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The Alpaca Business, A Unique Opportunity
By Mike Safley, Northwest Alpacas

 

People visiting our ranch often ask me if I have a real job — or what I did before I retired. I’ve been in
business for myself ever since I quit college in the middle of my senior year to embark on a home
building career. Over the years, I’ve been involved in the building business, land development, and real
estate brokerage. I’ve owned and operated a hotel, bar, and restaurant business. I’ve never been involved
in a better business than Alpacas.


It is important to understand the difference between a business and an investment. Investments are more
passive assets, such as mutual funds, CDs, real estate, and bonds. While it’s true that Alpacas are the
world’s finest livestock investment, they are also a wonderful business. The concept of Alpacas as a
business opportunity should not be overlooked.


What makes for a great business? One that you would really like to own? The following
characteristics come to mind: high profit margins, a simple operating plan, and as few employees
as possible. Businesses with good cash flow and growth potential are attractive. A unique product
that can’t be reproduced quickly or cheaply gives a business stability. The luxury market provides
lots of opportunity for the right business plan.


A world-wide market provides far more opportunity than a local market. An ideal business requires
as little of your time as possible. In other words, profits should not be contingent on how many
hours you work. Finally, for any business to be good it has to be fun.


All this makes perfect sense. Who wouldn’t enjoy large profits and short work days? But anyone
who has been in business for themselves knows that it’s not always easy. How do Alpacas measure
up as a full time business opportunity?


Alpacas as a business, either full time or part time, enjoy many of the attributes I’ve described. You
can manage an Alpaca ranch with few to no employees. Most ranches in the United States are run
by the owners. No withholding taxes, labor unions, employee lawsuits, sick leave, or vacation time
to be considered. Even the biggest Alpaca operations have only one or two full time employees.


I run our ranch operation, including 200 Alpacas with one employee whom I pay $7.50 per hour.
I do all the marketing and Julie, my wife, handles our public relations and operates her Country
Store. She has one additional employee who helps her in the retail store.


We have plenty of time to attend our four children’s plays, karate tournaments, and baseball
games. We travel regularly. Most of our days are spent at home on the ranch. All of this wouldn’t
be possible if we owned a restaurant or manufacturing plant or were professionals practicing
medicine.


The Alpaca market is national and even international. The Alpaca rancher doesn’t necessarily depend
on his local economy for sales. People travel across the United States and from other countries to buy
Alpacas. Regional Alpaca Fests, auctions, and barn sales occur regularly around the country. Fleece,
made into fine fashions, finds its way to many far off boutiques.


Northwest Alpacas: www.alpacas.com phone: 503 628-3110 fax: 503 628-0210
Alpacas are unique. We don’t have to worry about someone manufacturing low cost copies. There are
only about 2,000,000 Alpacas in the entire world. Alpacas are the rarest of all domestic livestock. Less
than 400 Alpaca ranches exist in the United States — less than 50 Alpaca ranches exist in all of Europe.
Australia, with a population 1/15 that of the U.S., has two or three times more Alpaca ranches than North
America.


The other day someone asked me what I thought the profit margin was in Alpacas. That is a hard number
to calculate. First, consider that when a cria is born you have little or no cost attributable to the animal.
It is cheaper to feed an Alpaca than it is to feed the family dog. Veterinary costs are minimal because
Alpacas rarely get sick. At our ranch, labor costs are less than $20,000 per year and we care for 200
Alpacas. This amounts to $100 per Alpaca per year. If you care for the Alpacas yourself, the out-of-pocket
cost is zero.


No cost of goods, no labor, very few expenses, high sales volume — what a great business concept.
But we all know that any business needs to account for its cost of capital, the owners time, plant and
equipment, etc. Yet even when these factors are taken into account the profit margin in Alpacas is higher
than in most businesses.


Approaching Alpacas as a business opportunity also opens up other related profit centers. Many breeders
with good marketing skills are offering brokerage services. Both Teri Phipps of Colorado and Linda
Livengood of Oregon sell Alpacas regionally on behalf of small breeders. They earn a sales commission
of 10% on the animals they sell and everyone benefits. Many breeders sell stud services or offer
agistment services to add income to their Alpaca operations.


Shirley and Robert Applegate train and halter break Alpacas for a fee. Several Alpaca owners such as
Libby Forstner, Tilly Dorsey, and Jane Wyck, have opened retail stores in conjunction with their ranch
operations. The potential for Alpacas as a business is only limited by your creative imagination.
In summary, the Alpaca business requires little labor, has high profit margins, and produces a rare,
unique end product. The market potential is international in scope. In fact, most of the world has yet to
discover alpacas; few people even know they exist.


This all sounds great, but what about the future, asks the skeptic? How long will this rosy scenario last?
I’ve been in this business over ten years and I believe we’ve only scratched the surface. Australians are
exporting Alpacas to England. Californians are exporting Alpacas to Japan. In the meantime, the U.S.
domestic economy, the world’s largest by any account, has barely been exposed to Alpacas.
Who do you know that wouldn’t like to retire on ten acres in the country and raise their kids free from
the hassles of urban America? Do you know many 50 year old doctors that wouldn’t like a career
change, freedom from long hours, and the threat of law suits? How many women do you know who
would like to stay home and raise their children, but can’t afford to quit their job because raising a family
today requires two incomes?


The market for Alpacas as a business opportunity is easily defined. All we need to do is look at who is
already participating. Retired, or soon to be retired, couples are attracted to Alpacas. Men and women
looking for a career change find the Alpaca business alluring. Women are often the prime movers
involved in a family’s Alpaca venture.


In fact, Alpacas may be the number one business opportunity for women in America today. Many of the
skills required to succeed in the Alpacas business are second nature to women, including fashion sense
and sales skills. They also understand the birthing process and nurturing the young cria. Women are
perfectly suited for overseeing the husbandry of Alpacas, just as the Quecha women have done in South
America for centuries.


If we just considered the female half of the U.S. population as potential Alpaca business owners, there
will be a long future for our industry. When you look around the Alpacas business, you’ll find many of
the herds run by women. Men, of course, also enjoy Alpacas. The fact is, everyone in the family loves
owning Alpacas and this is a central reason why this business will continue to grow and prosper for many
years.

 

The Alpaca business — what a concept!

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Paca Fact of the Day

Alpacas are herd animals and are instinctively gregarious, as are other domestic livestock. They obtain security and contentment from having at least one other alpaca for company.

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