Starting a business is not without its fair share of challenges – regardless of the industry you go into. Earlier this week, Makamba Online ran a feature on Phenias Gumede, a subsistence farmer who turned his start-up into a commercial success. He offered some great advice and insight into the business of farming, which inspired others to share their industry advice with us. This is what they had to say.
Create a business plan
Writing a formal business plan is a good exercise and will be helpful for your future plans such as financial assistance applications. As a new business owner with many variable affecting your business, you can expect a lot of change in the first few years, so you need a business plan for reference. Include all members of your family in the planning process if they have a role or stake in the business or intend to in the future. As a start-up it is likely that you will not be doing this alone.
Create a production plan
Production planning include things such as land use, buildings, labour requirements, soil quality, equipment for specific jobs, well-organised supplies and processes, as well as laws and regulations that influence the business. The core to your success if effective tackling of activities – so production is the key. Do extensive research into the capabilities of your land, the type of farming you choose, market requirements and the buyers in your area.
Have a survival plan for the first few years. Amanika Heshima, a commercial farmer in Kenya says, “Give yourself a five-year grace period from the very beginning. Understand that it isn’t a constant success. Sometimes it is physically and emotionally difficult to keep going.’’ Try not to borrow against your projected future profits because you may never get to break even when cash flow is tied up servicing debt.
There are several ways to go about this. Most African governments have policies that support small-scale farmers with getting loans from their local banks. These banks support resource-strapped farmers to become active participants in mainstream commercial agriculture. Some of the banks have been named specifically for agriculture. To mention a few; Agriculture Development Bank of Tanzania, Agricultural Finance Company in Zambia, Bank of Agriculture in Nigeria, AgriBank and AgriTrade in Zimbabwe, Agricultural Finance Corporation in Kenya and Land Bank in South Africa. In short, African farmers are blessed because their governments and non-governmental organisations want to help. Go get a loan if you need finance, just be sure your business plan is well documented and ensures you are able to pay back the money.
Experiment, but make sure you have a passion for it
Start small, build your skills, and learn what grows best in your soils and climate, and figure out what you actually enjoy. Figure out what you like and are best at, and begin with those initiatives. Make sure you develop your farm around activities that bring you some joy or satisfaction. “Farming is really exciting, but don’t jump in and start everything at the same time. If you want pigs, become skilled and knowledgeable about them before adding goats or fishing. Know each area well before adding a new one,’’ noted farmer Tom Barker from Namibia.
Project the future
Thinking about the size of your business in the next five to ten years is the best thing you can do as a farmer. Each year start projecting the income you wish to make, followed by the profit and ultimately you can budget for the following year, however, keeping in mind the ten year objective. Begin planning budgets from year one to year 10 to understand how you will have to scale the business to get to those numbers up. If your first year’s budget is US$3,500, for example, improve your second year’s budget and keep improving the budgets up to the tenth year.
Add regularly to your savings account or farm account even when things are tight. Financial margin is needed to leverage sudden problems and costs or to take advantage of out of the blue opportunities. Maintain a cash reserve.
A farmer in Ghana, Claire Roisire, talked about budgeting. She said, “Keep all receipts to see if it is really cheaper to raise your own goods or buy them. Keep a diary of what works and what doesn’t.” You should also consult an auditor who will give you quarterly updates on your financial progress. Track and compare the numbers to see if you are meeting the goals you have set.
Decide on the location of your farm
The location of your farm will have to suit the type of product you wish to produce. If you are going to grow and sell flowers, for example, you need enough shade, water supply and a short distance travel to towns. Planting a crop such as maize you should consider the requirements like location and climate. However, make sure all the documentation is legal and to your advantage when buying a farm.
A commercial farmer in Limpopo South Africa, Bheki Mpilo, said, “When looking to buy land, make sure there aren’t deed restrictions for that property that will prevent you from your goals. The latter is the biggest problem I have now.’’
Keep on learning
Stay hungry for learning. Learning is the fuel for new ideas, for improvement, for exploring new alternatives, for success and for fun. Always recognise that you don’t know it all and stay humble enough to seek advice, to study differences and to learn from other businesses. Learn for the purpose of advancing your business. “Try to make acquaintance with some of the old-timers, and offer to help them whenever you’re available. Helping and paying attention is learning. You’ll make friends who share commonalities and interests with you,” said Gaffie Adesanaye in Nigeria.
Do you have any business advice? Share your thoughts with Makamba Online here.
Author: Gesture Chidhanguro