Establishing a successful small horticulture enterprise: Part 1

Having the courage to try something different and ‘just doing it’ cannot be underestimated. Many people do not ever develop their ideas because they never get started. This may be due to lack of drive, lack of confidence or just not knowing how to start.

Success in any new enterprise is possible provided you do your research first, plan carefully and are prepared to put in the hard work required.

The first steps involve choosing the right idea or business for you and then conducting sufficient research to ensure that your idea is feasible.

What suits you?

Have realistic expectations

Many horticultural crops require intensive management and a significant investment of time and energy. It is important to be aware of your motivation for establishing a horticultural enterprise.

If the primary motivation is to make money, potential business operators need to be aware that it may take several years for an enterprise to start producing a profit and some crops (such as grapes, olives and apples) will require significant capital up-front to install infrastructure such as trellising and irrigation systems.

A horticultural enterprise can provide a nice lifestyle option (who doesn’t like the thought of gazing over fields of lavender or grape vines), however, as mentioned before many crops will require a significant investment of time, energy and money.

Most high value horticultural crops are harvested by hand (requiring a significant labour input) and will also require regular on-going management such as pruning, pest and disease control, and irrigation. Thus, the vines might be nice to look at, but they will also be quite demanding.

Do you have a passion for what you plan to do? People tend to be most successful when they are doing something they really enjoy. A lot of small businesses stem from people’s hobbies and although diversification within an existing farm may be slightly different it will still be important that you have an interest and passion for your new enterprise.

A successful horticulturist will know and understand the primary reasons for establishing their enterprise and will have chosen a crop and business structure that fits with their lifestyle and personal objectives.

Have the right skills

Do you know how to grow your product? – Horticultural crops usually require intensive management. It will be important to know for example:

  • What the likely irrigation and nutrition requirements are?
  • What are the soil management requirements, how can you keep your soil healthy?
  • What are the rotation requirements, how often can you grow the same crop on the same land, what break or alternative crops are available, could you get an income from alternative crops?
  • What are the potential pests and diseases and how to manage these?
  • How will you control weeds? Weed control can be one of the highest costs and can cause substantial crop losses.
  • The right varietal selection for particular times of year, climate, soils or markets may make use of early or late season high prices.
  • All horticultural crops need to be handled correctly after harvest; do you know the optimum harvest maturity, cooling, drying, packaging and storage requirements, will you need specialised grading and packaging equipment or forklifts?
  • Do you understand the requirements for and costs of machinery, equipment and buildings; could you share with others? Mechanisation has often saved emerging horticultural businesses.
  • If you are thinking of minimum or complete processing, do you understand food safety requirements?
  • Are you are good communicator, are you good in dealing with people?

It is important to communicate well and relate to people to successfully market your product. You will most likely need to employ staff and it will be vital to select the right people and manage them well; you will need to understand Industrial Relations and Occupational Health and Safety regulations that apply to your industry.

Marketing will require promotional material and a website, IT now is an important part of each business; can you access these skills?

Can you access that expertise locally if you don’t have it yourself? – it may not be necessary to have these skills yourself if you can source assistance locally from a horticultural advisor who can assist you with management of the crop. Seeking assistance in other areas of the business such as marketing or finance can be just as important to ensuring success, if you do not possess skills in these areas yourself. Is there an industry organisation you can join? Is there are research facility nearby that can assist?

Don’t be afraid to seek out technical, marketing or financing assistance or training courses, if you do not posses skills in vthese areas.

Have a long term vision

Having a vision of what you want to achieve is important not only from a planning point of view, but also for motivation. Thinking big does not mean you have to start big. Most successful enterprises start in a small way, especially if they are developing a brand new idea. However providing your enterprise with room to grow is important especially when planning infrastructure requirements.

Having sufficient land to expand, resources to harvest and process larger crops and/or additional storage requirements may be important considerations. If the business expands quickly and/or in a different direction you may have to keep changing things to cater for increasing production or visitors if you did not envisage the potential scale of the operation at the start.

Remember, a failure to plan, is a plan to fail!

Access and build networks

Try to learn as much as possible from like-minded people that are in the same or similar line of business. Try to attend seminars, workshops and other training events. Travel to see how other people have gone about growing the same or a similar crop. Continue to share information with your networks. Investigate strategic alliances to be able to supply your market over a long period of time or with a diverse product range or range of varieties e.g. of flowers.

To be a successful horticulturalist in the Wimmera-Mallee will require access to strong networks, as it is not a traditional horticultural area and sound advice and expertise may not be available locally.

Is there a market for it?

Know your market

Conducting market research is a critical element in determining how successful your horticulture enterprise will be. Key questions that need to be answered include:

  • Is there a demand for your product? At what time of the year does the demand occur? Statistics and other market research data can help you make an informed decision as to the potential level of demand for your product. Analysis should include investigating and understanding your competitors – how many are there and what are they doing? What segment of the market do you intend to target – are you producing a specialised, niche product or a commodity? In general, it is more profitable and sustainable to establish and occupy a niche in a market than to offer a commodity and compete with others on price. It is also helpful to understand market trends so you can make the most of your business opportunities. How healthy is the market? Is there room for further expansion? What is the volatility of the market - if there is an increase in the volume of product within the market will the price go down?
  • Remember that not all your product(s) will meet quality specifications for the selected market. What will you do with second or third grade product, what will you do with your waste? Being creative about using off-specification product may make or break a business.
  • If there is a demand, it is important to determine what the product specifications may be. Most consumers and markets will have certain expectations of the presentation and quality of the product and many horticultural crops will be required to adhere to Quality Assurance (QA) schemes. There may also be an expectation that the product will be available all year round or meet certain windows or periods of time when the demand for the product is high.
  • Can you supply that product or service at a competitive price? What are the costs of establishment and on-going production, and what is the expected price you would receive for your product?

The answers to these questions can be found by talking to customers, other businesses or market agents (i.e. wholesalers). You can also research your market by using information that has already been gathered, such as government statistics (ABS and ABARE) and trade publications. If you are thinking about export, Austrade can provide useful help.

A successful horticulture business will know what its customers’ needs are, the requirements and characteristics of the market it is supplying, and the expected profit.

Know your product and service

It is important that you are clear about what your product and service entails. If you grow fruit, your product could be bulk fruit, prepacked fruit, pick your own fruit or preserved fruit. The service you attach to the product may be delivery, product information, a coffee shop, preserving classes, etc.

Investigate whether you can expand your product or service range by buying product in from other sources or value adding.

A successful horticulturalist will have clearly defined products and services.

Know your selling point

What will make your product different? What is your competitive advantage? Small businesses usually cannot compete with bigger operations on price. However, one advantage to being smaller is that you are likely to have greater control over the quality of your product and this should be what sets you apart from the larger operators. People remember quality long after they have forgotten the price.

Another advantage a small business might have is being unique. If you can offer something different that no one else is selling you can be the sole supplier to the market. The opportunity to value-add to a product will be of importance to ensuring your uniqueness and quality.

Small-scale horticulture is all about niche markets, so what’s your point of difference or competitive advantage?

For more information visit Agriculture Victoria