Key things to consider when diversifying
When it comes to setting up a new business, perhaps as a supplement to your existing farming, there are many considerations that need to be made.
Being ‘entrepreneurial’ or ‘innovative’ requires you to be a pioneer, to be a front runner, to be progressive, inventive, and creative – and above all you need to have astute business skills.
The first consideration when you’re thinking of launching a new enterprise is to ask yourself, what is the problem that we are trying to achieve and what is the market opportunity? Does it relate to people (social performance), the planet (environmental performance or profit (economic performance)?
By starting with your end customer, you can work backwards to develop the solution, business plan and coordinate the correct routes to market.
Diversification is becoming a predominant and viable option among many farmers and landowners. It makes commercial sense to tap into another revenue stream and look at alternative uses for your farmland to make money.
You may consider diversification through skills such as becoming a tree surgeon, engaging in public speaking or lecturing opportunities to help educate the next generation, or even setting up a dog training facility on your farm. Technology is a growing area of diversification ,with the agritech sector undergoing an exciting transformation.
Many new technologies are being developed to expand food production while reducing the impact on the environment. Diversification can also exist by adding value to produce; investing in new machinery to develop artisan food and drink – cheese, ice cream, butter or perhaps butchery, distillery or even opening up a farm café.
Renovating redundant farm buildings is another route, such as opening stables, kennels or operating a conference centre for corporate meetings. Leisure and tourism is a strong and thriving aspect.
Whatever aspect of diversification you are considering, the principles of business are fundamental. Pin down the three core basic business transactions – sales, operating costs, and capital expenditure. From here develop a pricing strategy derived from one or a combination of; cost plus mark-up, market value, competition, talking to customers and your own gut feel. In the incubation stage of business growth, it is important that you explore, validate, and then build the business ready for launch, growth and marketing.
Growth accelerators and incubation hubs such as Farm491 can help you to clearly define your business proposition and connect you to relevant funding, expert guidance and mentoring.
Dr Ali Hadavizadeh, Programme Manager, Farm491
