Evaluation: Is Your Microgreens Business on the Right Track?

This is Episode 4 in Part I, “Understanding the Market and Business Model,” in the Microgreens World series, “Starting a Microgreens Business: What You Need to Know.” If you missed the earlier posts, explore them here: “Microgreens Business.”

In the middle of fall 2018, my friend Steven and I decided to plunge into entrepreneurship and start our own microgreens business, JPure Farms. We both worked unfulfilling 9-5 office jobs and felt stuck in a rut. “There has to be more to life than this,” Steven lamented over drinks one night. That’s when the idea struck – why not combine our shared love of sustainable farming and nutrition into a business?

Our vision was clear, and our enthusiasm was high. We had a microgreens business marketing plan and a tool we believed would be our roadmap to success – the Business Model Canvas.

The canvas promised to guide us through the nine critical aspects of any business, from value proposition to customer relationships, channels to revenue streams. We knew that about 90% of startups fail in the first year, often due to a lack of market need, running out of cash, or needing the right team. But we were determined not to be part of that statistic.

Evaluating a microgreens business using the business model canvas involves assessing the nine key areas: customer segments, value proposition, distribution channels, customer relationships, revenue streams, key resources, key activities, partner network, and cost structure. It’s crucial to regularly review and adjust these elements based on market feedback and business performance. It is essential to be adaptable and continuously learn in this process.

Our journey was filled with challenges and triumphs, learning and unlearning, and a lot of growth. We learned that starting a business is one thing, but keeping it afloat and making it thrive is another. It’s like planting a seed – it needs the right conditions to germinate, grow, and eventually bear fruit.

This post takes you through our journey of evaluating our Business Model Canvas. This tool was instrumental in shaping JPure Farms. We’ll share our insights, the adjustments we made along the way, and how we ensured our microgreens business was on the right track.

So, if you’re ready, let’s dive in and explore the fascinating process of evaluating a microgreens business model canvas.

QUICK READS

Understanding the Business Model Canvas: A Recap
Evaluating the Microgreens Business Model: Customer Segments
Evaluating the Microgreens Business Model: Value Proposition
Evaluating the Microgreens Business Model: Channels
Evaluating the Microgreens Business Model: Customer Relationships
Evaluating the Microgreens Business Model: Revenue Streams
Evaluating the Microgreens Business Model: Key Resources
Evaluating the Microgreens Business Model: Key Activities
Key Partnerships: Did They Contribute to Business Success?
Cost Structure: Did We Optimize Financials?
Lessons Learned and the Path Forward for Your Microgreens Business
Other Key Considerations
Related Questions
Share the Guide
References

Understanding the Business Model Canvas: A Recap

Let’s recap. Nine building blocks, giving you a comprehensive view of your business, are part of the Business Model Canvas strategic management tool. These blocks are:

Understanding these building blocks is the first step in evaluating your business model. In the following sections, we’ll delve deeper into how to assess each of these areas in the context of your microgreens business.

Evaluating the Microgreens Business Model: Customer Segments

Our target customers were farmers’ markets, local restaurants, and specialty grocers. This was a good focus for us, as these customers appreciated the freshness and quality of our microgreens. However, we knew we would have to expand into additional segments like meal delivery kits and high-end restaurants for increased diversification.

Identifying and reaching the right customer segments is crucial for the success of any business, and our microgreens venture was no exception. When we started JPure Farms, we had a clear idea of our target customers: health-conscious individuals and families, chefs and restaurants looking for fresh, locally-sourced produce, and other businesses in the food industry.

We used various strategies to reach these customer segments, from participating in local farmers’ markets and food festivals to leveraging social media to reach a wider audience. We also partnered with local restaurants and businesses, offering them a reliable source of high-quality microgreens.

We looked at our sales data, customer feedback, and market trends to evaluate whether we reached the right market. Our sales data showed that most of our sales came from our target customer segments (63% farmers’ markets, 22% local restaurants, 7% specialty grocery stores, and 8% books, online, etc.). Customer feedback, both direct and through online reviews, was overwhelmingly positive, indicating that our products were meeting customer expectations.

However, understanding customer preferences and buying behavior was an ongoing process. We regularly conducted market research and customer surveys to keep up with changing trends and preferences. For instance, we noticed a growing interest in exotic varieties of microgreens (purslane, chicory), prompting us to expand our product range.

What we learned: Reaching the right market involves identifying your target customers and understanding their preferences and buying behavior. Regular evaluation and adaptation are vital to ensuring your business meets customers’ needs and stays relevant in the market.

Evaluating the Microgreens Business Model: Value Proposition

Our value proposition was consistent: providing fresh, locally-grown microgreens. We highlighted our small-batch process and nutrient-dense products. This remained strong, as our focus on quality and relationships resonated with customers.

The value proposition of your microgreens business is the unique value you offer to your customers. It sets you apart from your competitors and makes customers choose your products over others. When evaluating your value proposition, you must consider two main aspects: your unique selling points and their alignment with customer needs.

Your unique selling points are the distinctive features or benefits of your microgreens. For instance, at JPure Farms, we prided ourselves on offering exotic microgreens grown sustainably and without harmful pesticides. We also provided educational resources to our customers, helping them understand the nutritional benefits of microgreens and how to incorporate them into their diets.

We looked at our sales data, customer feedback, and market trends to assess whether these selling points have delivered value. We found that our customers appreciated the variety and quality of our microgreens, and our educational resources were well-received. This indicated that our unique selling points provided value to our customers.

However, evaluating your value proposition is more than looking at your unique selling points. It’s also about ensuring these selling points align with your customers’ needs. Through our regular survey, we found that our focus on sustainability and education resonated with our customers, who were increasingly seeking out healthy, sustainable food options and wanted to learn more about the food they consumed.

Evaluating your value proposition involves reviewing your unique selling points and assessing their alignment with your customers’ needs. It’s about ensuring that you’re offering something unique and something your customers truly value and need.

Evaluating the Microgreens Business Model: Channels

We reached our customers primarily through direct sales and word-of-mouth. We considered adding an e-commerce site to reach more customers outside our region.

But evaluating the effectiveness of our channels was a critical part of our review process at JPure Farms. Our channels for distribution and marketing were chosen with our target customers in mind. We primarily used direct sales at local farmers’ markets and deliveries to local businesses for distribution. We leveraged social media, email, and local events for marketing.

As we mentioned earlier, direct sales at farmers’ markets (63%) were our most effective distribution channel. These events allowed us to engage directly with our customers, answer their questions, and build relationships. Deliveries to local businesses were also successful, providing steady orders.

Our email marketing channel effectively raised awareness about our products and attracted new customers. It was a valuable tool for sharing information about our microgreens, farming practices, and the story of JPure Farms. We reached a larger audience through social media for personal interaction with our customers.

However, there were also areas for improvement. For instance, while our social media attracted a lot of traffic, the conversion rate was lower than we would have liked. This indicated that while people were interested in our products, not all of them were making a purchase. We realized we needed to improve our online shopping experience and started exploring online ordering and home delivery options.

While our channels were generally adequate, our review highlighted areas we could improve.

What we learned: This is an ongoing process, and you should continue to evaluate and adjust your channels based on your performance and customer feedback.

Evaluating the Microgreens Business Model: Customer Relationships

We built relationships through direct communication and outstanding service. Customers loved our personal touch and responsiveness. This hands-on approach served us well. To evaluate our performance in this area, we looked at two key indicators: customer retention and engagement.

Our customer retention rate was high, about 82%. In comparison, customer churn was about 7%, indicating that once customers tried our microgreens, they were likely to return for more. This was a positive sign that our customers were satisfied with our products and saw value in them. However, we also recognized that there was room for improvement. We started exploring ways to increase customer loyalty, such as introducing a loyalty program and offering discounts for repeat purchases.

Engagement was another essential aspect of our customer relationships. We used social media and email newsletters to inform our customers about our products, share helpful information about microgreens, and engage in conversations. Our engagement metrics on these platforms were good social media 2% and email 23% open rate, but we saw growth potential. We decided to invest more in our content strategy to provide more value to our customers and encourage more engagement.

Customer service also played a crucial role in building trust and loyalty. Our responsive and helpful customer service was a source of pride for us. Customer feedback was generally positive, but we also received valuable suggestions for improvement. We took this feedback seriously and used it to improve our customer service practices.

While we had successfully built strong customer relationships, our evaluation showed opportunities for us to do even better.

What we learned: Committing to continuing efforts to build customer trust and loyalty is essential, as we believe this is key to your long-term success.

Evaluating the Microgreens Business Model: Revenue Streams

Our revenue came from microgreens sales. Prices varied based on volume and product. We did consider value-added products like salad mixes to increase revenue per customer.

Effective monetization is critical o any startup’s chances of business sustainability. We started by evaluating our pricing strategies. We aimed to price our microgreens competitively while ensuring we covered our costs and generated a profit. We conducted market research to understand customers’ “willingness to pay” and how our prices compared to other microgreens suppliers. Overall, our pricing strategy seemed to be working well. Our prices were competitive ($3.37 – $4.19), and our customers perceived our products as good value for money.

However, we also realized that relying on a single revenue stream – selling microgreens – could make our business vulnerable. We started exploring ways to diversify our revenue streams. We considered offering related products, such as growing kits, educational materials, and services like workshops and consultations. We started exploring these initiatives because we believed they had the potential to contribute significantly to our revenue in the future.

Our evaluation showed that while our monetization strategies were effective, there were opportunities for us to diversify our revenue streams and increase our financial resilience.

What we learned: We encourage microgreens growers to commit to exploring these opportunities and continuing to adapt their business model to meet their customers’ needs and market trends.

Evaluating the Microgreens Business Model: Key Resources

Our key resources were our seeds, contract staff, production facility, distribution van, and relationships with local farms for materials. Maximizing these resources as we grew was vital.

In the journey of JPure Farms, we quickly realized that efficient management of key resources was crucial to our success. We also recognized our knowledge and expertise in growing microgreens were invaluable resources.

We had initially sourced our seeds and growing medium from local suppliers, but as our operations scaled, we started exploring more cost-effective options. We found a few online suppliers offering bulk discounts, which significantly helped us reduce our costs. We also optimized our growing space by arranging our trays more efficiently and investing in a vertical farming system.

Our expertise in growing microgreens was a resource we continually developed. We attended workshops, read the latest research, and experimented with different growing techniques. We also learned much from our customers’ feedback and trial and error.

Looking back, we believe we managed our resources reasonably well. However, there were areas where we could improve. For instance, we realized we could have started exploring bulk discounts and more efficient farming systems earlier.

We also recognized the importance of continuously updating our knowledge and staying abreast of the latest trends and research in the microgreens industry.

What we learned: Evaluating your resource management will help you identify areas for improvement and give you insights into how to make your operations more efficient and cost-effective.

Evaluating the Microgreens Business Model: Key Activities

Reflecting on the key activities of JPure Farms, it’s clear that our core activities were the cultivation of microgreens, marketing our products, and maintaining customer relationships. Each of these activities played a crucial role in driving our business.

Cultivating microgreens was, of course, the heart of our operations. We researched the best growing techniques, experimented with different seed varieties, and optimized our growing conditions. We also invested in quality control to ensure that our microgreens were always fresh and of the highest quality.

Marketing our products was another key activity. We used a combination of online and offline marketing channels to reach our target customers. We also attended farmers’ markets and local events to promote our products and engage with our customers directly.

Maintaining customer relationships was an activity that we prioritized from the start. We made it a point to listen to our customers’ feedback and respond to their queries promptly. We also implemented a customer loyalty program to encourage repeat purchases.

What we learned: We believe these activities effectively drove our business. However, there were areas where we could improve. For instance, we realized we could have been more proactive in seeking customer feedback and more strategic in our marketing efforts.

These insights will be invaluable for you to grow and evolve your business.

Key Partnerships: Did They Contribute to Business Success?

Reflecting on our journey at JPure Farms, we must recognize the significance of strategic partnerships. They were a critical component of our business model. We partnered with local restaurants, health food stores, and farmers’ markets, providing reliable outlets for our products and helping us reach a broader customer base.

Our partnerships weren’t limited to distribution channels. We also collaborated with other urban farmers, sharing knowledge and resources. This sense of community within the urban farming sector was a surprising but welcome benefit. It allowed us to learn from others’ experiences, avoid common pitfalls, and continually improve our operations.

Our partnerships undoubtedly contributed to our success. For instance, our restaurant partnerships accounted for about 60% of our total sales. Our collaborations with other urban farmers resulted in cost savings of around 20% through shared resources and bulk purchasing.

However, it’s not just about the numbers. Our relationships enriched our business in ways that can’t be quantified. They provided us with support, inspiration, and a sense of belonging. Our partnerships with local farms, suppliers, and community organizations have been beneficial. Expanding partnerships could help us access more resources.

What we learned: So, consider the value of key partnerships when evaluating your business model. They could be the difference between merely surviving and thriving in the microgreens business.

Cost Structure: Did We Optimize Financials?

It’s one of the most critical aspects of our business model that directly impacted our profitability. Our major cost drivers included seeds, growing medium, utilities, labor, and packaging. We’ve been meticulous in tracking these costs and identifying areas for optimization. Monitoring costs and minimizing waste kept us lean.

For instance, we realized early on that labor was a significant cost driver. To address this, we invested in automation wherever possible, reducing our labor costs by about 30%. We also found ways to reduce our utility costs, such as using energy-efficient LED lights for our indoor growing operations, which cut our electricity bill by 30%.

Packaging was another area where we saw the potential for cost savings. We switched to a more cost-effective yet still eco-friendly packaging option, which resulted in a 15% reduction in packaging costs.

However, cost optimization isn’t just about cutting costs. It’s about making strategic decisions that enhance the value proposition of our microgreens. For example, we chose to stick with organic, certified pathogenic-free, non-GMO seeds despite their much higher cost because we knew it was important to our customers.

Understanding and optimizing our cost structure was instrumental in the success of JPure Farms.

What we learned: To improve the structure of your costs, it is a constant process that must be periodically reviewed and adjusted. But the effort is worth it when you see the positive impact on your bottom line.

Lessons Learned and the Path Forward for Your Microgreens Business

Reflecting on our journey at JPure Farms, we learned that the Business Model Canvas is not a one-time tool but a living document that evolves with our business. It guided us in making strategic decisions, from identifying our unique selling points to optimizing our cost structure. It helped us focus on our customers, ensuring we delivered value and built trust. It also prompted us to continually reassess and adapt to changing market dynamics.

But the learning continues. As we moved forward, we continued to use the Business Model Canvas as a roadmap for growth. We kept refining our value proposition, exploring new channels, and seeking strategic partnerships. We stayed attuned to our customer’s needs and preferences and found ways to optimize our operations and resources.

After reviewing each component of our business model canvas, some key opportunities emerged:

• Diversify into additional customer segments like meal kits and farmer’s markets.
• Build an e-commerce site to broaden your reach.
• Develop value-added products to increase revenue per customer.
• Form new partnerships to access more resources and distribution channels.
• Focus on increasing efficiency as volumes grow to keep costs down.

For those of you embarking on your own microgreens business venture, we hope our experience can serve as a guide. Remember, the key to success lies in having a solid business model and your ability to evaluate and adapt it as you go.

The microgreens business is booming, and I’m excited for the bright future ahead!

Other Key Considerations

Reflecting on our journey at JPure Farms, we believe a few additional considerations are crucial for any microgreens business.

Firstly, always appreciate the power of the community. Engaging with local farmers’ markets, health food stores, and restaurants opens potential channels. It helps in understanding the local market dynamics.

Secondly, always be open to innovation. This could be experimenting with new microgreen varieties, exploring novel farming techniques, or leveraging technology for operations.

Lastly, sustainability should be at the heart of your business model. This goes beyond just environmental impact. It also means creating an economically viable business that contributes positively to the community.

Remember, a successful business model is not set in stone whether you’re selling microgreens in Florida, Pennsylvania, Texas, Oklahoma, or Georgia. It’s a dynamic blueprint that should evolve with your business, the market, and the wider environment.

Related Questions

What is the importance of a marketing plan in a microgreens business?

It is essential to have a marketing plan, as it assists in identifying target consumers, their needs are taken into account, and strategies for obtaining and retaining them are developed. It also aids in setting realistic sales goals and allocating the marketing budget efficiently.

How can I promote my microgreens business?

Promotion can be done through local farmers’ markets, online platforms, and partnerships with restaurants and health food stores. It is also possible to use social media and content marketing.

What factors should I consider when pricing my microgreens?

Factors to consider should include the cost of production, market demand, competitor pricing, and the perceived value of your product. It’s important to price competitively yet ensure profitability.

Share the Guide

We hope you found this guide on evaluating your microgreens business model canvas insightful. If you did, don’t keep it to yourself! Please share it with your fellow microgreens enthusiasts on social media. Want to stay updated on the latest tips and advice for your microgreens business?

Sign up for our newsletter. This is just one of many posts we’ve crafted to help you succeed in your microgreens venture. Remember, the more you learn, the more you grow. So, keep exploring, keep sharing, and keep growing!

• Discover more business tips in the post, “13 Solutions to Mastering the Challenges of Your Microgreens Business Journey.”
• For a wealth of knowledge, read the post “Harnessing Technology for a Greener Future: A Guide for Microgreens Entrepreneurs.”
• Discover how to grow microgreens. Read this post, “Beyond the Windowsill: Growing Microgreens on Your Balcony or Patio.“
• Interested in nutrition and health? “The Beginner’s Nutritional Guide to Incredible Microgreens” to explore more about microgreens.

Sign Up below for our free Microgreens Business Model Email Course.

References

These references provide insights into the evaluation of microgreens business models, the role of urban agriculture in food security and sustainability, and consumer acceptance of different vertical farming systems. They offer a comprehensive understanding of the various aspects of evaluating a microgreens business model.

1. Strategyzer AG. “Strategyzer | Canvases.” Strategyzer.com, 2019, https://www.strategyzer.com/books.
2. Osterwalder, Alex. “Alex Osterwalder.” Www.alexosterwalder.com, 2021, www.alexosterwalder.com/.
3. Armanda, D. T., Guinée, J. B., & Tukker, A. (2019). The second green revolution: Innovative urban agriculture’s contribution to food security and sustainability – A review. https://oa.mg/work/10.1016/j.gfs.2019.08.002. Global Food Security, 23, 36-47.
4. O’Sullivan, C. A., Bonnett, G. D., McIntyre, C. L., Hochman, Z., & Wasson, A. (2019). “Strategies to improve the productivity, product diversity, and profitability of urban agriculture.” https://oa.mg/work/10.1016/j.agsy.2019.05.007. Agricultural Systems, 173, 482-494.
5. Goodman, W., & Minner, J. (2019). Will the urban agricultural revolution be vertical and soilless? A case study of controlled environment agriculture in New York City. Land Use Policy. https://oa.mg/work/10.1016/j.landusepol.2018.12.038.
6. Jürkenbeck, K., Heumann, A., & Spiller, A. (2019). Sustainability Matters: Consumer Acceptance of Different Vertical Farming Systems. Sustainability. https://oa.mg/work/10.3390/su11154052
7. The new urban agricultural geography of Shanghai. https://oa.mg/work/10.1016/j.geoforum.2018.02.010.
8. “(PDF) Opportunities and Challenges of Urban Agriculture for Sustainable City Development.” ResearchGate, www.researchgate.net/publication/329610595_Opportunities_and_Challenges_of_Urban_Agriculture_for_Sustainable_City_Development.