Selling on consignment

[ebliese]

I've got an opportunity here to sell my syrup on consignment through a local coffee shop. 70% me/30% them split which seems pretty good. Better than 50/50 or 60/40. The coffee shop is all about local stuff (they have a few other products made locally they sell on consignment). The owners are nice and when talking to them about the syrup, they presented me with the idea of selling on consignment. The shop seems to get a good deal of business. This would be a way to get our syrup out there a little more and also (hopefully) sell the remaining before the end of the year. We've sold at some farmers' markets this year as well as to friends and we have 5 gallons left of the 23.5 we made this year.

Anyone have any thoughts/advice/tips?

[TapTapTap]

Put it in writing with both parties signing the agreement. Then have them sign for all product delivered to their store. Make them liable in the agreement for all product not on their shelves. Also give them payment terms for product sold.

BTW, do you have product liability insurance?

Ken

[mainebackswoodssyrup]

Check your state laws for selling syrup. In Maine, it's a little more for your license to include selling as a "vendor" which means selling somewhere other than from the sugar shack. Each state has its own set of laws for selling a product and some are worse than others. Maine is pretty easy. Michigan may be entirely different.

[maple flats]

Know your state's laws and get product liability insurance, I have it, quite low cost. If the cost sounds too high you can't afford to sell syrup. Even selling from your sugarhouse or home you should still have liability insurance. Just 1 law suit, no matter if it's not any fault of yours, you will be out thousands of dollars defending yourself.

[TapTapTap]

You should also consider forming a limited liability corporation (LLC) to protect your personal assets from risk of a product liability case. Remember that insurance only covers you to the policy limits which might not be enough. And as Dave indicated, you should be concerned about product liability even when selling out of your sugarhouse. In fact, having consumers in your sugarhouse also creates a general liability exposure which you would likely have coverage as part of a typical insurance package.

Ken

[Andy VT]

So, on the liability insurance question, specifically what companies and policies are you all using for your sugaring operation? The smaller your operation, the more interested I am in your answer (I'm planning to ramp up to about 30 quarts of syrup this year, up from my previous record of 11 quarts, so, I'm pretty small!).

Also, what do I need to actually be legal to sell? For me, its purely door to door and neighbor to neighbor. Not even out of a sugarhouse. Anything besides properly concentrated and hot-packed syrup? I have searched the Vermont agriculture webpages as best I could and didn't find anything that suggested I'd need some kind of license to sell, but sometimes I hear rumors of such things, including within this thread. I'm more of an ask-forgiveness-when-needed type of guy in all things I do, but don't want to blatently disregard anything.

Andy

[TapTapTap]

So, on the liability insurance question, specifically what companies and policies are you all using for your sugaring operation? The smaller your operation, the more interested I am in your answer (I'm planning to ramp up to about 30 quarts of syrup this year, up from my previous record of 11 quarts, so, I'm pretty small!).

Also, what do I need to actually be legal to sell? For me, its purely door to door and neighbor to neighbor. Not even out of a sugarhouse. Anything besides properly concentrated and hot-packed syrup? I have searched the Vermont agriculture webpages as best I could and didn't find anything that suggested I'd need some kind of license to sell, but sometimes I hear rumors of such things, including within this thread. I'm more of an ask-forgiveness-when-needed type of guy in all things I do, but don't want to blatently disregard anything.

Andy


Andy,
That's a good question for an insurance agent but I doubt you'll find any reasonable cost for insurance that will be justified on just 30 quarts of sales. Our policy is up over $1,200 but it covers quite a lot.
ken

[maple flats]

My insurance is with Farm Family. I have $1,000,000 liability coverage. It also covers me on my property, and I have a u-pick blueberry operation, 4.75 acres, that's covered too.
I sell about 200 gal of syrup a year, plus about 30 gal of bourbon barrel aged syrup, then the blueberries ($8,000- $10,000 a year)
You better ramp up a lot of forget selling any syrup, 30 qts at? wouldn't cover the policy. Liability insurance is rather cheap, but not free.

[Andy VT]

Liability insurance is rather cheap, but not free.
How cheap are we talking?
I'm going to lose money no matter what I do (other than quitting the hobby); I've made peace with that.
But refraining from selling is not among the options I'm considering. The worst that can happen is my life and the lives of my family being completely destroyed. That will happen soon anyway. In 40 short years according to my life expectancy. Though I refuse to reveal my age. :lol:
All that said, I'm curious about all options. I'll ask my home insurance company too, and other folks with hobby-sized sales.

[TapTapTap]

How cheap are we talking?
I'm going to lose money no matter what I do (other than quitting the hobby); I've made peace with that.
But refraining from selling is not among the options I'm considering. The worst that can happen is my life and the lives of my family being completely destroyed. That will happen soon anyway. In 40 short years according to my life expectancy. Though I refuse to reveal my age. :lol:
All that said, I'm curious about all options. I'll ask my home insurance company too, and other folks with hobby-sized sales.

Andy -

I'm not exactly sure how it works but the question I would ask the insurance agent is whether home owner's covers you if it is strictly a hobby and you don't sell product - but just give it as gifts. I would also look at the applicable sections of your policy so you know exactly what the exclusions are.

I'm surprised we haven't heard from more hobby sugar makers on this topic.

Ken

[minehart gap]

ebliese, back to your original question. I think that you should also include a minimum price that the coffee shop is allowed to sell the syrup. In that minimum price, be sure that your 70% is enough to cover the cost for you to make the syrup and some profit. No point in it if you will loose money in the end.

Or, suggest for the coffee shop to start making and selling maple latte's using your syrup and sell it directly to them.

[ebliese]

In answer to questions that have arisen:
We are an LLC.
We do not have product liability insurance but it certainly is something for us to consider.
In Michigan, if your gross sales are under $15,001 you are exempt from licensure. Maple syrup producers are not limited to direct, face-to-face sales to consumers. You still must label your products in accord with the law.

We do not sell out of our sugarhouse, or at least that hasn't happened yet. All of our sales have been at Farmers' Markets or through our google docs order form.

A written agreement with terms is a very good idea and we are working on a draft.

Thanks for the suggestions!

[ToadHill]

My advice is to avoid consignment if you can. In my experience consignment is usually reserved for businesses that can't afford to buy your products wholesale and there's usually a reason for that. We've been selling syrup wholesale for years and of the 6 times I tried consignment I got burned on 5 of them. They were shoestring operations that all went out of business and owed me money. I would look for other outlets for your products.

[Sugar Bear]

I will give you 100 to 1 odds that your own instincts on this frontier are your best bet.

I will also bet you are probably good at a lot of things even judging character.

If it works out its a outlet, if not its a small loss and you can still ask them to pay for what has been exchanged or you will leave them google reviews for anything they do the rest of their lives.

I will bet that will work.

[ToadHill]

"you can still ask them to pay for what has been exchanged or you will leave them google reviews for anything they do the rest of their lives."

It's hard to leave Google reviews for a business that closes. The ones I had experience with were probably losing money and owed more people than just me. None of them ever made an effort to square up with me. They just closed the doors and left. There's usually a reason why they wanted to do consignment in the first place. It's generally because they can't afford to purchase your products. That should be a warning sign.

[TapTapTap]

I will give you 100 to 1 odds that your own instincts on this frontier are your best bet.

I will also bet you are probably good at a lot of things even judging character.

If it works out its a outlet, if not its a small loss and you can still ask them to pay for what has been exchanged or you will leave them google reviews for anything they do the rest of their lives.

I will bet that will work.

Yup, you can't go wrong. Place a $10 bet with sugarbear at the 100 to 1 odds and if things go bad then go collect your $1000. Better than insurance.

[Sugar Bear]

Yup, you can't go wrong. Place a $10 bet with sugarbear at the 100 to 1 odds and if things go bad then go collect your $1000. Better than insurance.

Ken

Yup ...Good idea.

But you are asking him to perhaps be the person he is trying to avoid.

I am trying to assure him that he is not likely to contact that person.

In my experience of consignment in New York, Connecticut and Vermont, with my hand made products selling on consignment, I have sold through 11 different consignors that I can count off the top of my head. All but 1 have worked out well. And ironically the one from Vermont was the only one that did not work out well. After she sold my woodwork and would not pay my portion, I told her that she could keep the money if she needed it for food and would agree not to buy alcohol, tobacco or recreational drugs with it. I sincerely doubt she respected my request.

Based on the OP's tap count I don't think he is bringing in 6000 gallons of syrup to a coffee shop.

So my say is ...... go with your instincts and give it a try. If it does not work out you lose a little money, if does you sell your syrup. I like his chances.

Don't worry, he is not going to put your Vermont Made Maple syrup out of business.

Although that consignment shop in VT did go out of business. Then she came back for a while and then back out.

And I thought there was only good hard working honest people in Vermont like yourself!

Who wooda thunk it!