Are you thinking of a business to invest in; or looking for a business with a high rate of return on investment; or searching for a business that is not likely going to crumble due to a glut in the market? Then you must consider being an agricultural entrepreneur.
Indeed, you should begin to think about investing in agriculture. This is because apart from the fact that building a business around agriculture is very profitable, modern technologies have made the practice very simple and predictable.
Evidence also clearly shows that besides being among the businesses with the highest rate of return on investment, agriculture is the least likely to fail of all the businesses you can think of. Of course, that is if you know how to go about running your agro-business.
The reason for this is that the world’s population keeps growing by the day. And that means more mouths to feed. Besides, whereas not everybody would afford the luxury that other businesses offer, everyone eats (to live), and so directly depends on agriculture.
Therefore, by venturing into agriculture, you’re practically targeting all of the human population, potentially, the largest conceivable market on earth.
This explains why food prices keep soaring by the day, even during recessions when the prices of other items plummet.
How do you build a profitable business around agriculture and become a world-class agricultural entrepreneur?
Identify a Need
Don’t take coals to Newcastle, so says a popular cliché. Carry out some research and find out what is in need in your society.
As a startup that has limited capacity to transport your products over long distances, there is no need producing an item in an area where it is not going to sell.
For example, don’t invest in the production of swine in cultures where it is prohibited. Instead, find out what residents of your area of interest go out to buy and think of how to channel those outflows to your business.
Identify Areas Where you can Enjoy some Competitive Advantage
If you are a farmer, look out for an area that produces high yield; an area whose climate allows for the best yield for your targeted crop or livestock.
It can’t be overstressed that even the best crop and animal breeds will perform very poorly if the climate is not right.
Develop a Business Plan
As a start-up, a business plan is a very essential document that you must have.
Apart from being the tool with which you’ll be able to secure funding for your business, a business plan gives the entrepreneur guidance and direction in executing the business development strategies.
A clear plan sets targets, achievement modalities and evaluation criteria as well as enables the entrepreneur to adapt the business to changing realities.
In the course of preparing the plan, you must develop a business strategy which will be clearly spelt out in your business model canvass.
In developing a strategy, you must identify the part of the agricultural value chain you intend to venture into. Is it crop farming or livestock rearing?
Or do you want to venture into agricultural processing where you get inputs from the farmers and process them into finished or semi-finished products?
You can also choose to specialize in storage, transportation or marketing. For any option you choose, remember, it is very important to have a focus especially as a startup.
When you try to spread your tentacles across the entire value chain, you’re likely going to run out of resources to develop your business even to the point of making money (which is even the aim of business).
It can’t be stressed enough that a jack of all trade is master of none. Even big multinational corporations have realized this and are aggressively outsourcing functions that are not within their area of competence. You should toe that line too.
Seek Mentorship From Experienced Agricultural Entrepreneurs
There is almost no area of agriculture that you might want to venture into that has never been explored.
Find out about those who’ve been through that line of business before and learn from their experiences. Like they say, a wise man learns not from his mistakes, but from the mistakes of others.
Writing your business plan brings you so much joy because you assume that your business will be the best thing since sliced bread. But the reality is almost always the opposite.
So, connect with mentors in your field and learn more about your business. That way, you would have ready solutions for all the challenges you meet in the field.
Join Farmer Associations in your Area
This is very important for a start-up because such an association provides free access to guidance and mentoring from those who have already been in the business before you.
Besides, membership of such associations will enable you to easily secure loans from financial institutions to finance your business as well as participate in agricultural intervention programmes executed by the government and other development partners.
Again, membership of farmer associations will expose you to market opportunities for your products; high profiled buyers; suppliers of high quality agricultural inputs who can offer amazing discounts, warranties and credit windows.
Besides, as a cluster, agro-businesses can collectively acquire capital intensive machinery and other productivity enhancement tools. This will favour your business that most probably has very limited resources.
Therefore, to build and run a successful agricultural startup, membership of small farmer groups and associations is almost not an option.
Diversify your Business Portfolio
This applies most especially for agro-businesses that have operated for some time and acquired enough capital to finance a whole new project.
This is important because diversification is indeed a whole new project and an existing business is necessary to sustainably fund this project.
For example, a business involved in cassava cultivation might decide to diversify into processing the cassava tubers into cassava flour in order to increase the value and benefit more from the value chain.
This diversification plan is essential as the business grows, but must be properly managed to ensure that overheads accruing from the diversification exercise does not ruin the anticipated profits.
Outsource where Necessary
Like was mentioned before, a jack of all trade remains a master of none. To succeed in your business, you must learn to strategically outsource functions that are not your area of competence.
For instance, if you have a rice processing mill, then functions like transportation, marketing, management of online presence, healthcare for workers, sanitation etc. which are not your business’ core competence can be competitively outsourced to competent organizations.
This way, you reduce overheads and ensure that resources are maximally channeled to the core productive functions.
Learn to use Relevant Business Development Tools
Nowadays, agriculture is not as risky as it used to be in the past because of the presence of very powerful and innovative technologies.
ICT based tools exist to guide farmers on the choices they make regarding their businesses.
For instance, mobile apps exist which allow farmers to learn about future weather conditions and obtain early warning signals on weather events that could be detrimental to their investments.
The e-wallet system which is a phone based solution is connecting many farmers to high yielding agricultural inputs and several productivity enhancement technologies.
social media tools are enabling farmers access wider markets, network of suppliers as well as research outcomes that can positively impact their approach to agriculture.
As an agricultural entrepreneur, why not get used to these technologies and deploy them in your business operations. These highly helpful mobile apps are available for free download on Android, Apple and Windows App stores.
Also, on Entrepreneurs’ Square, there are a number of very important links to many other tools as well as government and private institutions that can assist you in building your business. Take advantage of these and make yourself a successful agricultural entrepreneur.
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Good luck on your entrepreneurial journey.