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The rational is to expand the business, drive more income and hopefully more profit. There may be a number of reasons behind this demand; increased families to support, an attempt to reduce fixed costs, ‘sweat’ the machinery asset or just pure ambition.
Joint Ventures, Mergers and Acquisitions… it’s not the normal language of UK agriculture. Until now such thoughts may have come under the UK farming industries mantra of ‘diversification’.
The capital required and the return on that capital with the investment in land can become a real game changer, with no immediate financial benefit. In fact, if not planned carefully it may lead to increased short term financial pressure when cash flow is paramount. Also, can we rely on land values to keep increasing at the present rate?
As we head into a less than certain future following the EU Referendum, by all accounts we can only expect reduced financial support from government. It will become increasingly important for UK farming to survive on its own feet… so what’s the answer?
Sorry, there isn’t one! Only a range options.
One option which may suit both you and your business is Added Value. Can the business, or more importantly can you, add value to any of the existing product range you’re currently producing? Investment in getting a higher farm gate price may well be substantially less than buying another 500 acres! It may be that by adding value and getting closer to the consumer it will allow the business the ability and the opportunity to drive more profit.
If the ‘added value’ route is to be followed, then there has to be the absolute burning desire to want to work in that sphere of business, where it becomes vitally important to become both marketing and consumer savvy.
This doesn’t come easily and if the ambition does not burn strong enough in one of the critical disciplines then hire someone who does; concentrate on what you’re good at or best to not start at all, because as we stray outside of the ‘farm gate’ we are faced with a completely new set of challenges.
The dynamic of the business changes, all of a sudden we have to deal with the public, the consumer, the person, who no matter what you think of them, he or she is paying for the product. Due to the location of where we work, as well as changes in culture, farmers can become ‘out of touch’ and if you’re not ‘in touch’ with your customer they are unlikely to want to buy from you!
So, you have decided you have the burning desire and the idea of a product using farm sourced raw materials that can be produced, manufactured and packed, ideally on farm, or even a nearby industrial estate. We now need a ‘story’ to go with it, an explanation of how the product is produced, how it’s made and where it’s come from, in other words the Provenance. Arguably the most important marketing tool available to the artisan producer.
Now the vertical integration process begins to take hold. Inevitably you will become more ‘quality conscious’ of what you’re producing and that discipline must be at the core of what the ‘new business’ is about.
Product consistency, continuity, label and packaging design all become areas that need real attention to detail. Entrepreneurial flair and drive are needed in ‘spades’ to develop the business and sell the product. The enthusiasm you have for your product needs to be transmitted throughout the business, the people working for you and into the ‘market place’. Passion sells, and without a doubt you must have an all-consuming passion for what you do. It
makes no difference if your target market is the local Farmers Market or the supermarket shelf, the pride in your product; its quality, provenance and its presentation can never be overestimated.
From Bird Seed to Cakes; from Cheese to Cold Pressed Oilseed Rape Oil; the options are endless. First of all review what product/raw materials you have available. Consider the facilities that could be used by the new business.
And, super-important, top-of-the-list, ‘numero uno’…. research your market!
You’ve just given birth… live and breathe the new addition to your business portfolio, lavish tender loving care on your new creation and with all that, the business will thrive. Repaying not only your confidence, but also your investment.
Oh by the way, very much like having kids, you’ll probably work harder than you ever have done before, but you will have a fantastic time, be alive with super-optimism and be closer not only to your production, but also your consumers than you ever experienced before.
For further information and advice contact Guy Coggrave tel: 01833 694935 or email: firstname.lastname@example.org
For further information and advice contact:
[team-member name=”Guy Coggrave”]