No doubt about it, new customers almost always demand more time and effort than established, long-term ones.
“Livestock producers who haven't worked with a custom operator before don't always have an appreciation for how complex your business can be,” says Joe Stellato, crop specialist with University of Wisconsin-Extension.
“Educating them about your business — how you set rates, schedule jobs, etc. — will require some patience and perseverance,” Stellato adds. “In the long run, though, it should lead to long-term relationships that will make you more efficient and profitable.”
Stellato recommends using the initial meeting with a potential customer to describe your business in detail. Explain how many years you've been in service and how you train your crews. Describe your equipment and offer details about your maintenance program. Provide a list of the services you offer and how you charge for them.
Also, be ready to furnish the names of two or three business references. You'll also want to use the first meeting to obtain credit references from the client.
“In the custom harvesting business, the feed that you've harvested is the collateral,” says Stellato. “The problem is that the collateral disappears as it gets fed out to the customer's livestock.
“If somebody is unwilling to provide a credit reference, it should throw up a red flag. You don't want to find yourself getting into the bill collection business.”
The next step is arranging an on-farm visit that will give you a chance to check out the customer's feed storage facilities, field locations, etc. Ask for a complete set of field maps with the correct acreage for each field.
Maps should show landmarks, farm lanes and potential field hazards — survey stakes, fenceposts, rock piles, etc. Ask the client if it's possible to remove the hazards or at least flag them before your crew arrives.
The on-farm session should give you more insight on whether you can meet a customer's needs in a timely manner.
“Always be realistic when estimating the number of acres you can harvest per day of any given crop,” advises Stellato.
You can also use the on-farm session to explain your approach to scheduling.
“Scheduling can be one of the toughest parts of a custom operator's job,” says Stellato. “With haylage, for example, everybody's crop in the area is likely to mature at about the same time. The customer needs to understand that it's not possible for you to be everywhere at once. Take pains to explain how you set up your farm rotation.”
Utilizing a written contract is always advisable.
“The contract is a tool for making sure that everybody is clear on the basic terms of the business relationship up front,” he says. “If there's a dispute or disagreement somewhere down the line, you can go back to the contract to see what the original agreement was.”
In some states, written agreements can be a prerequisite for seeking legal protection.
“In Wisconsin, for example, a business transaction of $500 or more can't be enforced by the courts unless there's an agreement in writing,” he says.
Payment rates, payment schedules and interest rates should be detailed in the contract. The document should also spell out who is responsible for providing equipment and labor, who will keep track of loads harvested and size of loads, who will do the testing for feed quality, feed sampling procedures, which lab will be used and who will pay lab fees.
Many custom operators furnish standardized contracts. Some clients might want to modify parts of theirs to fit specific circumstances. Others might ask to have their attorneys review the contracts before they sign.
If you're drawing up a contract from scratch, you might find it worthwhile to include a third party — a county extension agent or crop consultant — in the discussions.
Making an effort to maintain clear and open lines of communication is the surest route to developing a long-term relationship with the customer. Encourage him to keep you informed about changing crop conditions on the farm.
On the flip side, keep clients updated on things like last-minute scheduling changes, unexpected breakdowns and weather delays.
Encourage customers to immediately contact you about problems or concerns.
“Remind them that a problem can't be solved if you don't know about it,” Stellato says. “You want them talking to you about problems — not the neighbors or other custom operators.”
Stellato's bottom line: “The golden rule is a good rule to follow in any contractual arrangement. If everybody treats the other person the way they'd like to be treated, things will generally work out fine.”