Updated: Nov 15, 2019
Growth is the hallmark of a successful agribusiness. The increase in size and operations of a farm often translates to profit. However, the growth process is often laden with risks and challenges, careful and effective planning helps to manage the risks and steer you towards the desired growth. In this article, we would share some questions that would help in planning for your growth.
WHERE AM I NOW?
Before planning growth, an internal and external analysis of your farm is important. You need to ask yourself some tough questions like: what are our unique resources or strategy that is giving us a competitive advantage? Are we maximising all our resources (human & assets)? What external factors favours our farm, and which one doesn’t? These questions will ascertain if this is the right time for growth.
WHY DO YOU WANT TO GROW?
You need to know the reason for your growth. Why do you want to expand your farm operations or have a branch in another location or specialise on one product? You need to identify the need for growth, is it for easy reach by your customers or to reduce costs and increase profit? Are you trying to add more value to your products? You need to ask this question “Why Grow?”
HOW DO I WANT TO GROW?
Are you specialising, expanding, diversifying, replicating or integrating? Before planning growth, you need to define what growth means to your farm. Are you specialising on one product or process instead of two or more (For example, is your farm now going to produce and process only maize instead of maize and cassava, so you can churn out large quantities of maize or you just want to specialise in maize processing rather than the whole process of maize production?) Are you expanding your farm operations, making your farm bigger or are you bringing more products on board or do you want to replicate your farm in another location? You need to decide which one you want, and is suitable for your farm.
WHAT DO I HAVE THAT SUPPORTS GROWTH?
Before embarking on growth operations, you need to ask yourself what does you farm have to support the growth. It is important to look inward and determine the strengths and weaknesses of your farm. Identify your key resources, capabilities and core competencies. You need to identify which of your current assets or managerial abilities supports the growth.
WHAT DO I NEED TO GROW?
It is important to assess your needs before drawing up your plan. What do I need in terms of skills, competencies, assets and human resources to achieve this growth? Do you need land or a machinery? Is your current staff enough to manage the growth or do you have to employ more? Does your farm have the required skills and competencies to achieve the growth you desire? How are we going to finance the growth? Identify these needs before implementation.
HOW DO I FINANCE MY GROWTH?
Growth requires funds; funds to acquire assets, employ staff, and achieve the desired growth. You need to know where the funds would come from. Do I borrow (Debt) or use my retained earnings or is a partnership needed? You need to ascertain the source of finance for your growth operation.
HOW WILL GROWTH AFFECT MY CURRENT OPERATIONS?
When thinking about growth, it is wise to think about how the growth will affect your farms’ balance dependent on your type of growth. How does the growth affect your costs, revenue, profit margin and the effectiveness of your managers and staff?
WHAT ARE THE CHALLENGES I’M LIKELY TO FACE?
There are a lot of challenges when expanding your farm operations. Challenges like cash flow shortage, the amount of resources available to work with, delays due to construction of new needs and short-term operational inefficiencies. It is pertinent to anticipate and plan for these challenges.
Growth is important in any business, especially in the agricultural sector where farm size often equals more opportunities for profit. However, before expanding your farm operations, planning is important to achieve the desired growth. Your ability to prepare for the growth you desire will determine how successful you will be.