Case in point: Financial Accounting
A coach wouldn’t send out just one player onto a football field, would he? No. It’s the team that brings success. The same way, when marketing doesn’t venture out alone, whether in the form of an investment deck or a press release, it’s more likely to win.
Here’s what I mean – to empower marketing initiatives with the right angle, a good marketing professional would study startup operations and its target market as a whole. And this includes accounting.
Not long ago, an Israeli agro-tech startup looking for Round A investment turned to me to create their investor deck. When I met them, I was captivated by the simplicity and brilliance of their solution, which introduced full automation to dairy farms.
When they outlined the benefits to the dairy farm, however, they said the benefits came to about only 15% savings in labor costs for the farmer. The calculation didn’t seem right – such a brilliant solution must generate higher savings.
I decided to flex my economic muscles and asked them to show me a typical profit and loss statement of a dairy farm. It turned out that in mid-sized farms, labor constituted around 15% of the total operations costs. (Labor costs, together with labor shortages, high turnover, and lack of skilled workers, are the biggest challenges facing dairy farms today).
I also learned that farm net profit typically stood at around 3-4% of the total gross production value. This meant that the labor savings brought on by our solution translated to an incredible increase in net profits: 47% in small farms, 130% in mid-sized farms, and 37% in large farms.
(If you’re wondering why the increase in net profits is highest in mid-sized farms, it’s because of the worker-per-stall ratio).
Now, this made sense. It clicked. The solution could prove to be a crucial advantage in a market with highly fluctuating milk prices. With such small margins, farmers often incur losses, so a solution that can increase net profits by 100% is a must-have by any account.
To make a long story short, we created an investor presentation highlighting the dramatic increase in net profits, among other advantages, not least of which is the gentler treatment of cows.
Our customer raised $1.5M in Round A Investment and will begin commercial production in Q2 2020.
(The picture shows some friendly cows at the farm where the R&D takes place).