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Complete Article PDF (378 KB)

Business Planning

The Alpaca Business Planner

By Mike Safley

First and foremost, I think prospective alpaca breeders should realize that alpacas are a business, not an investment. Investments have traditionally been thought of as financial stocks, bonds, gold, silver, and real estate. All of these things can be owned passively, and when need be, you can sell them by calling your broker and asking him to liquidate the asset on your behalf.

Alpacas are a business opportunity. They need to be fed, cleaned up after, shorn, housed, and marketed before you can profit from them. And, you need to pay the bills before you can determine your profit. While I may be stating the obvious, this is an important concept to understand. There is no better tool to help make this clear than a business plan.

We have created this business planning tool to help you through all of the decisions that a prudent person would make prior to committing their hard-earned capital to start an alpaca business. First, it is important to choose your alpaca marketing niche and decide how much money that you would like to make. You will also need to make decisions about whether you are going to treat alpacas as a business or hobby, what business entity to use, the tax consequences of your investment, the initial start-up costs, ongoing expenses, and decisions about whether to pay cash or to buy your alpacas on terms.

If you would like input on all of these decisions, we recommend that you attend our seminar, "How to Buy Breed, and Succeed in the Alpaca Business". Once you have made these decisions, we have created the business planning calculator to assist you in creating a financial plan. You can fill out the forms that accompany this article by clicking "Proceed" under the Alpaca Business Planner heading on the right, and submit them to my associate, Fred Kraft. He will work with you to produce your personal version of the 10-year plan that you will find later in this text.

Choose Your Alpaca Market Niche

Alpacas came in two kinds, 85 colors, many quality levels, young, old, and are priced from inexpensive to expensive. There is a perfect alpaca for everyone no matter what their preference. This is both a delight and a dilemma.

One of the most critical decisions an aspiring alpaca breeder can make is what kind of alpacas to raise. The first choice that needs to be made is; will you breed suris, huacayas, or both? If you breed both, you must realize that eventually you will need twice as many herdsires. It also means that you will probably have a larger herd.

To understand the differences between suris and huacayas you may want to read,"The Ideal Alpaca: Suri and Huacaya". Both breeds tend to cost, on average, about the same price. The main difference is the type of fleece they display. In any case, choosing which breed to buy is often a threshold decision. I recommend you buy what stirs your emotions.

Beyond the breed you decide on, you should consider what colors you want to breed, whether you want to breed show stock, pets, or production females. All these categories have a price point.

The lower the average price of your alpacas, the larger the market will be. As my dad used to say, "God made more poor people than he did rich ones." The key issue to consider on price is your ability to sell the females' cria that you produce for the same price that you paid for the mother.

In any case, you should think carefully about what type and price of alpaca you want to raise because this decision will impact your budget and your marketing approach. These decisions are every bit as important as how many alpacas to buy and what barn to build.

(Please note that this text is a only small excerpt of Mike's article about alpaca business planning. The full article is available as a PDF document at the top of this page.)

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