There were more failures in farming during the 1980s than at any time since the 1930s.To avoid failure in farming there are various things one has to look at. These includes but are not limited to the following;
• Treat farming as a lifestyle and not as business
You know, a lot of people are drawn to farming because they enjoy the lifestyle idea. They want to plant or harvest food. Or they have a set of animals, and they want to enjoy their days in the sunlight, with their hands making everything, and out on the ground.
And that’s brilliant. But is that how you will handle an opportunity for a business? Is that your chance to pitch to an investor or a bank? …you want to go work in the dirt with your hands and get any animals? Of course not! An approach to business requires first defining the demand. And this is really different from what most farmers do, who only start because they want things to grow. Or manufacture products such as soap, spices, and cheese.
So they approach advertisement and selling as an afterthought. Now, that’s a misunderstanding, as I’ve said several times. A corporation is a company because it has clients who order from it. So you always start with the market in mind.
There is an excellent “Growing for Market” publication for small farmers and the title means exactly that… generates what the market is going to want and that you can sell at an attractive profit margin. That means concentrating on crops and items of high value.
• Avoid choosing low-end profit streams
The math just doesn’t fit in these situations, since the farmer has either picked a low margin commodity or is targeting a rather cost-conscious customer, and though Wal-Mart can pull off the tactic… at least before they are buried by Amazon… this is only because they have reached immense size, productivity and integration of the supply chain.
These are not advantages that you are able to obtain as a small farmer. But it’s very difficult to make it on the price dimension in small-scale farming because, let’s be frank here, there’s no market potential to sell to people who don’t have cash.
Thus, target openings for industries that have disposable income. And pick farm companies that do not have such a low entry barrier. And it won’t be impossible for anyone to mimic if you choose something that’s easy and inexpensive to get into, even if you reach some level of performance. But it is important for any small company to choose a business strategy that reaches clients who have the means and ability to buy what you sell, based on high profit margin businesses.
• Accounting very Necessary
Look… you have to wear a lot of hats as a peasant… or as an entrepreneur. We all realize that. And sometimes it can be overwhelming times. You’re better qualified to employ an accountant or have an accounting experience, but let’s face it. Many tiny agricultural firms don’t.
For periodic assistance, they may depend on a CPA… including annual taxation, but the day-to-day accounting falls into their own hands. They don’t know what to do, too many, but accounting is just as much an afterthought as it is marketing. They do not set up proper processes to calculate anything and distribute overhead or fixed costs properly.
They just buy the feed, buy the fertilizer, get to work, go to the store, and at the end of the month, they hope they have money. You know that is real! So the farmpreneur doesn’t know the exact manufacturing expense is, what the actual full-allocated gross margins are by product line, by consumer category, by business strategy, and so on. They don’t know where more investments can be made and where they can scale down.
So there are weak numbers. And you are flying blind with poor numbers or no numbers. But if you got an accounting analysis pushed in front of you that revealed how much money you were wasting with all the effort you invested in… And how much you might gain if you worked on some company instead… you’d make the move in a hurry. And that is what you can expect from good, solid accounting.
• Picking the Best Crop
When selecting a cropping strategy for your farm, there are several variables to remember. Some of these are biochemical, some are ecological, and some have to do with the expertise and facilities needed for development to be efficient.
Many small farmers begin with annual plants that are fast growing and then scale up to more complex perennial systems. It is important to learn what grows well in your environment and soil, and can also require a trial and error process.
The crop decisions you make will also be influenced by your marketing plan. Using company budgets to consider the viability of each product you grow can be an invaluable guide to help you pick the best suited crops. For the business planning process, enterprise budgeting is often highly relevant, which will help you obtain the funding you need to develop a successful farm business.
It is also useful, much like a stock portfolio, to diversify the variety of crops you cultivate on your farm. If your main crop takes time to mature, diversification is particularly necessary. Planting a number of crops is like a scheme of insurance that hedges against tragic loss. If one crop fails us, several others are likely to be successful. It will also be a way to figure out what is right for you to grow, what you want to grow, which crops are easiest to sell and which crops are more lucrative.
The secret to knowing what is and isn’t working for you, and to optimizing your operation year after year, is strong documentation. You will need to keep a list of all the manufacturing practices so that you can stop constantly making the same errors.
Farming is dynamic and responsibilities are continually changing, so don’t make the mistake of thinking that what you have done in the past will still be remembered in the future. In order to learn how to create farm viability, financial reporting of sales and expenditures is also important. It would help you to discover inefficiencies that eat into your profit margin by tracking your purchases.
• Inadequate Research
This is not just about clicking Google any time you come across a new idea for credible services (although this is obviously very important, too). You must practice due diligence as a starting farmer to scrutinize and analyze every part of your business. I recall a story about a first-time poultry farmer who died within the first two months of getting at least 80% of his freshly purchased chicks.
As he carefully learned so he could comprehend the best methods in the field, this farmer was puzzled. He had good equipment and instruments. He used high quality feed, too. Since visiting the breeding farm from which he procured his chickens, the guy just understood what the problem was. He found the same cocks were used for year-in, year-out breeding. The chicks were, in short, a result of unchecked inbreeding.
This has shifted to a poorer breed that is more vulnerable to illnesses. If he had done more research on the farm in question, he would have stopped spending a lot of money. Also, study does not necessarily mean resorting to old-school books and internet services.
Sometimes, it pays to meet and follow the counsel of experienced farmers. With their knowledge and abundance of experience, you will certainly gain a lot. Only make it a point to go to a farmer you can invest in.
• Getting off with very little capital
While farms are among the cheapest companies to start with, many newcomers seem to make the agricultural mistake of getting too little money. Countless articles saying that for less than $1000 you can start your own farm might be too much to blame. It’s crucial not to be fooled, as a lot of start-up and emergency costs are involved with starting up a farm.
• Expanding So fast
Particularly for farming beginners, bigger is not always better. We know that growing your farm as quickly as you can be enticing. However, doing so is a recipe for disaster without being a hundred percent ready for it. Prioritize decent growth over bigger growth.
If you have not yet optimized every single square inch of your farm, a wise decision will be to delay plans for expansion. This helps you to avoid possible errors in farming that could kill your business. To cover emergencies such as animal disease, damaged plants, and unexpected natural phenomena, you have to have enough currency. You may try to apply for farm loans if you are uncertain about your ability to fund your farm.
• Focusing on so many enterprise at a time
We all know that there are distinct kinds of goods for the most sustainable and profitable farms. That way, if, say, the demand for leafy greens does not do so well over a certain time, there are sales sources from items such as milk and fruit to back them up.
However, with only a single specialty, the most popular multi-product farms likely started out. And they grew to include distinct companies with the superiority of the goods they currently have. With that said, take it from us and select only one company to begin with. It can quickly get frustrating to try to do so many things at a time. It is critical that you deliver consistent outcomes in your first enterprise before adding another enterprise.
• Not having the Right Equipment
When you first start out, there’s nothing wrong with being resourceful and employing on-the-cheap solutions. It’s understandably hard to fork out big bucks for proper machinery if you consider farming as just a hobby. However, once you move into farming as a corporation, it is an entirely different matter.
Spreading seeds by hand instead of buying a decent seedling, for example, will have a huge effect on the health of your crops. Instead of having a commercial cooler, opting for a bunch of residential refrigerators will even harm the efficiency of your plant.
• No Corporate Strategy
It is important to know what the company looks like on paper when you start any venture, how much it costs to start, what the competition looks like, how much it can profit year after year, and so on. The development of a business strategy will improve your chances of success as a farm dramatically.
• Bogged Down In Ideology
Stone said, to begin with, that some farmers become too concerned with their philosophies. For instance, modern farmers, especially urban and sustainable farmers, may become too concerned with environmental, economic or political big-world issues.
Stone, meanwhile, says they miss small chances in front of them and may get disappointed because there is not enough global influence on their local acts. Such philosophies may prohibit small farmers from working with those who may have a different point of view or strategy, Stone says, almost as poor. But in helping a new farmer get his or her operation underway, these individuals can be very important.
• All that matters to you is money.
It’s marvelous to have money. You can explore the world with money and enjoy life. In order to think on your behalf, you can also buy people. One thing is for sure, though, that capital will never replace the ideas and imagination needed to run a good agribusiness. When the primary inspiration comes from material benefit rather than a love for farming itself, it’s much worse.
• You haven’t even got a market!
When it comes to growing their fresh produce successfully and having loads and tons of harvest just to find they don’t have a demand, most farmers are brilliant. Unfortunately, as humid as it can look, that’s the case for most agribusiness entrepreneurs. Give up your hopes of being an accomplished farmer before you waste more money if you don’t have a demand that is big enough for that matter.
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