In this post we're going to explore some of the key strategies to planning for your agricultural business' success.Whether you're a small market garden growing vegetables or a large agriculture business exporting livestock, when it comes to growing a profitable and sustainable agriculture business planning is key to your success.
Admittedly business planning for your farming business will require some time and effort upfront, which can often turn people off, however, that time is well spent and will usually result in:
• A massive saving of time and money for you down the track.
• The luxury of planning for and securing finance for your farming business' growth.
• The knowledge of being able to identify your business strengths, weaknesses, opportunities and threats such as seasonal changes, changes in your industry and competitors.
• And the peace of mind and security of knowing you have a plan in place for your agricultural business instead of hoping for the best.
At this stage I have no idea of whether you are starting an agriculture business, or have been operating or managing one for some time.
So irrespective of where you are in your farming business, here are my keys to planning for success when it comes to growing your farming or agricultural business. Not every point will be relevant to your business but pick the three most relevant and put those into action to start seeing results.
1. Do you have a farming business plan?
If the answer is yes, fantastic! You are underway. If you do not have a business plan for your agricultural business, this is step 1.
Apart from including points such as market research, your businesses vision, mission and goals and a marketing plan, other key points to think about, identify and answer include but are not limited to:
• What is your operational strategy?
• How does your farming business operate?
• Where do you want your agricultural business to go, or what is your vision?
• Identifying in what areas there are opportunities for you to grow.
• And what your point of difference is. Meaning what does your farming business have that your competition does not? An example could be that your products are organically farmed and produced.
2. What are your top 3 priorities for growing your agriculture business?
When it comes to business planning for any business - irrespective of its size and industry, be it agricultural, manufacturing, commercial or professional - it is easy to become overwhelmed and end up with too many goals which results in many people feeling overwhelmed and doing nothing.
The best way to move forward and achieve things is to pick on the top three goals you want to achieve in your agricultural business. Then focus on planning and taking action on those only in a said period of time. This keeps it manageable, gives you clarity and direction and purpose of what you're doing, where you are going and when you want to achieve those goals.
3. Do you have a key point of difference, Unique Selling Proposition (USP) or Value Proposition (VP)?
Much like your personality and fingerprints that are unique to you, in almost any business there is usually something that makes them unique or different from their competitors. You need to zero in, discover what that is for your business and use it in your marketing and other communications.
Of course, this is easier said than done because many business owners, irrespective of their industry, are too close. Working in their business & knowing it so intimately can make it difficult to determine what, if anything, makes their product or service different.
A great solution to finding out what your key point of difference is for your farming business would be to ask previous and existing customers.
They'll give it to you straight about what they think makes you different and from there you can cherry pick those nuggets of gold to create a key point of difference.
4. Everything that's tracked and measured improves
By tracking, measuring and knowing certain metrics in your agricultural business such as:
• Product Yields and Margins
• Equity to Asset Ratio
• Debt Coverage Ratio
• Working Capital
• Cash Flow
• And other metrics for growth so you'll start to get a picture of what drives the growth of your business.
All effective business plans will set targets based on key measures. If you want improve a particular results against a measure you will have to put into place plans and actions and then monitor the results to make sure they are going in the right direction.
Of course, the above examples above are generic in nature, and the exact metrics to track will relate to your specific farming business, so if you need further advice in this matter please feel free to contact me using the details at the bottom of this article.
5. Are there any relationships you can develop to get to the next level?
Whether you call it a strategic partnership, relationship, joint venture or similar, at the end of the day it all means the same thing. Have a think about what relationships you need to develop to grow your farming business. These could be with suppliers, clients, competitors who have a non-related product that compliments yours or vendors you can build relationships and work with to grow and improve your circle of influence, brand and sales.
For many farmers, building joint ventures or strategic relationships with others in their industry is a golden opportunity that not enough take advantage of which is slowing their growth and profitability.
6. Multiple income streams
Are there any new markets, products or services you can tap into to create multiple income streams for your farming or agricultural business?
The benefits of having more than one income stream for your farming operation are many.
• For example, if you have existing customers who already know and trust you, and have done business with you before the likelihood that they'll purchase a new product from you is increased tenfold.
• Offering new product to existing customers is also cheaper as opposed to spending money on marketing to get a new customer.
• Another benefit is being that most agricultural business are seasonal and you have other products to sell in those slow times, those sales will help prop up your cash flow.
Plus… use people & services with experience
While there is no shortage of information about agriculture business planning on the Internet, please be careful as it is generic in nature and your needs and outcomes will differ from others.
Based on our many years of experience serving the farming and agricultural industry, it is always best to seek advice from agricultural specialists, whether that advice relates to taxation, finance or legal matters. This way you can ensure you are getting tailored advice based on your own individual circumstance before making any important decisions that impact your farm and family's future.
There's no doubt that there are many advantages to taking the time to create and review a rural farming business plan at least every quarter. Like anything new, knowing where to start and how to execute it is usually the hardest step.
Also while there are many other things to consider in regards to planning for your agricultural business' success, any plan is better than no plan at all.
Want more planning tips or advice for successfully growing your farming or agriculture business?
Have a question about building a business plan or strategic planning for your rural farm or agriculture business?
We've been helping farmers plan for their future and turn a profit for over 40 years so for more information please contact me and the team at Murray Nankivell at email@example.com or by phoning me on (08) 8535 5999 for more information about agricultural planning.
About the Author - Heath Nankivell