How to create a Small Business of the Year

photo by iLoveButter 

Being a small business owner is hard, but if you go into it with the idea that you want to be remarkable, that you want to be the best you can be, then amazing things can happen.

There’s Happy Cows in Missouri as well

I just had the opportunity to listen to a talk from Leroy Shatto – owner of Shatto Milk Company, a boutique dairy operation just outside of Kansas City.

If you haven’t heard the story, it’s pretty compelling.  The farm itself is over 100 years old and the dairy operations are over 60 years old but towards the end of the last century they started heading into rough times (along with most other small, family owned farming operations). 

The problem was a lack of scale and control over the product – they were a commodity without the scale or opportunity of more ‘corporate’ operations.  Faced with losing the cows and the farm, Mr. Shatto came up with the plan to become a premium dairy provider with a focus on providing the best product possible and a secondary objective of making milk fun.

Although several banks told him no, he finally found a local banker that bought into his idea and supported him for an SBA backed loan and in 2003 he started creating the dairy farm of the future.

In the 5 years since then he has more than tripled his production / number of cows, their products are in over 70 stores, which sometimes have trouble keeping them on the shelf and he has won numerous awards including the Missouri Small Business of the Year award in 2006 and the National Small Business of the Year runner-up in 2006.

Pretty amazing outcomes, especially from someone that claims to be just an everyday dairy farmer, not a business expert!

What can you learn from a Dairy Operation?

So what is it that makes this business stand out as a rocket towards success?  There’s not any one thing that really made this work, it was quite a few things.  (Nobody said it was easy to be remarkable!)  Here are a few of the key points that I picked up on tonight:

Produce A Quality Product

Every step of the operation is geared towards premium quality.  As an example, the chocolate milk is made with the most expensive (and best) chocolate they could find along with real cane sugar, not the less expensive fructose sweeteners (and it really does taste great!).

The cows are treated with respect and care, including a special all-weather enclosure that uses deep layers of sawdust to give them a comfortable place to lay down.  (As they say on the commercials great dairy comes from happy cows!).

Tap into Trends

Here’s a few:  Organic Foods, Local Production, Nostalgia, Green, Family Owned versus Corporate are just some of the trends that the company took advantage of to find interested buyers and to jump into the public conscience.

The milk is sold in nostalgic glass containers that are totally recyclable, which is great environmental statement.  Additionally, the bottles are distinctive, they improve the quality of the product in terms of taste and keeping it colder than other materials and they reinforce the image of the good old days and being a top of the line product.

The product is fresh and pure – the cows are not on any growth hormones and the processing operation was designed to be transparent so that touring visitors can see all aspects of what goes into the milk as a fresh and natural thing.

Be Innovative and Creative

Beyond the interesting packaging, the company has also developed a lot of interesting flavors for the milk, including Strawberry, Chocolate, Banana and even Root Beer (which is very popular and reminiscent of a root beer float).

They’ve also found some additional revenue streams: the farm itself has become a tourist destination with tours occurring 5 days a week (and winning an award from the State of Missouri Tourism board).  Additionally they are finding ways to creatively use the excess cream (skim milk is popular), including artisan butters and they have just started making cheese.

Be Yourself and Have Fun

Having said all of that, the thing that stood out the most for me listening to tonight’s talk was what a genuine, real person Mr. Shatto is.  In fact the point was made that a big part of his early sales success was likely due to his passion and down to earth approach that’s extremely refreshing in today’s atmosphere of high pressure sales.

Along with that genuine approach, it was also clear that this is a labor of love and pride and the end goal of providing fun and a valued product that people enjoy was more important than squeezing maximum profit out of the operation.  I think people can sense that and that’s how you create raving fans of your product and your brand (I think he created several tonight – I’ll be looking for the chocolate milk next time I’m in the store).

So can you apply any of these ideas to your business?  I’m sure this re-vamping process has been incredibly hard work, but as Mr. Shatto said – it’s also been the most fun he’s ever had.

I would love to hear your thoughts on his story and any key aspects driving his business success that I might have missed – share your comments here.

Shawn Kinkade