Agriculture is fast becoming the world most important industry, this is because of the growing need to feed a vast population of people spread across the globe. But there have been many agribusinesses failure in the industry why some have also recorded numerous successes.
In this article, we will share six reasons for many agribusinesses failure at the startup stage. This will help to guard you from making the same mistakes.
- Lack of Knowledge
A lot of people think venturing into agribusinesses do not require much training. Some crop farmers think agriculture is all about making ridges, planting seeds and then waiting until harvest to start raking millions into their bank. Likewise livestock farmers, they think livestock farming is all about getting young animals and feeding them until maturity so that they can sell them out to start making money too.
Knowledge is the key in every successful venture, never presume you know it all. Acquire training from experts before venturing into any agriculture ventures, also acquire business management skills it will help to build a sustainable business.
- Poor Planning
You must sit down and estimate the costs before establishing any type of agricultural enterprise. Many agricultural enterprises fail when they first start up because the founders did not make enough plans.
In order to achieve optimum efficiency, planning entails choosing what to do, how to do it, and when to do it.
The management board, the expansion plan, the sources of funding, the transportation, the marketing strategy, and other factors are all part of the planning process. Distribution channels and the supply chain must also be planned.
Almost everything in agribusiness is planned. Farmers plan when to buy their inputs so that they can harvest at a favourable time of the year when they can sell at high prices. They make a lot of profit from selling in peak periods or festive periods because demand is high at those times.
- Poor Marketing plan
Most farmers focus all their energy on production and fail to develop a good marketing plan for their product. That’s why they end up been exploits by middlemen. A good marketing plan is very essential because it helps you to know who customers are, what they need and the best way to reach them and convince them.
- Lack of Core Values
What are your products known for? What makes your products and services different from that of others?
Many startups do not have core values they can capitalize on. Your core values are your identity. They end up becoming people’s perception for your business.
Practice good values such as integrity, good morals, timely delivery, and the likes of it. You should be known for something.
- Poor Financial Management
A lot of small-scale farmers and startups don’t keep financial records of their business, once they start seeing revenue coming in from sales, they begin their spendthrift almost immediately. Most don’t even have a separate account for their business, positive cash flow is necessary for business growth. A good financial record helps you to monitor your business financial cash flow and make important decision.
- Poor Risk Management
This is one of the reason for so many agribusinesses failure. Most agribusinesses have so many risks which need to be mitigated, such as pest and diseases, flooding, farm invasion by herd of cattle and other animals, community land disputes etc. if this risk are been ignored it can lead to serious losses. So you venture into any agribusiness analyze the risk involve and develop plans to mitigate those risks.
