility aren't you?
One other thing she
did which is also important. For several years she spun/dyed fiber
that she purchased from a 3rd party. This allowed her to
improve her craft and learn the market for the product without any
significant expenditure. She actually was earning money the whole
time.
That “earning
money the whole time” bit is a big deal because when I asked
her:
“So uh.. what do
these alpacas cost anyway?”
she was able to say:
“I want to put
about 5 thousand into the ones I am looking at now. However I have
the money set aside in a separate account. It's the profit I have
earned off selling the fiber all this time.”
and I had to say:
“Oh, wow .. cool.
Uh.. yeah. Sounds good to me. Hell, you earned the money.”
And that was that.
So what does this
mean to you dear “Person who wants to start a fiber business”?
See if you can get
your feet wet in some manner. My wife did this buy buying various
fibers from 3rd parties (mostly she found the raw material
on the internet and had it shipped in) and then did her
dyeing/spinning and increased the value of the product. Can you do
that? Are you planning on selling finished products or fiber
modified in some manner? If the answer is “Yes” then of course
you can. You'll just be doing it at a lower profit % than you would
be if you had your own livestock to harvest the raw material from.
This is good. It
allows you to learn the market and start working in it without a
major expense/commitment. That is more useful than you'd think!
My wife started out mostly spinning fiber. She was really into it.
I know, those wheels are not cheap!
However she largely
stopped spinning some time ago. She makes more money dyeing and
selling the raw material to others who want to spin it themselves.
You learn that by getting out into the market and seeing what
happens. If you can do so without literally “buying the farm”
that is a bonus. Buy the farm when you know what you want to do with
it!
Anyway I hope that
is helpful to someone and if you want to ask me any other questions
or just yell something at me I can always be found on /r/homesteading
on Reddit.
-J