Establishing a successful small horticulture enterprise: Part 3


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Managing a new business

Keep good records

Once your enterprise is up and running and you have developed a strategic, business, marketing and risk management plan the next step is to ensure that your business continues to run smoothly. It should adapt to new challenges and opportunities for further development and identify innovation opportunities. Prepare annual operational plans alongside your annual budget and apply the plan – do – review principle to check whether you are on track and make changes as required.

To enable reviews and continuous improvements, it is very important to keep adequate records, not only financial records but records on how you manage the crop(s), inputs, timing of all activities, results like yield and pack out, crop losses, soil and plant testing results, weather data, reasons for success or failure etc.

The review of records will greatly assist in understanding reasons for success or failures. Without these, improvements are difficult to make and it is hard to gain an understanding of the best, most efficient production methods to increase productivity and profitability. Photos should be kept with records to illustrate descriptions.

Feedback/review

Actively pursuing feedback on your product and service from customers will assist you in finding ways to make it better and learn from any mistakes. Most people are passive – they wait for negative feedback and then do something about it. However many people do not like giving this feedback so unless you actively pursue it, you may never know how your product could be improved.

Regular review of your business will also provide an opportunity to potentially improve your product or the way you have been managing the business. It is important to allow yourself the opportunity to step back and critically review how things have been going.

Manager/owners can often get caught up in routine shortterm focussed activities, which hamper their ability to focus on strategies for long-term competitiveness and profitability. Seeking external advice to review and recommend areas for improvement may assist in the development of your business if you do not have the time to do this yourself.

Having sufficient flexibility and adaptability to change the way the business is managed will be important in allowing you to change things if review and feedback from customers indicate that improvements could be made. It is also important that if obstacles or challenges outside of your control occur, you can adapt to these.

Strive for continuous improvement

Can you work more efficiently? Can you access new technologies that allow for mechanisation, improvements in processing, or packaging?

Can you access improved varieties, propagation methods or agronomy information?

Can you improve your service to your clients or make it easier to do business with you e.g. by using better distribution channels, different packaging, easy payment options or internet sales.

Consider accreditation under a quality assurance system or other certification scheme. Monitor and control your finances.

Develop systems that will help you keep track of your finances and also what are your profitable and non-profit lines. Having good control of your finances will allow you to demonstrate that you are in control of your operation and show your bank manager actual records of cash flow. Successful businesses must manage the information they collect: financial statements, customer records, sales performance, service levels, plus dozens of other categories. Furthermore, there are an infinite number of ways to cross-reference any data category with another to identify trends and other indicators.

Focus on margin rather than turnover - Many horticultural producers fall into the trap of focussing on turnover or volume of product rather than the margin they are achieving. Knowing your margin will require an awareness of the capital costs, operational costs and the price received for the product. This may seem obvious but many large-scale producers still make this mistake, especially when dealing with a commodity product.

Market your product

Effective marketing is a vital part of a successful business. Sales are very important, but your brand, image and ultimately marketing determines your customer loyalty and growth of your business. Understand what customers want; their key buying reasons may not be what they tell you outright.

Marketing establishes the basis for your sales strategy and how you will generate sales. Successful marketing of your product does not necessarily require a lot of money. Smallscale horticultural business can take advantage of the fact that they are doing something different and unique to attract free advertising and promotion (through newspaper articles, radio interviews, attending shows or entering competitions).

In order to grow your business, find ways to regularly stay in touch with clients and educate them on your products When talking to customers, do not focus on telling them about the features of your product but emphasise what the product can do for them, how it can fill a need. Design you promotional material accordingly.

Consider developing a brand and trademark . Branding will make it easier for customers to recognise your product and trade marking is a simple and cost effective way of protecting intellectual property.

Develop point of sale material . If you are producing a vegetable, herb, fruit or food product consider providing information on its use (including recipes) and associated benefits.

Identify and target networks that will assist in raising your profile . Lead generation is the lifeblood of any small business. The more qualified prospects contacted, the more clients you’ll have. One of your marketing goals should be to improve your lead generation and motivate qualified prospects to give you their contact information so you can market to them.

Distribution/Supply chain management – If you are not doing the distribution yourself (which may be wise as this can take your time and attention away from the business) then find a distributor who will suit your product and support you. Will your product appeal to most audiences and therefore should be widely distributed? Or is it more suited to a select clientele, in which case a more target approach will be more effective. Understand the supply chain and which position you have in it and try to make contact with members of the chain regularly.

Presentation and display – Not only is it important for your products to be presented as attractively as possible to customers but the image of your whole business should also be as professional as possible. One of the best forms of marketing, that is very affordable, is a consistent and professional image. Elegant business cards, matching letterheads and an informative and effective website are just a few pieces of a small business toolbox that can do much more than a high-dollar advertising campaign. Although you may be operating your business from a small back shed, by using well-presented advertising brochures and products the resulting image will be of a big, well-run company. You may be able to have features on your business in local media.

Public relations and customer service – The importance of good customer service cannot be underestimated. People like to buy from others they know and trust and attracting new clients takes a lot more effort than selling to a repeat client. The key to good customer service is to look at the situation from your client’s point of view. Most people want good quality and reliable service with the least possible hassle. Friendly, trained and efficient staff is part of the service.

Consider developing a website and sales via the Internet , especially if you are in a remote location.

Manage risks

Embarking on a new enterprise means that you will be dealing with a great amount of uncertainty about whether you will have success or failure. Avoiding failure means managing risks.

Managing risks requires making good decisions based on an understanding of your risk factors and interactions between them. Carefully think about:

  • What are my risks and risk factors? What can go wrong?
  • Which preventive action can I put in place?
  • Which corrective actions are possible, if something has gone wrong?

You will need good market, technical and business information to manage risks and therefore have to:

  1. Source existing information through:
    • Networks, ‘specialists’ with the right skills & knowledge
  • Written material
  • Media
  • Travel
  1. Generate analyse and synthesise new information to fill gaps through:
  • Trial & error – record keeping
  • Observation – record keeping
  • R&D

You will need the capacity to use information through:

  • Combining it with/building on existing skills and knowledge, your own, that of your partner, staff or from people outside the business.
  • Using insight, instinct, awareness, and discernment.
  • Acquiring new skills and knowledge e.g. through training.

For more information visit Agriculture Victoria